It was reported that after Tesla CEO Elon Musk became the new boss of Twitter, he and other confidantes were distracted, while investors were worried about Twitter. Global market demand for Tesla’s electric vehicles may be weak. Various factors have caused Tesla’s stock price to plummet continuously. However, such a plunge has made short sellers “very happy”.
According to data from S3 Partners, the sharp drop in Tesla’s stock price has brought huge profits to short-sellers. The short-sellers have made about $17 billion in profits on Tesla’s stock, and Tesla will become the profit maker for 2022. The most abundant shorted stocks.
In December alone, Tesla’s stock price has fallen as much as 37%, and it has fallen by nearly two-thirds this year. The company’s capital market value has evaporated by $670 billion.
Such a dilemma is a 180-degree turn for Tesla stock. You know, Tesla used to be one of the stocks with the highest gains during the global new crown epidemic. In 2020 alone, stimulated by the rising demand for electric vehicles and the Federal Reserve’s low-interest rates, Tesla’s stock price rose by 740%.
These short-selling institutions often buy a large number of Tesla’s shares, betting that Tesla’s stock price will fall, so as to obtain huge profits. The return rate of Tesla short-selling institutions this year is as high as 89%, which is a rare victory for these institutions against Elon Musk.
According to reports, at some point in 2018, about one-third of all of Tesla’s outstanding shares were held by short-selling institutions. Well-known short-selling Tesla investors include Jim Chanos (Jim Chanos). Chanos, David Einhorn, and Andrew Left.
The bearishness and siege of Tesla stocks by short-selling institutions angered Elon Musk. He vowed to let the short-selling institutions suffer retaliation from the market. Later, Tesla’s stock price rose and the short-selling institutions suffered heavy losses. Elon Musk quickly let Tesla La Co. makes and sells panties (priced at $69,240) to poke fun at short sellers (“pants” and “short” are the same word in English).
Later, as Tesla’s stock price skyrocketed, some short sellers exited the market one after another. According to data from S3, only 2.9% of Tesla’s total outstanding shares are held by short sellers today.
Ihor Dusaniwsky, an analyst at S3, said that before Tesla’s stock price creates a new bottom, the selling climax of the short side will continue.
However, where is the bottom of Tesla’s stock price? This question has Wall Street analysts and investors scratching their heads. However, Tesla’s stock price may face a turning point. For example, the company will release electric vehicle deliveries for the fourth quarter of this year early next month. In order to stimulate sales, Tesla recently offered discounts in markets such as the United States and China.
On Thursday local time, Tesla’s stock price rose sharply by 8.1%, rebounding for two consecutive days. In the seven days prior to this, Tesla’s stock price plummeted by 31%, but there are now signs of stabilization. The last two days have also become a rare consecutive rise in Tesla stock in more than a month.
Recently, Adam Jonas, an analyst at American investment bank Morgan Stanley, said in a research report that Tesla’s stock price has plummeted recently, and attractive opportunities for investors have emerged.
For Tesla stock, Jonas gave a buy rating. Taking into account the current decline in stock prices and the decline in the market value of the entire company, Jonas lowered Tesla’s target stock price. However, the analyst also emphasized that in 2023, Tesla will continue to expand its lead in the electric vehicle market.
Dusanisky, an analyst at the above-mentioned S3 company, said that although Tesla’s stock price has shown signs of rebounding, the stock’s “notorious” volatility will still exist in the future.
The analyst said that if Tesla’s stock price starts to rise, there will be a very violent short-covering (short institutions buying stocks), and their purpose is to lock in the short-selling profits realized before the stock price rises further. This operation will also make the stock price rise further.
