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Tesla Stock Short Sellers Pin Hopes on Q1 Earnings

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  • The short interest in Tesla (NASDAQ:TSLA) stock has risen after bottoming in mid-March. Earlier this month, Jim Chanos said that he’s still short on the stock.
  • Tesla has scheduled its first-quarter earnings for April 29. In the last two earnings releases, short sellers got a rude surprise. The company posted better-than-expected profits.

Tesla stock short-sellers: Jim Chanos

Tesla stock is among the most shorted shares on the NYSE. However, bears have gradually lowered their short positions since October 2019. Short sellers suffered billions of dollars of losses amid the steep rise in the stock price. However, short sellers have been building positions in the stock. The short interest rose in the two weeks ending April 15 and March 31. Earlier this month, Jim Chanos admitted that while he squared off some positions amid the spike in Tesla stock, he is currently “maximum short.”

Q1 deliveries

Over the last two earnings calls, Tesla stock short-sellers have had little to celebrate. The stock rallied after earnings beat. Now, bears seem to be pinning their hopes on the company’s first-quarter earnings release. The earnings will likely be released on April 29. The company’s first-quarter deliveries were better than expected despite the pandemic. While the company’s Freemont plant has shut production, its China Gigafactory is ramping up production.

Q1 earnings estimates

The analysts polled by Thomson Reuters expect Tesla to report revenues of $5.9 billion in the first quarter. In comparison, the company generated revenues of $7.4 billion in the fourth quarter of 2019 and $4.5 billion in the first quarter of 2019. Analysts expect the company to post a loss per share of $0.36 in the first quarter and $1.83 in the second quarter. However, Tesla will likely post a net profit in fiscal 2020. Notably, Tesla has never posted a fiscal year profit. So far, the company has only been profitable in six quarters. Tesla stock short sellers see an opportunity in its dismal profitability record. However, during the earnings release for the third quarter of 2019, Tesla sounded optimistic about sustainable profitability.

Tesla stock before its Q1 earnings

Tesla stock short sellers have had a hard time since October 2019. The company posted a surprise profit in the third quarter of 2019. A mix of positive news and investors’ optimism about electric cars catapulted the stock to record highs in February. In what has been the case traditionally, analysts who were bullish on Tesla stock came up with even higher target prices amid the rally. The opposite also holds and bearish analysts come up with a doomsday scenario when the stock falls. Read Tesla Stock: Are You Bullish, Bearish, or Just Neutral to learn more.

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