Daily Management Review

Investor interest in Tesla falls to its lowest in 11 years


Short-sellers’ interest in Tesla has fallen to its lowest level since the company traded on the stock exchange. Investors are tired of the company's long-running growth, which was bolstered by record deliveries of electric cars last quarter.

harry_nl via flickr
harry_nl via flickr
The interest of stock market participants who make money on falling share prices ("shorts") in Tesla has fallen to its lowest in 11 years, Bloomberg wrote, citing data from research firm IHS Markit. It said the percentage of Tesla shares that traders borrowed from brokers fell to 1.1%. That percentage reflects short-sellers' interest in the securities, and 1.1% is the lowest since 2010, when Tesla held its IPO, Bloomberg explained.

In shorts, investors borrow shares from brokers and sell them. Traders expect the value of the stock to decline: then by the time the shares need to be returned to the broker, they can be bought cheaper than when they are sold, close the debt and make a profit.

Data from another company, S3 Partners, shows short-seller interest at 3.2% of Tesla shares outstanding. While that's almost three times IHS Markit's figure, it's still the lowest for the company, Bloomberg claims. According to Ihor Dusanivsky, managing director of S3 Partners, there has been some recent coverage of short positions: they have fallen by 1.55m shares or about $1.2bn in the last month.

Tesla began its rapid rise in value in 2020. The company is now worth 41% more than it was in March, when it recorded its lowest value since the beginning of the year, Bloomberg noted.

source: bloomberg.com