Investor's Corner

Tesla (TSLA) shorts are betting $20 billion against the automaker’s stock

(Credit: Tesla)

Tesla stock (NASDAQ: TSLA) could set yet another new record within the coming days: first stock to ever hit $20 billion of short interest.

Tesla has been one of the most shorted stocks on Wall Street for years. Its short-sellers are notorious names in the world of investing. Jim Chanos and David Einhorn are two of the more well-known names who are vocally against the electric carmaker’s performance in the market.

Now, short-sellers have amassed a gigantic $20 billion bet against the company’s stock, according to research firm S3 Partners. Currently, the value of shares that have been sold short has reached $19.95 billion, Bloomberg reports.

In a Thursday report, S3 indicated that Tesla, along with new company on the block Nikola Motors, both look like ideal companies that could be subjected to a short squeeze. Short squeezes occur when short sellers are forced by stock’s increase in value to close their position. This act drives the price of the stock higher than it was previously. If the stock falls, short-sellers could make a fortune.

TSLA stock has gained 223% this year and has somehow managed to provide exponential gains to its investors despite shutdowns at its two active vehicle production facilities in Fremont, California, and Shanghai, China.

The company’s stock has primarily been driven up by technological developments, battery improvements, production efficiencies, and delivery figures that have consistently outperformed Wall Street’s estimations.

Because of the impressive performance on Wall Street and internal performance that can only be described as magnificent because of the current circumstances, CEO Elon Musk has had quite a bit of fun with short-sellers. The South African head of Tesla has traded jabs with several short sellers in the past, but this past week Musk took the trolling to an entirely new level.

Musk announced the release of “Tesla Short Shorts,” red and gold satin shorts that were being sold for $69.420 on the company’s online shop. A statement that was satirical and comedic, Musk and his team of loyal followers who have supported the company’s products since Day 1 bought the satin shorts so quickly that a second order was fulfilled to keep up with demand.

Many investors and analysts believe TSLA’s rampage through Wall Street is far from over. Oppenheimer analyst Colin Rusch stated on an episode of CNBC’s Squawk Box that the company is showing evidence of a 50-70% upside within the next 4-5 years. The improvement in stock value will come from the company’s significant advantage in electric transportation, along with a sizeable lead in automotive technology, which has surged the company’s value on Wall Street into superstardom.

Tesla will hold its Q2 2020 Earnings Call on July 22.

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours. 

Tesla (TSLA) shorts are betting $20 billion against the automaker’s stock
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