Tesla Has Been The Most Profitable Stock For Short Sellers 2 Months In A Row

Zinger Key Points
  • Tesla short sellers generated more than $2.3 billion in profits in November.
  • Tesla shares are down 51.7% year-to-date.

Tesla Inc TSLA shares have rallied 7.2% in the last five days, but Tesla continues to be one of the most profitable stocks in the market for short sellers.

ORTEX Analytics released its monthly Short Interest Insights report this week and said Tesla was the most profitable stock in the market for short sellers for the second straight month in November.

ORTEX estimates Tesla short sellers generated $2.37 billion in profits last month. Tesla's stock price is down 51.7% year-to-date in 2022, and the selling pressure has intensified in the last two months as investors fear potential financial fallout from Tesla CEO Elon Musk's chaotic $44-billion takeover of Twitter.

Related Link: Meta Platforms Is Now The 2nd Most Profitable Stock For Short Sellers In 2022, Behind Only Tesla

Musk himself contributed to the selling pressure in Tesla in November when he sold $4 billion of Tesla stock, and a continued deterioration of Twitter's business could force Musk to unload more Tesla shares down the line.

Other Short-Selling Activity: While Tesla was a home run trade for short sellers in November, short sellers took a huge hit on their bets against Chinese e-commerce company Alibaba Group Holding Ltd - ADR BABA.

ORTEX reported Alibaba short sellers endured $1.66 billion in losses in November after the tech giant reported better-than-expected third-quarter numbers.

Heading into the end of the year, ORTEX reported that short sellers have become increasingly bearish on the industrial sector, increasing their aggregate short interest in the sector by 5.6% in November. At the same time, aggregate short interest in the utilities sector decreased 8% in the month, suggesting short sellers may fear a Santa Claus rally in utility stocks.

Benzinga's Take: Tesla has long been one of the most shorted stocks, and ORTEX reported in October that Tesla has been the most profitable stock in the market for short sellers in 2022. The year-to-date gains have likely been particularly satisfying to Tesla shorts given Musk's track record of publicly mocking and taunting short sellers.

Illustration via Shutterstock and Wikimedia images.

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