Daily Management Review

$1.09bn Made By Tesla Investors Betting Against It Since Elon Musk's Tweet


$1.09bn Made By Tesla Investors Betting Against It Since Elon Musk's Tweet
Since the controversial tweet from Tesla chief Elon Musk about taking the company private and of a “secured” funding for the purpose on August 7, $1.09bn has bene made by Tesla investors by betting on a drop in the stocks.
There had been an increase of 11 at $379 per cent in the stocks of the company following the so called “Tesla tweet” by Musk about the secured funding for taking the company private at $420 share.  But since that tweet, there has been a 19 per cent drop in the shares of the company as nothing concrete has come out from Musk or Tesla about a buy out and as the company now faces potential regulatory inquiry on the tweet.
There have been multiple instances where Musk has clashed with Tesla’s short sellers – who are investors who trade on the expectation that the shares would fall.
The investors were however willing to risk about $5bn since 2016 because ethery strongly believed that Tesla could not be able to deliver on its proimses.
“What bothers me is not so much the personal stuff and the personal attacks. I’m used to that. It’s the willingness to say things that I think he knows are a stretch, to be polite,” investor Jim Chanos, founder of Kynikos Associates, who has been betting against Tesla for years, said in July.
“I don’t think you get to tell people you’re going to make 20,000 Model 3s a week when you know that’s not going to be the case,” Chanos added, referring to the problems hampering production of the mass-market Model 3.
About 33.4 million shares of Tesla with a total worth of about $11.2 billion which is over one forth of the free floating shares of issued by the company are on loan to investors who believe strongly that the stock will fall, said S3, a financial technology and analytics firm.
For such investors, the figures posted by Tesla are not satisfactory. 
“This has been one of the largest shorts in the US for several years,” says Ihor Dusaniwsky, managing director of predictive analytics as S3 Partners. “It’s become a battle of wills. The big players on the short side have a conviction that the stock is going to tumble to bankruptcy.”
About $6.4bn was added to Tesla’s market cap in the early days following Musk’s taking Tesla private tweet because investors believed that Musk would be able to raise the required $70 billion. that resulted in a loss of about $1.3 billion for short sellers and  law suits.
However, after media reports about a possible probe by the Securities and Exchange Commission into Tesla’s public statements, there has been a fall in the shares of the company. Further, the board of the company also denied any knowledge of any deliberations with any Saudi Arabian pledge investment that Musk claimed in a blog spot.

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