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Tesla Short-Sellers Down $7.2B In 2023 As TSLA Surges 85% Since Start Of Year

With the incredible rise in Tesla’s stock price, short sellers betting against the EV maker have already lost $7.2 billion since the start of the year.

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Since Musk announced his intention to buy Twitter on April 14, 2022, up until the end of the year, Tesla shares went down more than 70%. This means in less than a year, more than $700 billion was wiped off Tesla’s $1 trillion market cap.

And according to data analytical firm S3 Partners, Tesla’s 2022 stock decline has made short sellers betting against the company paper gains as high as $16 billion.

If you happen to be unfamiliar, short selling is a financial instrument whereby investors who want to bet a company’s stock price will fall down, borrow the company’s shares, and sell them on the open market.

Once they sell the shares, the short sellers will keep the money and if as they predicted the stock price falls down, they buy back the same number of shares they sold but now that the share price has fallen down at a lower price.

Related News: 2023 - The Year Tesla Shocks the World

Then the short seller gives back the shares to the institution they borrowed them from and keeps the difference for themselves as profit.

There are ethical questions regarding short selling however the practice is nonetheless legal and short sellers who bet against Tesla’s stock price made out like a bandit making a $16 billion profit in 2022.

In addition to Tesla, 2022 has been an incredible year for short sellers overall with investors betting against US companies making a total of $57 billion throughout the year.

However, since the start of 2023, Tesla stock has seen a miraculous turnaround and is up 85% for the year, clawing back $300 billion worth of its market cap.

And this has made 2023 a difficult year for investors betting against the EV maker. With the incredible rise in Tesla’s stock price, short sellers betting against the EV maker have already lost $7.2 billion since the start of the year.

This is a big blow and shows why betting against Tesla, at least in the long run, is usually a bad idea. However, in addition to Tesla, short-selling overall has been a costly endeavor in 2023. According to S3 Partners, investors betting against 10 of the most shorted stocks this year have already lost $17 billion.

Currently, this is great news for all growth stocks, and barring macroeconomic difficulties, the rise in Tesla’s stock price might just be starting.

For the rest of this year, Tesla has plans to unveil the company’s upcoming generation 3 vehicle platform, begin Cybertruck production, introduced the next generation Hardware 4 autopilot system, and many more exciting plans which should all positively affect the EV maker’s stock price.

This means although losing $7.2 billion in less than 2 months might be difficult, it can still be peanuts when compared to losses investors betting against the EV maker might face throughout the year.

Having said that, the stock market is notoriously unpredictable, especially in the short term and there are several things including Elon Musk’s Twitter behavior, product delays, the macroeconomic environment, and many more things that can negatively affect Tesla shares.

However, no matter what direction Tesla’s stock price goes, we will be sure to keep you posted on the EV maker’s various endeavors. And until then, make sure to visit our site regularly for the latest updates.

So what do you think? Surprised by the magnitude of losses Tesla short sellers have faced in the first two months of the year? Do you think this trend will continue throughout the year? Let me know your thoughts in the comments below.

Image: Courtesy of Tesla, Inc.

For more information check out: California Rebates Put Model 3 Cost At $26,790

Tinsae Aregay has been following Tesla and The evolution of the EV space on a daily basis for several years. He covers everything about Tesla from the cars to Elon Musk, the energy business, and autonomy. Follow Tinsae on Twitter at @TinsaeAregay for daily Tesla news.

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DeanMcManis (not verified)    February 23, 2023 - 6:41PM

I dislike short sellers. They cause lasting damage and work against growth and innovation. With that said, Elon was a Tesla stockholder's worst enemy last year, with his $44B Twitter purchase. But he did say himself that the tesla stock was unrealistically inflated. Still, with all of the ups and downs Tesla is still growing, innovating, and succeeding overall. Despite some early looters profiting off of loss. Simple success is the best counter-attack.