- Tesla’s 13% slump in value Friday made short sellers $1.27 billion, according to S3 Partners.
- The stock’s heavy losses came after the SEC filed a lawsuit against CEO Elon Musk about his failed go-private saga from August.
- Follow Tesla’s stock price in real-time here.
The Securities and Exchange Commission’s lawsuit against Elon Musk sent Tesla’s stock price plummeting more than 13% Friday — netting short sellers $1.27 billion in the process.
Short sellers, or those investors betting against Tesla’s stock price, have long had the company in their sights. Tesla recently regained the title of most shorted US equity this week, with $10.19 billion worth of bets riding against the stock, after briefly giving up the crown to Amazon. Apple is also in the short sellers’ crosshairs, according to data from S3 Partners, a financial technology and analytics firm.
“Short sellers are now profitable for the year and are chipping away at their historical mark-to-market losses,” Ihor Dusaniwsky, the firm’s managing director of predictive analytics, said in a report.
“The conviction that longer term Tesla short sellers had in their thesis is finally paying off for them and may embolden those with excess capital and risk limits to increase their bets.”
The SEC alleged on Thursday that the billionaire had made “false and misleading statements” in tweets on August 7 claiming he was considering taking the electric-car maker private at $420 a share and had secured funding.
Trying to get in on the action? There are still 10 billion shares left available for shorting, S3 says, and the firm wouldn’t be surprised if the number of bets against Tesla’s stock climbs further. But be warned: investors are paying about $600,000 every day to borrow shares to short, with about a 2.05% fee. For comparison, some of the cheapest stocks to short go for about 0.3% fees.
“We expect shares shorted to increase in the near term and if Tesla’s stock price continues to drop we could see shares shorted climb towards the 39-41 million share levels we saw in May,” continued Dusaniwsky.
More on the fallout from the SEC’s lawsuit:
- The SEC’s lawsuit against Elon Musk has traders paying record amounts to protect against a Tesla default
- ‘Lawsuit secured’: Here’s what Wall Street is saying about the SEC’s lawsuit against Elon Musk
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