It’s shaping up to be a terrible holiday season for investors betting against Tesla (TSLA) and Elon Musk.
With shares of the automaker rising 80% since September to hit an all-time high Thursday, losses for those shorting Tesla shares, or betting that Tesla shares will fall in value, have mounted to $2.43 billion in mark-to-market losses during 2019, according to data firm S3 Partners.
Tesla’s rally accelerated this winter after the automaker reported an unexpected profit for the third quarter and said it was moving ahead of its own expectations with the buildout of its Gigafactory in China and the launch of its new Model Y SUV. In the last week alone, Tesla shorts have racked up $1.13 billion in mark-to-losses, writes S3 analyst Ihor Dusaniwsky, adding that the short squeeze pressure on short sellers could add to Tesla’s gains accelerating.
“If Tesla’s rally continues, we should see continued short covering as more shorts reach their P\L pain and risk limits,” he speculated, adding that despite the mounting losses, the number of net shares shorted has only fallen by 0.45% in 2019.
“Tesla shares shorted have not dipped below 20 million shares since mid-2013, but as its stock price keeps hitting historical highs we can expect short covering to accelerate as short mark-to-market losses mount,” Dusaniwsky wrote.
Not all Tesla analysts are convinced that the Musk-led company will necessarily be able to meet the higher expectations the automaker has garnered as of late, however. As Credit Suisse analyst Dan Levy noted earlier this week, the success of last quarter will be tough to top.
“Amid this run, expectations for Tesla have likely risen,” he said. “And to the extent a soft datapoint emerges, it could lead to some stock correction.”
As far as Tesla’s story for 2019 is concerned though, it looks like Musk is getting the last laugh of the year at the expense of those betting against him.