Traders who wagered against Tesla's stock ended up $1.5 billion poorer late Thursday after the electric car's sales breakout pushed shares to a new peak, financial analytics agency S3 Partners reported.
Tesla wrapped up Thursday's trading on a high at 10.4 percent at $640.81 a share; meaning short-sellers who bet against the company collectively lost more than $1.5 billion.
These short-sellers, as a matter of fact, have already lost over $5 billion this year in mark-to-market declines after shedding $2.9 billion last year, S3 Partners disclosed.
The Elon Musk-owned auto company bared it would start rolling out Model Y CUV sooner than planned, and that total shipments for the fiscal year should "comfortably surpass" half million units.
Tesla's new projections underscore a 36 percent increase from last year's total and eased analysts' worries of weakening supply.
Short selling involves borrowing stocks and selling them on the open market with the goal of purchasing them back later at a lower price.
The strategy allows traders to gain from a losing stock, but a rising share price can also trigger rapid declines as traders remain "locked" for the difference.
S3′s Ihor Dusaniwsky noted that since Tesla's low of $178.97 on June 3, 2019, company short sellers have covered over 19 million shares valued at around $11 billion, and are down $12.3 billion in mark-to-market losses.
According to Dusaniwsky, the company's tight squeeze will perhaps translate into a higher momentum as some short sellers reconsider their short strategies and start to cut or shut out their short exposure.
S3 data show that the volume of Tesla stocks shorted has dropped by around 1.78 million in the last 30 days, while the automaker's shares have climbed almost 40 percent in the same month. The fall is equivalent to $975 million of short covering in the 30-day timeframe.
Tesla shares have increased 55 percent since December, and 110 percent in the last four quarters, as the S&P 500 Index has soared 1.32 percent and 22 percent, respectively, over a 12-month duration.
Tesla was poised for another record close late Thursday, which would mark its 17th since mid-December, and notch an intraday record of $650.88 earlier in the trading session.
The electric vehicle maker is the most shorted stock in the US with over $14 billion in short interest. Tech giants Microsoft Corp and Apple Inc fall in second and third place for short interest, respectively. All three companies posted better-than-estimated sales this week and saw their shares rally rocket to all-time highs.
