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Tesla (TSLA) shorts have lost $2 billion in June as stock continues rise

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It is currently not a good time to be Tesla (NASDAQ:TSLA) short-seller. According to financial analytics firm S3 Partners, Tesla shorts have been hit by more than $2 billion in mark-to-market losses so far this June, as the electric car and energy company rides a wave of optimism in the weeks leading up to the end of Q2 2018.

Tesla stock has risen 20.5% so far in June, making the Elon Musk-led company on pace to hit its biggest monthly gain since August 2014. This sudden boost in the company’s stock has managed to hit short-sellers hard. After Tesla’s 2018 Annual Shareholder Meeting, shares rose 9.7%, and shorts lost $1.1 billion in a single day.  Just this past Monday, shorts lost another $549 million in mark-to-market losses, and as of Tuesday afternoon, bears were down an additional $278 million.

According to S3 Partners head of research Ihor Dusaniwsky, the massive losses incurred by Tesla short-sellers so far this month has made the electric car and energy company the worst-performing stock for short-sellers this year. In a statement to Reuters, Dusaniwsky noted that the recent blows received by Tesla shorts are among the biggest losses he has seen to date.

“In all of 2017, they (short-sellers) were down $3.4 billion. To lose $2 billion in a month stands out as one of the biggest losses for a stock that I have seen,” the S3 Partners head of research said.

Tesla shorts could have lost far more, however. During Tuesday’s intraday, Tesla shares rose by as much as 6.9% to a 3-month high of $354.97, before settling down to a 3.21% gain at $342.77 per share amidst news of the company’s restructuring efforts that cost 9% of its employees. By Wednesday’s pre-market, however, Tesla shares appear to have recovered, rising 1.38% and trading at 347.50 per share.

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Tesla remains as one of the most-shorted stocks in the market today, with short interest currently standing at $12.6 billion. That’s 37.9 million shares, or almost 30 percent of the share float sold short. Despite the recent losses incurred by Tesla short-sellers, however, Dusaniwsky noted that Tesla bulls’ anticipated “short squeeze” has not even started yet. A short squeeze happens when shares of heavily shorted companies such as Tesla rise as traders rush to buy stock to cover their short bets. This has not happened to date.

“With almost 80 million shares traded in June, this slight short covering did not move Tesla’s stock price. This is the biggest cry wolf on Wall Street – everyone says short squeeze, and it never is. They will be right one day, but not today,” Dusaniwsky said.

After Tesla’s successful 2018 Annual Shareholder Meeting, the Elon Musk-led company’s stock has seen a meteoric rise. Earlier this week, Berenberg raised its price target for Tesla to $500 per share, citing the company’s tech advantage and the Model 3’s positive gross margins. KeyBanc Capital Markets also sent out a note to clients on Monday, stating that Tesla could possibly deliver as many as 30,000 Model 3 for the second quarter.

As of writing, Tesla stock is trading up 1.38% at 347.50 per share on Wednesday’s pre-market.

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

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Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Investor's Corner

xAI targets $5 billion debt offering to fuel company goals

Elon Musk’s xAI is targeting a $5B debt raise, led by Morgan Stanley, to scale its artificial intelligence efforts.

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(Credit: xAI)

xAI’s $5 billion debt offering, marketed by Morgan Stanley, underscores Elon Musk’s ambitious plans to expand the artificial intelligence venture. The xAI package comprises bonds and two loans, highlighting the company’s strategic push to fuel its artificial intelligence development.

Last week, Morgan Stanley began pitching a floating-rate term loan B at 97 cents on the dollar with a variable interest rate of 700 basis points over the SOFR benchmark, one source said. A second option offers a fixed-rate loan and bonds at 12%, with terms contingent on investor appetite. This “best efforts” transaction, where the debt size hinges on demand, reflects cautious lending in an uncertain economic climate.

According to Reuters sources, Morgan Stanley will not guarantee the issue volume or commit its own capital in the xAI deal, marking a shift from past commitments. The change in approach stems from lessons learned during Musk’s 2022 X acquisition when Morgan Stanley and six other banks held $13 billion in debt for over two years.

Morgan Stanley and the six other banks backing Musk’s X acquisition could only dispose of that debt earlier this year. They capitalized on X’s improved operating performance over the previous two quarters as traffic on the platform increased engagement around the U.S. presidential elections. This time, Morgan Stanley’s prudent strategy mitigates similar risks.

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Beyond debt, xAI is in talks to raise $20 billion in equity, potentially valuing the company between $120 billion and $200 billion, sources said. In April, Musk hinted at a significant valuation adjustment for xAI, stating he was looking to put a “proper value” on xAI during an investor call.

As xAI pursues this $5 billion debt offering, its financial strategy positions it to lead the AI revolution, blending innovation with market opportunity.

