Slashdot Mirror
Tesla Short Sellers Actually Made Over $1 Billion After Musk's Taking-Private Tweet (fortune.com)
An anonymous reader quotes Fortune:
Investors betting that Tesla stock will lose value -- so-called "shorts" -- have made $1.2 billion since CEO Elon Musk first tweeted about taking the company private. Much of that gain came on Friday, after the New York Times published a revealing, emotional interview with Musk that drove Tesla stock down nearly 9%. The tally comes from a report released Friday by stock analytics firm S3 Partners. The Friday collapse helped reverse a price spike after Musk's August 7 Tweet saying he was "considering taking Tesla private at $420," about 18% higher than the stock's market value at the time.
According to S3, the subsequent surge in Tesla stock cost short positions $1.3 billion. But soon after, it became clear that Musk had exaggerated the certainty of his funding, and the SEC began a probe of his statements, driving the stock back down. On Friday, the Times interview with Musk detailed his 120-hour work weeks, lack of social life, and reliance on Ambien to sleep. That sent the stock down 9% in one day, for a total drop of 19% over 10 days. That gave $2.5 billion back to the shorts, for a net gain of $1.2 billion since Musk's going-private tweet.
Tesla remains the most-shorted stock on the American stock exchanges, and the researchers note that only 4% of shorts have actually cashed in these on-paper gains.
According to S3, the subsequent surge in Tesla stock cost short positions $1.3 billion. But soon after, it became clear that Musk had exaggerated the certainty of his funding, and the SEC began a probe of his statements, driving the stock back down. On Friday, the Times interview with Musk detailed his 120-hour work weeks, lack of social life, and reliance on Ambien to sleep. That sent the stock down 9% in one day, for a total drop of 19% over 10 days. That gave $2.5 billion back to the shorts, for a net gain of $1.2 billion since Musk's going-private tweet.
Tesla remains the most-shorted stock on the American stock exchanges, and the researchers note that only 4% of shorts have actually cashed in these on-paper gains.
Rei bought in at ~$260 in April, so is now sitting on a paper profit of $40 per share. Not bad for a few months, but not great. But Rei doesn't have an exit strategy, and so avoided making a real world profit of $120 per share if Rei was better at peak-picking than I am. People who buy shares in TSLA as some sort of 'vote' for Tesla or Musk or EVs are mere grist to the mill of the professionals. I don't suppose they affect the price much, but they sure create a lot of noise (both types).
And of course this will be modded to -1 (Correct but inconvenient).
I never understood why people are so entranced by Musk. Do we not remember how scummy PayPal was when he was there? Now he is producing electric vehicles for the 1% and shooting military and communication satellites to LEO and he is a hero. I don't get it. He isn't an engineer, just a guy who got rich during the dotcom bubble, just like Mark Cuban. He isn't even producing affordable EVs or solar panels. Other companies are doing that. So he is hardly "saving the planet" by producing $60,000 cars.
The shorts are the only ones keeping this scam to only a $300 stock and not a $600 stock. Tesla isn't solving the "world's pressing problems" either.
The shorts are literally the only group who has an economic interest in scrutinizing an asset. Without this kind of rigor you get more money being thrown at fantastic enterprises like Theranos. Nobody cares that they are holding lemons as long as the price keeps rising. So, yeah, I don’t know what “flip speculators” are, but short sellers are very much beneficial to the market’s well-being and by extension our resource allocation as a society.