Investor's Corner

Tesla shorts feel the burn with $1B loss to start 2021

Credit: Reddit | u/BattMastard

Tesla (NASDAQ: TSLA) short sellers felt the burn on the first days of 2021, recording a $1 billion loss due to the electric automaker’s boost in price on January 4.

Tesla closed at a record high of $729.77 yesterday, marking the first official trading day on Wall Street of 2021 as a win for the Silicon Valley-based car company. The 3.4% boost in stock price was met with another record: a 52-week high of $744.49, which occurred during the early hours of Monday’s trading session.

But while TSLA’s long-term holders have felt the growth in their portfolios for a year, short-sellers are feeling the heat already, much like they did in 2020, when they reported a $38 billion loss for the year. Reports from Financial Review now indicate that shorts have already lost $1 billion in 2021, despite only one trading session taking place so far.

Why? It’s pretty simple. Tesla reported its Q4 2020 and 2020 Full-Year delivery and production figures, which showed that it reached its 500,000 unit goal in production and fell just short of deliveries at 499,650. However, the official number could be over 500,000 and will be reported during Tesla’s Q4 2020 Earnings Call, which will take place later this month.

The 500,000 unit threshold in either deliveries or production was a long shot for Tesla. Even though demand was healthy for all of 2020, there were several shutdowns of its production facilities, including the Fremont Factory in Northern California, which is the only plant that builds all four of Tesla’s electric models.

However, Elon Musk’s dedicated crew of executives, engineers, production associates, and sales advisors bound together to create a legendary Q4 push, which resulted in the company’s biggest quarter yet, where over 180,000 vehicles were delivered, and over 179,000 were produced.

“Musk & Co basically hitting its 500,000 goal for the year is a major feather in the cap for the company and the bulls as Tesla saw robust Model 3 demand over the last 10 months despite the hurricane-like consumer headwinds seen globally in this COVID backdrop,” Wedbush analyst Dan Ives wrote in a note to investors.

ALSO READ:

Tesla (TSLA) 2021 Outlook: Deutsche Bank boosts guidance after record-setting year

Despite Tesla’s five-consecutive profitable quarters, robust demand, and proven growth, it continues to be the most shorted stock on Wall Street. Data from S3 shows that Tesla’s short interest is $31.20 billion, or 44.22 million shares are short. This equates to 5.83 percent of TSLA’s float. Meanwhile, Apple holds only $13.3 billion in short interest, which is only .6 percent of its float.

Tesla enthusiasts are no stranger to being on the right side of the TSLA vs. TSLAQ dilemma. David Einhorn of Greenlight Capital Re admitted that his fund felt the heat from shorting Tesla in 2020, stating that the electric automaker “detracted from performance” of Greenlight’s 2020 portfolio. Net premiums decreased by 10.7%, all due to Greenlight’s short position of TSLA.

At the time of writing, TSLA shares were up around .2%, trading at $731.19.

Disclaimer: Joey Klender is a TSLA Shareholder. 

What do you think? Leave a comment down below. Got a tip? Email us at [email protected] or reach out to me at [email protected]

Tesla shorts feel the burn with $1B loss to start 2021
-->
To Top