It shows how the number of shorted Tesla shares fell off the cliff as Tesla stock was roaring higher: Look at the chart below (and take a careful look because it may be the most important chart about Tesla right now). In the next two days, Tesla stock popped 31%-which likely triggered a chain of short squeezes that exist to this day. On October 23 2019, Tesla reported a profitable quarter, blowing away analysts who expected losses. Short sellers have been buying Tesla stock en masse And one likely was triggered at the end of last year. The sheer magnitude of short sellers put Tesla at risk of being caught in a short squeeze of historic proportions. ![]() But as you may know, the company is 14 times bigger than Tesla. No US stock in history has ever been that shorted.įor perspective, Apple AAPL, the second-most shorted stock in America, has 13 billion dollars’ worth of its shares shorted. The dollar value of all shorted Tesla shares is close to hitting $20 billion. But what's really surprising here is the scale. No surprise Tesla has lured in a record number of investors who are betting against it-making it America’s most shorted stock. It’s insane given that these two automakers generated 10 times more sales than Tesla last year. Tesla is now the most valuable car company in the world. The stock is worth more than triple the combined value of US automakers General Motors (GM GM) and Ford (F). Tesla is America’s most hated (shorted) stock And this vicious cycle is what we call a “short squeeze.” ![]() ![]() This repeats again and again, sending the stock price to bananas levels. The higher stock price wipes out even more short sellers, which in turn drives the stock price even higher. You see, when lots of short sellers are forced to exit the trade and buy the stock all at once, the puffed up demand pushes the stock price up. Problems begin when this happens on a bigger scale.
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