Tesla short sellers lost $5.7 billion in a week

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Tesla (NASDAQ: TSLA) stock has been one of the best performers in the whole of the S&P 500, as it caused significant losses to short-sellers of this popular EV maker stock.

Since July 2 and the release of the second-quarter delivery report, TSLA stock added over 25% to its value, while the previous 30 days brought gains of over 45%.

TSLA stock 30-day price chart. Source: Finbold

This surge led to an estimated $5.7 billion in unrealized losses to TSLA stock short-sellers, with a potential for further increase as the company’s stock price continues to gain.

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Highest short interest of TSLA stock in years

According to the stock market data tracker Ortex, Tesla stock experienced a new level of short-interest pressure.

Namely, it reached 3.84% in the previous week, a level not seen since 2021, just before TSLA stock surged to a new all-time high and recorded the most successful year on record so far–2022.

TSLA stock short-interest 1-year chart. Source: Ortex

This level has subsided to 3.80%, or approximately 105.3 million shares shorted, with an average cover of 0.68 days. Due to their short time span, short-sellers are especially vulnerable to further price increases of TSLA stock.

TSLA stock short-interest. Source: Fintel

Cost-cutting initiatives and the Q2 report could fuel further TSLA stock surge

On July 2, Tesla reported second-quarter deliveries of 443,956 vehicles, surpassing Wall Street estimates of 439,000. While deliveries fell 4.8% from a year earlier, this decline was less steep than the 8.5% year-over-year drop in the first quarter. 

This suggests that demand for Tesla vehicles remains stronger than feared despite an aging lineup and increasing competition. 

Tesla has been offering various incentives to boost sales, such as discounts, low- or no-interest financing options, and other perks. In the second quarter, Tesla reduced prices in Germany and Norway and offered zero-interest loan promotions in China for its entry-level Model 3 sedan and Model Y SUVs.

In the U.S., buyers of the rear-wheel-drive Model 3 were offered a three-year, 2% APR financing deal. These measures have helped mitigate the decline in sales and maintain consumer interest. 

Tesla’s upcoming earnings report, due on July 23, is expected to provide a clearer picture of the company’s financial health. Analysts predict a 2.9% revenue decline to $24.2 billion following a 9% decline in the first quarter. 

This report will be crucial for understanding Tesla’s ability to navigate its current challenges and maintain its market position amidst growing competition and an aging product lineup.

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