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Musk warns against shorting Tesla shares

Matt Clinch
Musk warns against shorting Tesla shares

Tesla Motors Chief Executive Elon Musk has warned investors against seeking to benefit from a sharp fall in his company's share price.

Musk said it was "probably unwise" to short Tesla stock when quizzed on social media site Twitter Tuesday. This comes after new data last week that showed 25 percent of all Tesla shares are out on loan, which is used as an indication of short selling by research firm Markit.

Markit highlighted last week that short interest is now at an all-time high for Tesla since its initial public offering in 2010. Short-selling is where a trader sells shares they don't own in the expectation that the price will fall and they'll be able to buy the cheaper shares and make a profit.

Tesla's share price has surged in the last five years and it's currently trading with a price-to-earnings ratio — an important metric analysts use to gauge a company's valuation — of 149.63, according to Thomson Reuters.

The company said Monday that it had delivered 14,820 vehicles in the first quarter — shy of guided expectations of 16,000 deliveries. This came after Musk's new Model 3 was unveiled in Los Angeles last Thursday and will go into production in 2017. Shares were higher by 0.6 percent at the open on Wednesday.

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