Tesla Inc's (NASDAQ:TSLA) short interest has increased 3% since the last report. The company recently reported that it has 26 million shares sold short, which is 3.25% of its float, the amount of regular shares that are available to investors for trading. With its current trading volume, it would take traders 1.0 days to cover their short positions on average.

Why it matters: Short interest is the number of shares that have been sold short but have not yet been covered or closed out. Traders make money from a short position if the price of the stock falls and they lose if it rises. For these reasons, short interest can be used as an indicator of market sentiment for a stock. If the number of shares sold short increases, this can mean that the market is developing a more bearish outlook on the stock and if they decrease this can mean the market is more bullish.

Sometimes, a large amount of short interest can be bullish for a stock. If short interest rises too high and trading volume falls too low, this will make it hard for short sellers to buy back their shares on the open market. If the price of the stock starts to go up, this could cause short sellers to panic and rush to buy back the shares they sold short (close their positions). This buying pressure can make the price rise and create a vicious cycle of more short sellers buying back shares. This is called a short squeeze.