Tesla Scorches Short Sellers With $12.6B Burn In 2023: A Volatile Year For Bears

Zinger Key Points
  • Short sellers have lost a whopping $178 billion in 2023 amid the stock market rebound, says S3 Partners.
  • Analysts are divided over Tesla stock's trajectory in 2024 as the auto gross margin continues to languish well below the 20% threshold.

Tesla, Inc. TSLA holds the distinction of being the most shorted stock among mega-caps, and a recent report suggests that it has also inflicted the most significant losses on short sellers throughout this year.

What Happened: Short sellers have incurred staggering losses of $178 billion in 2023, according to data from S3 Partners, as reported by Yahoo Finance. The stock market rebounded strongly this year, with the broader S&P 500 Index up about 23.6%, with only six more sessions to go.

S3’s data highlights that the “Magnificent Seven” group, benefiting from their involvement in artificial intelligence technology, contributed to the overall losses.

Graphics shared by Yahoo reveal Tesla’s prominent position at the top of the list, with short sellers facing a staggering loss of $12.6 billion. This remarkable figure persists despite the stock’s first-half rally losing momentum in the latter half of the year due to fundamental challenges.

Chart Courtesy of Benzinga

Nvidia Corp. NVDAApple, Inc. AAPLMeta Platforms, Inc. META, and Microsoft Corp. MSFT followed Tesla in that order. Alphabet, Inc. GOOGL GOOG claimed the ninth spot. The losses suffered by short sellers in these stocks were $11.3 billion, $7.7 billion, $6.3 billion, $5.4 billion, and $2.2 billion, respectively.

Amazon, Inc. AMZN was the only company not featured in the top 10 list.

Why It’s Important: Analysts are divided on Tesla stock’s trajectory in 2024. Bearish analysts anticipate further margin erosion due to ongoing competitive pressure and lukewarm electric vehicle adoption. Bulls, on the other hand, foresee incremental upside from growth levers like the charging network, full self-driving, and batteries. They believe that the launch of a sub-$30,000 EV could help the company reaccelerate volume growth.

Late Thursday, Wedbush analyst Daniel Ives raised his price target for the stock to $350, indicating roughly 38% upside potential.

As of Nov. 30, 2023, Yahoo Finance’s database revealed that approximately 90.33 million shares of Tesla were held short. This represents 3.27% of the float and 2.84% of the outstanding shares, the highest among mega-cap stocks.

A reversal in the stock’s fortunes and a sustained upward movement could provide additional support stemming from short covering.

In premarket trading on Friday, Tesla was little changed at $254.40, according to Benzinga Pro data. The stock is up 106.6% this year.

Read Next: Tesla Gets Price Target Boost To $350 As Wedbush’s Ives Foresees EV Giant Regaining $1 Trillion Market Cap In 2024

Photo via Shutterstock

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