Tesla short sellers lost $ 38 billion in 2020 with the increase in shares

Photographer: David Paul Morris / Bloomberg

Tesla Inc. short sellers lost billions more to the electric vehicle maker than any other company in 2020, when bears were badly burned by rising stocks to new highs.

With shares up 730%, Tesla bears saw more than $ 38 billion in mark-to-market losses this year, according to data from S3 Partners. By comparison, the second biggest loss for short sellers was from Apple Inc., with just under $ 7 billion, S3 data shows.

This “is not only the biggest mark-to-market loss for any stock this year, it is the biggest annual mark-to-market loss I have ever seen,” said Ihor Dusaniwsky, managing director of S3 partners.

Tesla did not respond to a request for comment.

For now, the electric car maker and its investors, small and large, have the advantage against a group of short sellers that came to be known as TSLAQ-Q, being the character that changes the timbre of a stock exchange after a company goes bankrupt.

These short sellers include some high-profile names, such as Jim Chanos, president and founder of the hedge fund Kynikos Associates. Chanos recently reduced the size of his business, telling Bloomberg TV in early December that it was “painful”.

Read more: Chanos reduces Tesla shorts ‘painful’ and tells Musk ‘job well done’

Many of Tesla’s short sellers closed their positions throughout 2020, with short interest falling to 6% from the float of almost 20% a year ago, according to data from S3.

“The little squeeze has been going on all year. It was a straight downward sloping line, ”said Dusaniwsky. “Tesla’s great advantage, as opposed to any other action, is that the vast majority of retail shareholders will never be a seller. They love stocks, they love the car, they love Elon Musk and they are long and unyielding shareholders. ”

Tesla’s stock soared this year, recording five consecutive quarters of earnings and amid growing sentiment on Wall Street that the move to electric vehicles is accelerating. The company was added to the S&P 500 Index on December 21 and several smaller EV stocks rose along with it.

The next potential catalyst comes in early January, when Tesla reports vehicle production and delivery figures for the fourth quarter. Tesla expects to deliver half a million cars in 2020, a major milestone for a company that initially struggled to mass produce its Model 3 and is now building additional factories in Berlin and Austin, Texas.

“Tesla checks many boxes for investors in terms of people who want growth, disruption, electrification,” said Dan Levy, an analyst at Credit Suisse. “Operationally, they had a good year, but there are also broader trends in the market. There was clearly more interest in shorting the shares before 2020, and then 2020 eliminated many sellers. “

In July, CEO Musk messed with Tesla’s critics by selling limited edition red satin shorts with the company’s logo – or whatever he called “short shorts”. Fans posted photos of themselves using them as Tesla shares rose and Musk tweeted a photo of a couple as a Christmas greeting.

Musk, who with an 18% stake is Tesla’s largest shareholder, has seen his own wealth soar this year. He is now the second richest person on the planet, after Jeff Bezos of Amazon.com Inc.