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Tesla tops Cathie Wood’s stock picks, predicts $2,600 surge

Tesla’s future lies beyond cars—with robotaxis, humanoid bots & AI-driven factories. Cathie Wood predicts a 9x surge in 5 years.

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Cathie Wood shared that Tesla is her top stock pick. During Steven Bartlett’s podcast “The Diary Of A CEO,” the Ark Invest founder highlighted Tesla’s innovative edge, citing its convergence of robotics, energy storage, and AI.

“Because think about it. It is a convergence among three of our major platforms. So, robots, energy storage, AI,” Wood said of Tesla. She emphasized the company’s potential beyond its current offerings, particularly with its Optimus robots.

“And it’s not stopping with robotaxis; there’s a story beyond that with humanoid robots, and our $2,600 number has nothing for humanoid robots. We just thought it’d be an investment, period,” she added.

In June 2024, Ark Invest issued a $2,600 price target for Tesla, which Wood reaffirmed in a March Bloomberg interview, projecting the stock to reach this level within five years. She told Bartlett that Tesla’s Optimus robots would drive productivity gains and create new revenue streams.

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Elon Musk echoed Wood’s optimism in a CNBC interview last month.

“We expect to have thousands of Optimus robots working in Tesla factories by the end of this year, beginning this fall. And we expect to scale Optimus up faster than any product, I think, in history to get to millions of units per year as soon as possible,” Musk said.

Tesla’s stock has faced volatility lately, hitting a peak closing price of $479 in December after President Donald Trump’s election win. However, Musk’s involvement with the White House DOGE office triggered protests and boycotts, contributing to a stock decline of over 40% from mid-December highs by March.

The volatility in Tesla stock alarmed investors, who urged Musk to refocus on the company. In a May earnings call, Musk responded, stating he would be “scaling down his involvement with DOGE to focus on Tesla.” Through it all, Cathie Wood and Ark Invest maintained their faith in Tesla. Wood, in particular, predicted that the “brand damage” Tesla experienced earlier this year would not be long term.

Despite recent fluctuations, Wood’s confidence in Tesla underscores its potential to redefine industries through AI and robotics. As Musk shifts his focus back to Tesla, the company’s advancements in Optimus and other innovations could drive it toward Wood’s ambitious $2,600 target, positioning Tesla as a leader in the evolving tech landscape.

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Investor's Corner

Goldman Sachs reduces Tesla price target to $285

Despite Goldman Sach’s NASDAQ: TSLA price cut to $285, Tesla boasts $95.7B in revenue & nearly $1T market cap.

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tesla-model-y-giga-berlin-delivery
(Credit: Tesla)

Goldman Sachs analysts cut Tesla’s price target to $285 from $295, maintaining a Neutral rating.

The adjustment reflects weaker sales performance across key markets, with Tesla shares trading at $284.70, down nearly 18% in the past week. The analysts pointed to declining sales data in the United States, Europe, and China as the primary driver for the revised outlook. In the U.S., Tesla’s quarter-to-date deliveries through May fell mid-teens year-over-year, according to Wards and Motor Intelligence.

In Europe, April registrations plummeted 50% year-over-year, with May showing a mid-20% decline, per industry data. Meanwhile, the China Passenger Car Association (CPCA) reported a 20% year-over-year drop in May, despite a 5.5% sequential increase from April. Consumer surveys from HundredX and Morning Consult also shaped Goldman Sachs’ lowered delivery and EPS forecasts.

Goldman Sachs now projects Tesla’s second-quarter deliveries to range between 335,000 and 395,000 vehicles, with a base case of 365,000, down from a prior estimate of 410,000 and below the Visible Alpha Consensus of 417,000. Despite these headwinds, Tesla’s financials remain strong, with $95.7 billion in trailing twelve-month revenue and a $917 billion market capitalization.

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Regionally, Tesla’s challenges are stark. In Germany, the German road traffic agency KBA reported Tesla’s May sales dropped 36.2% year-over-year, despite a 44.9% surge in overall electric vehicle registrations. Tesla’s sales fell 29% last month in Spain, according to the ANFAC industry group. These declines highlight shifting consumer preferences amid growing competition.

On a positive note, Tesla is making strategic moves. The Model 3 and Model Y are part of a Chinese government campaign to boost rural sales, potentially mitigating losses. Piper Sandler analysts reiterated an Overweight rating, emphasizing Tesla’s supply chain strategy.

Alexander Potter stated, “Thanks to vertical integration, Tesla is the only car company that is trying to source batteries, at scale, without relying on China.”

As Tesla navigates these delivery challenges, its focus on innovation and supply chain resilience could help it maintain its edge in the electric vehicle market despite short-term hurdles.

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