Tesla short sellers lost $ 40 billion in 2020. Elon Musk earned more than three times that

Tesla short sellers lost $ 40 billion in 2020. Elon Musk earned more than three times that

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His personal net worth soared like one of his SpaceX rockets, increasing by more than $ 100 billion. And its biggest critics, also known as short-listed investors Tesla (TSLA) The shares, assuming the stock price would fall, lost a record $ 40.1 billion by betting against it, according to the analysis by S3 Partners.

These critics, with whom Musk has waged a very harsh and public war of words over the years, would have a healthy return if Tesla’s shares fell in value, but would risk huge losses if the stocks continued to win.

And, boy, did you win, rising 743% over the year.

The $ 40.1 billion in losses from investors selling Tesla shares were different from the losses suffered by any other short investors – last year or never – according to Ihor Dusaniwsky, managing director at S3 and an expert on the subject.

In fact, the losses suffered by Tesla’s short sales were more than the losses of the next nine companies – combined. Losses in paragraph 2 Apple (AAPL) in 2020, it reached $ 6.7 billion, which is just slightly more than the Tesla shorts lost only in December. Amazon (AMZN) cost $ 5.8 billion to sell, according to S3.
Tesla has long been a favorite bet for short-term investors, who controlled about 19% of shares in early 2020. For all those who believe the company is a leader in clean energy that changes paradigms and has unlimited potential, other investors claim that it is an exaggerated niche player that will soon be dominated by larger and more established automakers.

Many of the shorts were forced to admit defeat last year. About two-thirds of short positions were reversed during 2020, which in itself was a factor that helped raise Tesla’s shares as sold investors were forced to buy higher-priced shares to exit their positions.

“It was a gentle tail wind in Tesla’s price movement throughout the year,” said Dusaniwsky.

But the year ended with investors sold still holding about 5.5% of Tesla’s shares, which is equivalent to a $ 31 billion bet against the company’s future prospects. For comparison, there are $ 13.3 billion and $ 10.2 billion in bets currently against Apple and Amazon, respectively, with short positions controlling less than 1% of the shares of each of these companies.

Musk’s very profitable year

Musk has regularly battled short sellers, attacking them on Twitter and in public comments. But, in addition to any joy he is feeling over their losses last year, their collective pain does not compare to his personal gains.

Musk’s stake in 170 million shares increased its value by an impressive $ 106 billion in 2020, and that is only part of the gains he made from Tesla’s performance. He entered the year with options to purchase over 22.9 million shares, when adjusted for the split of five by one of the company. These options increased in value by $ 14.2 billion.

Tesla reached the goal of half a million cars in 2020
Throughout 2020, Musk also qualified for options to purchase 33.8 million additional shares, part of his remuneration package with only options he receives when the company reaches certain market values ​​and operating targets. He qualified for four separate tranches of options in 2020, which ended the year at $ 21.5 billion after taking into account the strike price.

And he is ready to qualify for two more tranches of options to buy an additional 16.9 million shares sometime earlier this year, given the company’s recent financial and market performance. These additional options would be worth $ 10.7 billion based on the share price at the end of the year.

In all, Musk is expected to soon control enough options to buy another 73.5 million Tesla shares at an average price of around $ 50 each. It is currently trading above $ 700.

Musk has not yet exercised any of the options he has now, which is not uncommon. Stock option executives rarely exercise them until they are ready to sell the shares or until the options are about to expire.

All of this made Musk the second-richest man in the world, with a net worth estimated by Forbes at $ 162 million, behind only Amazon CEO Jeff Bezos, whose net worth is $ 187 billion. Bezos’ current holdings on Amazon have increased in value “only” by $ 75 billion over 2020.

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