Tesla, Inc. TSLA shares have been on a dream run this year, having nearly doubled this year. After starting 2023 on a solid note and rallying through mid-February, the stock’s upward momentum faltered slightly.
Since the start of May, Tesla has found its mojo back, much to the delight of investors. But those who bet on a stock decline have burnt their fingers.
What Happened: Reuters reported that short sellers lost about $6.08 billion on a mark-to-market basis during Tesla’s 11-day winning streak, data from S3 Partners showed. Since May 24, when the current winning streak began, the stock has gained 33.6%.
Tesla is the largest short bet in the world, according to S3 Partners’ Ihor Dusaniwsky.
Data shared by the analyst showed that Tesla’s short interest was at $22.43 billion, with 95.51 million shares shorted, representing 3.52% of the float.
Tesla shorts were down $11.68 billion in 2023 on a mark-to-market basis, he said.
Why It’s Important: Analyst expects Tesla shares to rise further in the near term, as analysts upwardly adjust their price targets as they revised their estimates ahead of the June quarter results.
On top of it, the stock is now trading above the price targets of most sell-side firms.
This could mean more losses for the short sellers and an additional opportunity for upside for the stock.
A short squeeze from short covering will likely propel the stock even higher. Short covering refers to buying back borrowed securities to close out an open short position and this will create additional demand for a stock.
Tesla closed Friday’s session at $244.40, up 4.06% for the session, according to Benzinga Pro data.
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