Short Tesla Stock
You might have heard the phrase ‘shorting’ or ’short selling’ from your Wall Street friends, or perhaps you have watched the movie “The Big Short.” In any case, these are two investment positions used by investors to make money when a share goes down.
As of last month, Short Tesla Stock was shorted by about 97 million shares, or 3.5% of its total float. That equates to around $22.4 billion notional value. That is an all-time high for the electric car company, and it has prompted some concerns over short coverage.
Short Tesla Stock: Platforms & Strategies
To make a profit from a short sale, a trader must borrow shares to sell and then buy them back at a lower price, returning the borrowed shares to their broker. That difference between the two prices is their profit. But there are risks involved, and if a short seller is wrong and the stock rises instead of falling, they can lose substantial sums.
It’s not clear whether Tesla has a bigger short position than any other US stock in terms of the percentage of its float or market capitalization, but it is probably the most shorted US equity by dollar volume at this time. The closest competitor is probably Amazon, with $8.8bn of bets against it, but some of that is likely a hedge or a bet on an arbitrage opportunity rather than pure negative sentiment toward the firm.
Despite the stock surge, many analysts still think TSLA is overvalued. For example, Piper Sandler analyst Alexander Potter recently trimmed his price target on the company to $225 a share, valuing Tesla’s automotive division (excluding its Full Self-Driving capability) at $135 a share and the energy business at around $300 million.…