Tesla Short Sellers Lose $3.5 Billion in Two Days After Deliveries Exceed Expectations with 443,956 Vehicles in Q2
Fiona Nanna, ForeMedia News
4 minutes read. Updated 2:00PM GMT Thurs, 4 July, 2024
Tesla’s latest deliveries report has caused significant losses for traders betting against the electric vehicle giant. The company’s better-than-expected performance led to a 17% rally in its stock over two trading days, resulting in a $3.5 billion loss for short sellers, according to data from S3 Partners.
Since hitting a low for the year in April, Tesla’s stock has surged by 73%, closing at $246.39 on Wednesday, just $2 short of erasing its annual losses. Currently, short interest in Tesla stands at 3.5% of its float, equating to 97 million shares with a notional value of $22.4 billion.
Tesla reported second-quarter deliveries of 443,956 vehicles, surpassing Wall Street’s estimate of 439,000. While deliveries fell 4.8% compared to the previous year, this decline was less severe than the 8.5% drop experienced in the first quarter.
Despite a decline in sales due to an aging product lineup and increased competition, Tesla has been aggressively incentivizing purchases. The company has offered discounts, low or zero-interest financing, and other perks. For instance, Tesla reduced prices in Germany and Norway and offered zero-interest loans in China, including for its entry-level Model 3 sedan and Model Y SUVs. In the U.S., Tesla provided a three-year, 2% APR financing deal for the rear-wheel drive Model 3.
Tesla’s latest model, the Cybertruck, has encountered quality issues, resulting in four voluntary recalls in the U.S. within a year. The upcoming earnings report will provide more insight into Tesla’s financial health, with analysts expecting a 2.9% revenue decline to $24.2 billion, following a 9% decline in the first quarter.
Ronald Jewsikow, an analyst at Guggenheim Partners, highlighted the challenges Tesla faces despite the temporary boost from financing promotions. He pointed out that sustaining new demand has been difficult over the past 18 months, maintaining a sell rating on the stock.
Tesla CEO Elon Musk, whose net worth increased by about $15 billion in two days, took a jab at short sellers, including Microsoft co-founder Bill Gates. Musk’s confidence in Tesla’s future is evident in his remarks about the company’s autonomous driving and humanoid robot, Optimus, which he believes will significantly increase Tesla’s value.
Despite advancements in in-vehicle software, Tesla has yet to deliver fully autonomous driving capabilities. The company is also facing brand deterioration, partly due to Musk’s political activities. A recent Axios-Harris poll and a New York Times survey highlighted how Musk’s polarizing statements are affecting Tesla’s brand perception, particularly among left-leaning consumers.
Tesla’s recent performance and the subsequent stock rally have had a significant impact on short sellers. As the company continues to innovate and address challenges in its core business, the upcoming earnings report will be crucial for investors and analysts. For more insights on Tesla’s market performance and future developments, visit Tesla Investor Relations.
For more updates on the electric vehicle industry and Tesla’s market performance, follow our latest reports on Electric Vehicle News and stay tuned for our in-depth analysis.
