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TSLA Stock: Short Interest Plunges, Bulls Take Charge

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  • Tesla (NASDAQ:TSLA) has been among the most shorted stocks on the NYSE. However, the short interest has fallen gradually since mid-October. Currently, Tesla’s short interest is at historic lows.
  • TSLA stock short-sellers have lost billions of dollars amid the incredible rally that started in October. Bears have been in oblivion and bulls have taken charge.
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TSLA stock short interest

Tesla has been on fire since October 2019. The rally has continued into 2020. Notably, Tesla’s market capitalization surpassed Volkswagen, which sells more cars. TSLA stock has more than doubled this year. Chinese electric vehicle maker NIO (NIO) has risen 6.0% during this period. While bulls are rejoicing after the surge in TSLA stock, short-sellers have lost billions. Jim Chanos and David Einhorn are among the well-known short-sellers.

Bears are covering positions

As the losses rise, many short sellers are covering their positions. This is evident from the short interest. According to the most recent filing, TSLA stock’s short interest was 22,752,621 as of January 31. To put the number into perspective, the short interest was 37,186,793 as of October 15, 2019. The short interest fell in every fortnight since October 15. Currently, the short interest is at historic lows and is at the lowest level since at least February 2015. Notably, this is based on the number of stocks shorted. The dollar value is actually higher than the historical average due to the recent surge in the stock price.

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Electric cars are the future

While they might disagree on the timeline, most observers agree that electric vehicles are the future. Talking of electric cars, Tesla is the first name that comes to mind. The company holds a pole position in the US electric vehicle market. While other automakers have launched electric car models, they haven’t been able to challenge Tesla’s dominance in the US electric car market. Notably, NIO (NYSE:NIO), once hailed as a “Tesla-killer,” is fighting to survive as TSLA stock is scaling new highs.

What’s driving the current surge in TSLA stock?

Optimism about green and renewable energy has been fueling the rally in TSLA stock. Notably, along with electric cars, Tesla also has an energy division. While the segment accounted for only about 6% of Tesla’s revenues last year, in its earnings call for the third quarter of 2019, CEO Elon Musk said that eventually, the energy business could be bigger than the automotive business. Analysts have been raising Tesla’s target price over the last few months. Some of the analysts have a bearish view of TSLA stock.

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