It’s already a common occurrence for Tesla to be shorted by the agency. One of the most shorted stocks in the U.S., it was shorted in two days, making it Tesla’s standard. However, short-sizing Tesla investors may be facing a “worst period” in recent times, as Tesla’s stock surges for two months, its share price has hit a record high of $400, and some long-time short-scented Tesla fund managers are thought to be likely to go from billionaire to millionaire if they continue to insist.
Earnings beat market expectations for two-month jump
By Friday’s close, Tesla had closed at a new high of $405.59, up 0.38 percent, while it was trading at an all-time high of $413 a share, up nearly 127 percent from its all-time low of $178.97 on June 3.
It already has a market capitalisation of $73.1billion, well ahead of General Motors, the traditional auto leader, which has a recent market capitalisation of $53.2 billion, second only to Toyota and Volkswagen in the auto industry.
Notably, Tesla’s share price rally began on October 23rd of this year. In just two months from October 23 to December 20, Tesla’s share price jumped more than 59 per cent from $254.68 at the close of trading on October 23rd to $405.59 at the close of december 20.
Tesla’s rally came from a financial report at the end of October. On October 23rd Tesla released its third-quarter 2019 results, which were the catalyst for Tesla’s share price and continue to this day.
Tesla’s earnings exceeded market expectations because it made an “unexpected” profit. Tesla’s third-quarter revenue was $6.303 billion, down 7.63 percent from $6.824 billion a year earlier, but its third-quarter net profit was $143 million, the first time in a year that it posted a $143 million profit, according to its third-quarter results.
Tesla also revealed that the Shanghai plant has started trial production, ahead of schedule. Tesla’s share price began to soar after the earnings report, which jumped 18 percent on October 24th, and has been on the rise for two months.
Tesla shares soar and shorting institutions are not good
The surge in share prices has hit Tesla’s shorts hard.
In a report on Friday, Ihor Dusaniwsky, head of forecast analysis at S3 Partners, a financial analysis firm, wrote that the surge in Tesla’s share price had sent short sellers into a “winter of despair,” adding that the company had entered a “winter of despair,” adding that the company had entered a “winter of despair”. Investors who are bearish on Tesla have lost $2.43 billion so far this year.
Mr Dusanevski said that while market-denominated losses were rising, squeezing many short positions with low confidence or lower risk thresholds, “there is still a lot of shorts holding their ground and coping with the roller coaster of 2019”. If Tesla’s share price continues to rise, he expects the short-shot tobe bet will continue as more investors reach the limits of risk.
In the report, Mr. Dusaniwski also wrote that Tesla’s total number of shares shorted was 25.46 million, up slightly from a three-year low of 24.23 million hit on January 30. 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.
Gary Black, a well-known former Wall Street analyst, also said last week that Tesla’s short-stakes view was that the company already accounted for 75 percent of the U.S. electric car market, as established luxury automakers launched their own electric cars and backed up with a strong network of brands and dealers. Tesla’s share will fall rapidly. The reality, however, is that the launch of Mercedes electric cars in the U.S. has been delayed until 2021, and sales of new electric cars for Jaguar and Audi have been slow.
While carmakers such as Mercedes and Audi have launched their own electric cars, Tesla has an advantage in battery life. This is crucial for car buyers. “When you talk to dealers and non-electric car users, you know that the biggest barrier consumers are trying to do with electric cars today is charging batteries,” Black said. People want electric cars to travel longer.”
Mr Black believes Tesla’s share price could double its current share price, with a market capitalisation of more than $140bn.
U.S. star fund managers lose a lot of money by shorting Tesla
David Einhorn, a star fund manager in the US and founder of Greenlight Capital, has suffered heavy losses from long-term shorting of Tesla, and some in the market are even worried that Mr Einhorn is adamant that Tesla will lose and refuses to change its bearish attitude. The star fund manager could go from billionaire to millionaire.
Photo: Sina Weibo
Back in June 2017, Einhorn said bluntly: “Tesla is one of the bubble stocks we see. We think the extent to which bubble stocks are misvalued is very high. The level is high enough for us to wait a long time to prove our judgment. “
Notably, Greenlight Capital lost more than 34% in 2018 because of shorting Tesla and other mistakes. Greenlight Capital managed $6.3 billion in assets at the beginning of 2018, according to regulatory filings, and by early 2019, Greenlight Capital would be worth less than $5 billion, compared with $12 billion five years ago.
Tesla’s share price has soared since the third quarter of this year, causing heavy losses in shorting its Green Light capital. In November, Tesla founder Elon Musk also shared a letter on Twitter mocking Einhorn’s position on the bearish ness of Tesla.
“Given the losses tesla’s success in the third quarter, especially since your investment performance has been declining over the past few years, and total asset management has fallen sharply from $15 billion to $5 billion, it’s understandable that you want to keep your face in front of investors.” “We sympathize with you,” Musk wrote.
Before Tesla’s rebound at the end of October, Greenlight Capital returned about 24 percent in the first three quarters of this year, but the company lost more short positions because of the strong rally at the end of October, Einhorn said in a third-quarter investor letter from Greenlight Capital, despite Tesla’s “significant losses” to Greenlight Capital. One of the most failed bets, but will continue to maintain a short position on Tesla.