New research shows that short sellers made $15 billion this year betting that Tesla shares would go down. They were right, as about $800 billion was taken off its value.
Analysis by S3 Partners showed that betting against Tesla shares was the most profitable in 2022, with a return of $6.2 billion from shorting Amazon shares.
S3 said that people’s desire to bet against Tesla started to go down in April when the stock started going down, which made the potential returns smaller. However, people’s desire to bet against Tesla started going up again in September when Elon Musk’s tense acquisition of Twitter was nearing its end.
About 3% of Tesla shares are borrowed against, which makes it the second-largest short in the US after Apple.
Bill Gates, the founder of Microsoft, is said to be one of the people who bet against the company. Earlier this year, Musk said Gates had a short of up to $2 billion against Tesla.
This year, the value of Tesla has dropped by more than $800 billion. At its peak in November 2021, the company was worth $1.24 trillion, but its shares closed on Friday at $123, making it worth $385 billion. At the beginning of the year, the stock was worth almost $400. Since then, it has dropped by about 70%.
According to the Bloomberg Billionaires Index, Musk’s wealth has gone down by $132 billion this year because of his stake in Tesla. He is no longer the richest person in the world because Bernard Arnault has passed him.
High inflation and rising interest rates have caused a wider market selloff, which has caused the S&P 500 to fall by almost a fifth this year.
But Musk has always denied that his work at Twitter has anything to do with Tesla’s falling fortunes, even though a number of well-known investors have asked him to pay more attention to the car company.
Instead, he has tried to place the blame on the Federal Reserve’s regular interest rate hikes, which he says make all stocks, not just Tesla’s, less desirable to own.
This year, the CEO of Twitter sold $3.6 billion worth of Tesla shares to pay for Twitter’s operations while he tries to shape the social media site the way he wants it to be.
Musk said on Thursday that he wasn’t going to sell any more Tesla stock for at least 18 months.