- The short interest in Tesla (NASDAQ:TSLA) stock has fallen sharply since October. The sharp rise in the stock price triggered a short squeeze. Bears lost billions of dollars as the stock rose to almost $1,000 earlier this year.
- Meanwhile, coronavirus fears caught up with Tesla. The stock has fallen 24% in March. Notably, the stock doubled between January and February. Earlier this month, the stock turned negative for the year. Since then, the stock has recouped some of the losses. So far, the stock has risen 20% for the year.
Tesla stock’s short interest
Tesla stock has been a favorite among short sellers for the last few years. However, the picture changed in October 2019. The company reported a surprise profit in the third quarter of 2019. Bulls got charged up with a series of positive developments like the Cybertruck launch and China Gigafactory ramp up. As I mentioned earlier this year, an element of speculation also crept in as Tesla’s stock price rallied to almost $1,000. Meanwhile, TSLA short sellers have been gradually cutting their positions.
Tesla stock bears
As Tesla’s stock price skyrocketed between October 2019 and February 2020, short sellers accumulated billions of dollars of losses. Many short sellers had to cut their positions to curtail burgeoning losses. According to the most recent filing, TSLA’s short interest was 16,158,160 as of March 13. To put that number in perspective, the same figure was 37,186,793 on October 15, 2019. TSLA’s short interest has fallen in every fortnight since October 15. Currently, the short interest is the lowest in years.
Notably, January and February were a good time to build short positions in Tesla stock. However, the way that the stock rallied then made taking a bet against it a huge risk. By then, Tesla stock short sellers had accumulated losses in the billions. Overall, it looks a case of once bitten, twice shy for TSLA stock bears.
Tesla took advantage of the rise in its stock price by selling shares worth $2.3 billion. The cash will come in handy now amid coronavirus-driven shutdowns. Initially, TSLA CEO Elon Musk was a coronavirus skeptic. He made some controversial statements about the deadly virus. Read Elon Musk, Tesla, and the Perennial Twitter Controversies! to learn more.