Short Sellers Lost More Money Betting Against Tesla Than Any Other Company in 2023
Here’s something sure to make Elon Musk smile – short sellers, those investors who placed bets that the value of Tesla shares were going to go down, lost a combined $12.2 billion last year, more than short sellers lost on any other company in 2023.
Despite the losses suffered by shorts, Tesla’s shares more than doubled over the course of the year, contributing to the financial downturn for those betting against the electric vehicle (EV) manufacturer.
The overall climate for short sellers in the U.S. stock market proved challenging in 2023, with an estimated total of $194.8 billion in losses. However, Tesla’s short sellers faced particularly harsh outcomes, surpassing the combined losses experienced at Microsoft and Meta Platforms (formerly Facebook).
Tesla, led by CEO Elon Musk, has long been a target for short sellers who challenge the company’s valuation and market position. Last year, the average short interest in Tesla reached $18.9 billion, second only to Apple, which had an average short interest of $19 billion despite its significantly larger market value.
For context, the $12.2 billion in Tesla short losses exceeds the estimated $10 billion economic impact of the six-plus week strike by the United Auto Workers union against General Motors, Ford, and Stellantis.
The financial landscape for Tesla shorts is a stark contrast to 2022 when they made a profit of $15.9 billion as Tesla’s stock experienced a 65% decline. However, over the long term, Tesla shorts have suffered a net loss of $61.8 billion since the company went public in 2010.
Tesla shares faced volatility throughout 2023, with a significant decline in the first half of the year, followed by a modest profit for shorts in the latter part as Tesla shares lost approximately 15% of their value from the peak in July to the year-end.
Analysts remain divided on Tesla’s prospects, with some viewing the company as a disruptive technology entity, while others express concerns about its valuation, profit margins, and increasing competition in the electric vehicle market. Despite the ongoing debate, Tesla’s market capitalization stands at a staggering $756 billion, more than double that of the second most valuable automaker, Toyota.
Elon Musk, a vocal critic of short sellers, has accused them of attempting to undermine Tesla’s success through false claims. While shorts can face substantial losses, their role in identifying operational and financial issues in companies, as demonstrated in the case of Nikola, remains a potential factor in market dynamics.
