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Apr 3, 2017

S3 BLACKLIGHT: Tesla Shorts Down Half a $ Billion today as Elon Musk Makes it Rain

Elon Musk tweeted “Stormy weather in Shortville…” today as Tesla Inc.’s (TSLA US) stock price is up over 5.5% to $293.83, or $15.53, in intraday trading. Tesla reported deliveries of 25,000 automobiles in the first quarter of 2017, a 69% increase from first quarter 2016 deliveries and more than half of the 40,697 sold in 2016.

Today’s announcement, coupled with Chinese internet behemoth Tencent Holdings’ (700 HK) recent purchase of a 5% stake in Tesla for $1.8 billion and the start of solar tile sales in April, paints a much rosier picture for Tesla’s revenue growth. With Tesla needing most of its $2.5 billion of cash on hand to finance research, development and production of the $35,000 Model 3, continued good news will make it much easier to float another $1 billion round of financing in mid-year.

Tesla short sellers are not too pleased with the recent flow of upbeat Tesla news as total short interest has risen to $8.9 billion, an increase of $1.64 billion, or 22%, for the year, but mark to market losses keep piling up. Short interest had actually dipped down to $5.5 billion in October 2016, but has risen consistently along with Tesla’s share price.  Short sellers were down $354 million, or 5.62%, in 2016, but are having a much worse year in 2017. Prior to today’s stock price spike short sellers were down $2.25 billion on an average short position of $8.3 billion for a return of -27.23%. However, today’s 5.5% price move added another $488 million to their losses. 2017 year to date P\L for TSLA short sellers is now $2.74 billion for a negative return of -33.15%.

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Head of Research, S3 Partners
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