Tesla shares hit a record high of $413 a share on Friday, December 20. The surge in share prices has hit Tesla’s shorts hard. Short sellers have lost $7.6 billion since Tesla’s stock neared a multi-year low of $178.97 in June, according to S3 Partners, a financial analysis firm.
“A seven-month ‘hug’ is becoming a full-blown ‘squeeze,'” Ihor Dusaniwsky, head of forecast analysis at S3 Partners, said in a report on Friday. “
Short sellers will continue to be dismal as Tesla stocks hover near record highs.
Ihor Dusaniwski, head of forecasting analysis at S3 Partners, says shorts of Tesla’s stock are now in a “winter of despair.” So far in 2019, Tesla short-sellers have lost $2.43 billion in market value, losing $1.16 billion last week alone. “
Mr Dusaniwski argues that while rising losses may have left some “poor lynoses or low risk tolerance” traders, large numbers of short sellers remain edgy.
Short positions in Tesla shares fell by 3.2 million shares in December and 18.2 million this year, according to the report. But since its June 3 low, Tesla’s real short position has increased its market value by $2.47 billion.
Mr Dusaniwski said the shorts of Tesla’s stock had not exited the short bet after a “rollercoaster profit/loss shock in 2019”.
Mr Dusanevski believes that if Tesla’s stock continues to rise, there will be more short positions. The total number of short-selling shares is about 25.5 million, according to the report. If Tesla continues to rise to $450 a share, the total number of short-selling shares could fall below 20 million shares.
Tesla’s stock is up about 22 percent this year as of Friday, Dec. 20.