Tesla Short Sellers Have $15B In 2022 Profits, And They Are Still Piling On

Zinger Key Points
  • Tesla short sellers have generated more than $15 billion in profits in 2022.
  • Tesla shares are down 68.6% year-to-date.

Tesla Inc TSLA shares opened lower once again on Friday after making new multi-year lows on Thursday, continuing to be one of the most profitable stocks in the market for short sellers.

This week, S3 Partners released an updated report on the most profitable stocks of the year for short sellers, and Tesla leads the way by leaps and bounds.

S3 estimates Tesla short sellers had generated $15 billion in profits in 2022 through Dec. 21, which does not include Tesla's nearly 9% decline on Thursday.

Tesla's stock price is down 69.5% year-to-date in 2022, and the selling pressure has intensified in the last two months as investors fear financial fallout from Tesla CEO Elon Musk's chaotic $44-billion takeover of Twitter and a potential slowdown in EV demand.

Related Link: As Tesla's Stock Falls To New 2-Year Lows, How Are Its EV Peers Performing?

Musk himself contributed to the selling pressure in Tesla in November when he sold $4 billion of Tesla stock, but Musk said Thursday that he is not selling any more shares until at least 2024.

Wedbush analyst Daniel Ives didn't pull any punches when discussing Musk's antics on Thursday.

"At the same time that Tesla is cutting prices and inventory is starting to build globally in face of a likely global recession, Musk is viewed as 'asleep at the wheel' from a leadership perspective for Tesla at the time investors need a CEO to navigate this Category 5 storm," Ives said.

He reiterated his Outperform rating for Tesla but cut his price target from $200 to $175.

Most Shorted Stocks: Tesla remains the second most shorted stock in the market heading into 2023, trailing only Apple Inc. AAPL.

Here's a rundown of the five most shorted stocks:

  • Apple, $16.7 billion short interest
  • Tesla, $11.2 billion short interest
  • Microsoft Corp MSFT, $10.8 billion short interest
  • Visa Inc V, $7.7 billion short interest
  • Alibaba Group Holding Ltd - ADR BABA, $6.1 billion short interest

Related Link: Elon Musk 'Really Doing Some Damage To His Brand' Says Tesla Analyst, Downgrades The Stock

Most Profitable Shorts: Tesla may not be the largest short in the market, but it has certainly been the most lucrative one for short sellers in 2022.

Here are the top five most profitable stocks of the year for short sellers:

  • Tesla, $15 billion in profits
  • Amazon.com, Inc. AMZN, $6.2 billion in profits
  • Meta Platforms Inc META, $5.6 billion in profits
  • Apple, $5 billion in profits
  • Carvana Co CVNA, $4.3 billion in profits

Tesla investors are hoping the worst of the selling pressure is now behind the leading EV stock, but S3 analyst Ihor Dusaniwsky said short sellers disagree.

"Tesla has had the ninth largest increase in shares shorted over the last 30 days," Dusaniwsky said.

Benzinga's Take: Tesla has long been one of the most shorted stocks, and the EV maker still trades at a significant valuation premium to legacy automaker stocks such as Ford Motor Company F and General Motors Company GM.

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.

Photo: xalien via Shutterstock

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Posted In: Analyst ColorPenny StocksShort IdeasPrice TargetSmall CapTop StoriesAnalyst RatingsTrading IdeasDaniel IvesElon MuskIhor DusaniwskyS3 PartnersWedbush
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