Short Tesla investors are facing the “worst” period, with shares of the electric car maker’s shares rising sharply over the past seven months. Tesla shares closed up 0.38 percent at $405.59 on Friday, hitting an all-time high of $413 at one point, up 130 percent from the June 3 low of $178.97.
Tesla’s rally accelerated after it reported a surprise third-quarter profit and said its Shanghai Superplant and Model Y crossovers had earlier released their release dates. Ihor Dusaniwsky, managing director of forecast analytics at S3 Partners, wrote in a note that tesla’s surge in share prices had sent short sellers into a “winter of despair,” adding that investors who were bearish on Tesla had lost $2.43 billion so far this year.
Despite rising losses on market value, squeezing many short positions with low confidence or lower risk thresholds, “there are still a lot of shorts standing in their positions to cope with the roller-coaster market in 2019,” Dusaniwsky said. “If Tesla’s share price continues to rise, he expects the short-shot tobe bet will continue as more investors reach the risk limit.”
Tesla’s total of 25.46 million shares was shorted, just above the three-year low of 24.23 million hit on January 30, Dusaniwsky wrote. If the current short-back rate and share price rally continue, the number of short shares could fall below 20 million as Tesla’s share price hits $450.