A recent rally in Tesla shares (TSLA) has meant some serious pain for short-sellers who had enjoyed a successful spring betting against the electric carmaker.
Short-sellers betting against Tesla lost at least $1 billion on Thursday alone, according to data from S3 Partners, as the stock rallied 10% following the company’s latest quarterly report.
Shares finished Thursday’s session at $815.12, their highest close since May 6.
Tesla was little-changed on Friday afternoon amid a broader sell-off in tech stocks.
Data from S3 showed showed Tesla shorts were down $1.01 billion in mark-to-market losses as of mid-day Thursday, when shares were trading closer to $800 per share. Total losses are expected to be even higher when accounting for the full day’s 9.8% gain.
“The end of ‘supply chain hell’ may turn into a ‘short squeeze hell’ for Tesla short sellers as Elon Musk says the firm has the ‘potential for a record breaking second half of the year,’” S3 Partners’ Ihor Dusaniwsky and Matthew Unterman said in a note published Thursday.
Since July 18, Tesla’s market cap has risen about $100 billion, from ~$750 billion to around ~$850 billion as of Friday afternoon.
For short-sellers, Tesla has been the worst performing bet in dollar terms so far this month, as several FAANG, crypto, and meme stocks have rebounded after a rough first half of this year.
Tesla shares, for instance, fell some 36% in the first six months of 2022, with the company’s market cap going from $1.2 trillion at the beginning of this year to $650 billion at its nadir on May 24.
Apple (AAPL), Amazon (AMZN), and Nvidia (NVDA) follow Tesla as the worst performers for short sellers this year in dollar terms.
Tesla’s latest rally follows second-quarter earnings that came in better than Wall Street had expected, despite concerns production would drop due to lockdowns at its Shanghai factory.
Tesla reported adjusted earnings per share of $2.27 on revenue of $16.9 billion during the period. Analysts surveyed by Bloomberg had anticipated EPS of $1.83 and revenue to come in at $16.88 billion. The company also stood by its outlook to achieve 50% annual growth in vehicle deliveries over the next several years.
“We have the potential for a record-breaking second half of the year,” CEO Elon Musk said Wednesday on a call with analysts. “The past few years have been quite a few force majeures, and it’s been kind of supply chain hell for several years.”
Shares of Tesla are still down 30% year-to-date. And for the year, TSLA shorts remain profitable, up $6.34 billion in year-to-date mark-to-market profits and 29.6% in 2022 as of midday Thursday, per S3.
Tesla also remains the largest short in the U.S. and worldwide.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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