Tesla, Inc. (NASDAQ:TSLA) shares have been mired in a slump since the electric vehicle pioneer’s third-quarter results were unveiled in mid-October. Data from S3 Partners Managing Director Ihor Dusaniwsky indicates that bearish bets on the stock have been on the rise.
What Happened: Short interest in Tesla stands at $18.36 billion, making it the world’s most valuable short, according to Dusaniwsky.
Approximately 3.03% of the float, or around 83.34 million shares, are currently shorted.
Over the past month, roughly 242,000 shares worth $53.7 million were shorted, marking a 0.3% increase over the period. During this time, the stock price declined by about 14.72%.
While Tesla shares have made a modest recovery since the beginning of November, shorts have seen a $1.76 billion decrease, but their market-to-market losses have increased by 9.89%, Dusaniwsky noted. So far this November, the stock has gained approximately 10.6%.
Why It’s Important: Tesla has been grappling with fundamental challenges, despite showing promise in the first half of the year. The successive price cuts aimed at boosting sales volume have instead punctured the core auto gross margin.
The company reported a third-quarter double miss due to sluggish sales and ongoing margin erosion. Investors remain concerned about CEO Elon Musk‘s lack of clarity regarding when margins will improve and his focus on macroeconomic factors hasn’t reassured them.
Moreover, Musk’s remarks about the challenging ramp-up of the Cybertruck have compounded these issues.
However, there is optimism among most analysts and Tesla enthusiasts regarding the Cybertruck. Future Fund‘s Gary Black anticipates a surge in volume similar to the one the Model Y experienced when launched in 2020. He also expects the Cybertruck to have a positive impact on Tesla’s other EV lineups.
If Tesla’s stock starts to rise, it could spell trouble for short sellers. A short squeeze can occur when those who bet on a stock’s decline are forced to buy shares to limit their losses as the stock climbs, thereby driving prices even higher.
The upcoming Cybertruck launch event on Nov. 30 could hold the key to Tesla’s stock trajectory, potentially squeezing short sellers out of their positions.
Tesla ended Thursday’s session down 0.03% at $222.11, according to Zenger News Pro data.
Produced in association with Benzinga