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Tesla Short-Sellers Lose $1 Billion (cnbc.com)
An anonymous reader quotes CNBC:
A bullish call from a Wall Street analyst capped off a rough week for Tesla short sellers, with Nomura Instinet advising clients that the electric car maker's shares could rally 42 percent over the next year. The stock rose 1.7 percent Friday and is now up 10 percent on the week. One of the most shorted stocks in the United States, Tesla shares cost investors betting against the company more than $1 billion in losses on Wednesday alone after the stock rallied 9.7 percent. Adding to the short woes, the stock is up 13.5 percent in June and up 21 percent since April. More than 30 percent of Tesla's floating stock is currently sold short, according to FactSet.
Last week long-time Open Source advocate Bruce Perens (Slashdot reader #3,872) argued this is fueling Musk's anger at the press: [A] great many investors are desperate to see Tesla's stock reach a much lower price soon, or they'll be forced to buy it at its present price in order to fulfill their short positions, potentially bankrupting many of them and sending some out of the windows of Wall Street skyscrapers. These investors are desperately seeding, feeding, and writing negative stories about Tesla in the hope of depressing the stock price. Musk recently taunted them by buying another 10 million dollars in stock, making it even more likely that there won't be enough stock in the market to cover short positions. If that's the case, short-sellers could end up in debt for thousands of dollars per shorted share -- as the price balloons until enough stockholders are persuaded to sell. Will short-sellers do anything to give Tesla bad press? You bet.... Musk is stuck with a press that feeds negative stories about Tesla seeded by short-sellers, business competitors and the petroleum industry, and even the U.S. Government...
Musk is far from the only one who suffers from this abuse. I was personally involved while the Linux developers were hounded by bad press for years from Forbes and lesser entities, backed by a large software company we all know (and who is, surprisingly, funding more Open Source these days), based on SCO's unfounded lawsuit. Time proves them wrong, but don't expect them to admit it, nor should you hold your breath for an "I'm sorry".
And on Musk's plan to rate the credibility of news sites, Perens writes that "The world would be a better place if this was done honestly, with integrity, and well. Musk is one who has improved the world by going where conventional wisdom said he'd fail..."
Last week long-time Open Source advocate Bruce Perens (Slashdot reader #3,872) argued this is fueling Musk's anger at the press: [A] great many investors are desperate to see Tesla's stock reach a much lower price soon, or they'll be forced to buy it at its present price in order to fulfill their short positions, potentially bankrupting many of them and sending some out of the windows of Wall Street skyscrapers. These investors are desperately seeding, feeding, and writing negative stories about Tesla in the hope of depressing the stock price. Musk recently taunted them by buying another 10 million dollars in stock, making it even more likely that there won't be enough stock in the market to cover short positions. If that's the case, short-sellers could end up in debt for thousands of dollars per shorted share -- as the price balloons until enough stockholders are persuaded to sell. Will short-sellers do anything to give Tesla bad press? You bet.... Musk is stuck with a press that feeds negative stories about Tesla seeded by short-sellers, business competitors and the petroleum industry, and even the U.S. Government...
Musk is far from the only one who suffers from this abuse. I was personally involved while the Linux developers were hounded by bad press for years from Forbes and lesser entities, backed by a large software company we all know (and who is, surprisingly, funding more Open Source these days), based on SCO's unfounded lawsuit. Time proves them wrong, but don't expect them to admit it, nor should you hold your breath for an "I'm sorry".
And on Musk's plan to rate the credibility of news sites, Perens writes that "The world would be a better place if this was done honestly, with integrity, and well. Musk is one who has improved the world by going where conventional wisdom said he'd fail..."
great headline guys..
It does not matter what the stock price was a 12 months ago, short stocks have to buy the stock back when there is demand. It is like gambling, you borrow someones else's shares and hope the price will go down enough that you can buy it back. If the price does not go down, eventually they are going to have to buy it for something they did not want to pay.
The gambling part is when and how much you will have to buy it back for. They could just buy it back early, but they they wait until the market determines that they have to buy it back and it is usually when the price is much higher than they expected and puts them into a hole.
They really should outlaw short positions, it is just another way to gamble for financial institutions .
When you short a stock, you have to post the money into a margin account to buy it back (slightly more as you will have to have enough to cover any expected movement in the short term before your position can be closed)
As the price rises, you have to add more and more money to your margin account. Eventually you run out of money and if you cannot post the new margin for the next day, your broker will use the money in your margin account to close your short position.
If the shares move too rapidly and unexpectedly, your broker might not be able to close out your position using the margin account and you're fucked. If it's a big enough movement, your broker is fucked too as they're on the hook if you go bankrupt.
God said, "div D = rho, div B = 0, curl E = -@B/@t, curl H = J + @D/@t," and there was light.
Yes. But that's true with all gambling.
No it isn't. If I bet $10 at the blackjack table, the most I can lose is $10. So no deep pockets are needed.
With a short, there is no loss limit. The 2008 VW short squeeze resulted in ten of billions in losses, and bankrupted many investors.
Investors shorting Alibaba have lost over $16B.
Since when do I submit news anonymously?
Anyway, if anyone here is short TSLA and is trying to understand what the market is thinking, this summary explains everything.
Jesus: "Son of a
Again, anyone who shorts a stock can cut his losses any moment he wants by re-buying the stock he sold at whatever the current price is that moment.
The current price is nothing but the value of the *last* sale that was done. There is absolutely no guarantee that you can buy back your shares for that price. It all depends on the order book and the amount of shares you wish to buy.
Not really. Lets say you short Acme (trading at $10) today. Right now, you have no idea how much you stand to lose. Their stock probably won't double tomorrow, but unlike a fixed wager, you can't say so with absolute certainty.
Now, tomorrow, sure enough, it doesn't double. But it does go up to $15. Can you get out before the bleeding gets worse? Maybe. But now you're buying when everyone is buying. If you have shorted 1 share, sure, you can get out. Now try buying a signifivcant number of shares. That's right, your attempt to buy sends the price higher. How much higher? Who knows.
Now the kicker. If a lot of people shorted Acme, you may not actually be able to find enough willing sellers. Sure, you will eventually, but how much will you have to pay? Who knows!
In contrast, if I bet $10 in Blackjack, I can tell you to the penny exactly how much I might potentially lose. There is nothing that can make that amount any higher than that expectation.