Apr 25, 2019

Tesla short sellers pile on Elon Musk as stock tumbles

Dion Rabouin, author of Markets
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Data: S3 Partners; Chart: Naema Ahmed/Axios

Tesla's stock has had an awful 2019, sinking more than 20% while the S&P has risen by nearly that much.

Driving the news: Tesla's first quarter results likely did little to interrupt that trend. The company announced a larger-than-expected $702 million loss, with revenue coming up short as well.

Quick take: The whole year already has been like Christmas for short sellers, many of whom have suffered considerable losses betting against CEO Elon Musk and Tesla over the years. For some of them, it's personal.

  • "I hate the guy," Mark Spiegel, founder of Stanphyl Capital, told me late last year. He's been short Tesla for years and said he added to his position after Musk's now infamous "funding secured" tweet.

The other side: Musk feels just as strongly about Tesla short sellers and has lashed out at them repeatedly.

What's happening: As 2019 has gone on, others have jumped on the bandwagon, bringing short interest in the company to more than $9 billion, according to data from S3 Partners. It's now the second most shorted company in their fund universe, behind Apple.

  • Musk's most recent promise to get 1 million self-driving Tesla robotaxis on the road by next year has been a particularly generous gift to short sellers. Tesla short sellers made $334 million in mark-to-market profits the 2 days following the announcement and are up $1.91 billion so far this year.

What to watch: "There are no short squeezes on the horizon," says S3's Managing Director of Predictive Analytics Ihor Dusaniwsky, "and even more short sellers may enter the trades if they start sensing blood in the water."

Go deeper: How Tesla lost its minotaur soul

Go deeper

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