American EV manufacturing company Tesla is quickly becoming a favorite of short-sellers in the stock market. Elon Musk’s company’s shares have already dropped by 30% this year.
Bears rejoice
The constant tug of war between the bulls and bears has a decisive winner, at least for now. As far as Tesla is concerned, bears are having a field day. Data from S3 Partners reveals that Tesla has become the most profitable short-selling stock amongst bears who have made over $2.75 billion in mark-to-market gains this year, reported Ihor Dusaniwsky, the firm’s head of research.
It is a good time for the bears to throw Elon Musk off balance, which has been fighting a long and ugly battle against the people he calls “value destroyers.” The CEO of the EV manufacturer has taken to Twitter several times to talk to haters and say them that their days are over. In May 2018, he went on to tweet, “Oh and uh short burn of the century coming soon. Flamethrowers should arrive just in time.”
The gains keep on coming
Musk hasn’t congratulated bears on their victory yet. The company’s stock is still better off than its disappointing lows in June this year. However, there is no doubt that the company is facing its worst annual decline on record. The markets are concerned about its ability to keep the demand up while turning the company profitable. Musk’s tall projections about launching robo-taxis by the next year also look like hyperbole at the time. The company has a record of missing targets which could come back to bite it in the future.
Short sellers gain for Tesla stocks have increased by over 3x this year over the AbbVie Inc., that has become the second most profitable bear stock this year. The drug company has only returned $776 million faring better than DuPont de Nemours Inc., which brought in $631 million in mark-to-market gains for the short-sellers.
Interestingly, Beyond Meat Inc. didn’t make it to the list of the top 10 bear stocks this year. It was the most expensive short-sale bet in the market this year. After witnessing a peak in late July, the stock has been trading 30% lower. However, Alibaba Group Holding Ltd. has dented the short seller’s earnings by nearly $3 billion. The people betting on AMD and Apple’s lost amidst the rising trade tensions between the US and China have also been burnt significantly in the market.
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