'Trampled by a Tesla Semi': Tesla's post-earnings spike burns $1.5 billion in short bets

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  • Tesla’s post-earnings spike is frying short-sellers, with traders betting against the stock losing $US1.5 billion mark-to-market on Thursday, according to S3 Partners data.
  • The automaker beat analyst estimates for fourth-quarter profit and revenue after the close on Wednesday, and announced it expects to “comfortably exceed” a record 500,000 total deliveries in 2020.
  • Tesla short-sellers have lost $US5.6 billion year-to-date as the company’s stock has repeatedly soared to record highs. The shares are already up 55% in 2020.
  • Watch Tesla trade live here.

Tesla’s post-earnings surge extended the stock’s rally through 2020 and dragged short-sellers into even deeper losses.

Traders betting against the automaker’s stock are down $US1.5 billion in mark-to-market losses Thursday after the company’s earnings beat drove shares to a record high, according to data from financial-analytics firm S3 Partners. The Thursday losses bring short-sellers’ total year-to-date loss to $US5.6 billion.

The automaker announced in its report it would begin Model Y CUV deliveries sooner than expected, and that total 2020 deliveries should “comfortably exceed” 500,000. The new estimate marks a 36% gain from 2019’s total and curbed analysts’ fears of lagging supply.

Short-selling involves traders borrowing shares and selling them on the open market with the intention of buying them back later at a lower price. The method allows traders to profit from a falling stock, but a soaring price can drive rapid losses as traders remain on the hook for the difference.

The number of Tesla shares shorted is down by 1.78 million over the last 30 days, while the company’s stock has soared nearly 39% in the same period. The retreat equates to $US975 million of short covering over the 30-day period, according to S3 data.

“Tesla’s short squeeze will probably shift into a higher gear as some short sellers re-evaluate their short thesis and begin to trim or close out their short exposure,” Ihor Dusaniwsky, managing director of predictive analytics at S3, wrote Thursday.

“Shorts were trampled by a Tesla Semi as its stock price rose 9% within the first 5 minutes of trading and had little chance to close out positions anywhere near yesterday’s closing price,” he added.

The automaker is the most shorted stock in the US with more than $US14 billion in short interest. Apple and Microsoft stand in second and third place for short interest, respectively. All three companies reported better-than-expected quarterly earnings this week and saw their shares subsequently rocket to all-time highs.

Tesla traded at $US644.57 per share as of 3:50 p.m. ET Thursday, up 55% year-to-date.

The company has nine “buy” ratings, 10 “hold” ratings, and 18 “sell” ratings, with a consensus price target of $US441.06, according to Bloomberg data.

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