Thursday, December 31, 2020

Wall Street Traders Lose $38 Billion Betting Against Tesla

Short sellers lost $38bn (£28bn) betting against Tesla in 2020, higher losses than those triggered by any other company.

Tesla’s 730pc rise in its share price during 2020 caused the significant loss for short sellers. Apple caused the second-biggest loss of just under $7bn, according to the data from S3 Partners.

The $38bn loss for short sellers “is not only the largest mark-to-market loss for any stock this year, it is the largest yearly mark-to-market loss I have ever seen,” Ihor Dusaniwsky, a managing director at S3 Partners, told Bloomberg.

Vocal short sellers have for years published claims that Tesla is overvalued but have seen sizeable losses in 2020 as Tesla’s market cap has increased throughout the year.

Jim Chanos, the founder of hedge fund Kynikos Associates has reduced the size of his short position against Tesla and said in December that the position has been “painful” over the previous 12 months.

Tesla’s share price rise has been driven by five consecutive quarters of profit which led to the company’s inclusion in the S&P 500 index in December. Shares in the business rose 33pc after S&P announced the addition of Tesla to the index.

Elon Musk, Tesla’s chief executive, has publicly mocked short sellers who targeted his company by selling what he referred to as red “short shorts” featuring the Tesla logo.

Read the rest here

Favoring index funds, I don't do much speculative investing. And FWIW I have long though Tesla is overpriced, and I still do. But if I may steal a great line from the HBO series Rome, "This man is protected by powerful gods and it would be a cold day in the hot stinky bad place before I short sell any business of his." 

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