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Gerardf
Active Member
Short Interest in Tesla Motors Flat in Late December (NASDAQ: TSLA) - 24/7 Wall St.
28%, 11 trading days to cover. At 70$ below ATH.
This could get interesting....
28%, 11 trading days to cover. At 70$ below ATH.
This could get interesting....
Keep in mind it was 28% of the float when the share price was almost $30 higher, so I'm reasonably confident it's even higher right now. Still 28% + Elon's 25% + Fidelity's 10% doesn't leave a whole lot of shares for shorts to cover. I really think this is setting up to be a great opportunity for longs.
Gerardf
Active Member
It's not just FMR.
The top10- institutional investors hold > 51M shares (Sept 30-2015).
Actually all institutional owners together held 84M shares at that point in time (equal to 64% of all shares).
Source : Tesla Motors, Inc. (TSLA) Institutional Ownership & Holdings - NASDAQ.com
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The fee rate is now 4.5% at IB and it has been below 2% for more than a year. It could be because of macro shorts but in any event most likely the short interest is up from the end of the year.
Chickenlittle
Banned
Institutional owners will loan shares to let people short. I have come to appreciate the shorts. They get their fee and will enjoy short squeeze. Even on a day like today they could help support the share price as they cover their bets
The fee rate to short TSLA is at 13.36% at IB which is only a little less than SCTY at 13.625%. I would suspect short interest is currently at an all time high.
Others agree that, with a proper catalyst, there could be some heavy surf, if not a Tsunami of pain.
Why Tesla, SunEdison, Fitbit, GoPro, Weight Watchers And U.S. Steel Are Screaming 'Short Squeeze' - Yahoo Finance
Short interest as of trading on 12-JAN was more than 29 million shares. Today the fee rate at IB is 6.375% today and on 12-JAN it was 1.657%. It is quite possible there are more shares short today than there were on 12-JAN. The close on 12-JAN was $209.97.
No ideas. Originally I think stable model X ramp up (per Q4 delivery # statement) can provide solid bottom line for SP in 2016, now we lost that ground. I don't think it's realistic to expect short squeeze any time soon.
Given what happened to SCTY if one happens I'd be pleasantly surprised. At this point I think there's a group of people who are very reactive to entities challenging the status quo of how things are, and they'll be shorting TSLA and SCTY all the way into the bankruptcy. They will dampen any possible short squeezes.
adiggs
Well-Known Member
The mechanism of shorting doesn't make it possible to wish something from existence, and then make it so. You CAN create selling pressure today on the stock (when you sell short), but in doing so, you also sign yourself up for a loan that you are paying interest for. And margin calls if/when the price goes up instead of down.
The only way you can avoid the buying pressure later is by waiting all the way until bankruptcy and the delisting of the stock. If anything, more people shorting, and more shorts holding their positions grimly, increases the likelihood and the magnitude of any short squeeze - it doesn't dampen it.
The 29M shares short represents selling pressure on the stock that's already occurred. All that's left in that trade is a programmed 29M share purchase (admittedly not all at once, spread out). To the extent that more people want in on that side of the trade, that'll increase the interest rates for everybody that wants to be on that side.
(In making this comment, I'm not attempting to say anything about the likely future success or failure of the trade - only commenting on the shorting mechanism itself).
One observation I've been wanting to make - I understand the idea of the days to cover metric. I just also think it's badly misleading in the simplistic form. Saying the float is currently 7 days to cover is only actually true if the daily 4M share purchase demand disappears from the market for 7 days, and is fully replaced by shorts covering their previous sales. Of course that isn't true.
How quickly could the market absorb an incremental 29M shares being purchased, over and above the daily activity of 4M shares changing hands? 10% of 4M per day? I don't know - I just know that there isn't a 7 day exit plan available for the sum total of the shares short.
My expectation - I'm not really expecting a short squeeze, but I'm starting to think its more likely. I think we've traded down as we have for macro reasons, not for TSLA reasons. The stock market up and became fully correlated with oil price in the last few weeks after being mostly uncorrelated for a long time.
At some point, the broader market will come to view low oil and low energy prices as being a bad thing for the energy sector, and a great thing for everybody else. The cost of living, doing business, and otherwise existing and getting things done is getting cheaper. Or put another way - less of the fruit of world economic activity needs to go into paying for the fossilized remains of dead dinosaurs, and that means more of that fruit of worldwide economic activity can be used for big cars, better food, trinkets, electronic doodads, and etc..
When the macro view of things shifts, then I expect low oil prices to become the reason for a broadly higher market instead of lower. And when that sentiment turns, I expect TSLA to rebound just as strongly to the upside as it's moved to the downside. That macro shift could be the trigger for a short squeeze.
And I, of course, can be badly wrong.
As a long term investor with a 5+ year horizon, I didn't really care about the stock price when it was $260. I don't care if I wake up tomorrow and it's $160 (except to think about adding shares). I'm pretty sure I don't care if the stock is $60, except possibly to mortgage the house and buy more (based on what I know today). I haven't yet seen anything from competitors or from Tesla that suggests to me the long term investment thesis has changed at all. The current macro environment certainly doesn't constitute a change for me, in my investment thesis.
Sorry I should have been more clear, I meant there's a class of shorts that'll keep shorting until they're out of ammo, not until Tesla goes bust. People like Musk and companies like Tesla are a thorn in their side that is a glaring reminder they're playing small and keeping low in comparison. It's the inconvenient truth, people don't like that, and they make irrational investment decisions to go along with their feelings. The more Tesla succeeds the more inconvenient it is and the more of that type of shorts it'll attract. So they'll just keep shorting. The short interest can stay high for years, new shorts just pile up as stock price goes up. It's just the nature of the company, it's very polarizing.
At least that's one of the ways one can explain a lack of a short squeeze if it doesn't happen. SCTY might have had some material things happen to avoid the short squeeze but I'm still mighty puzzled on how exactly did it all go down last year. Maybe the jump to $50+ was the short squeeze after all.
At least that's one of the ways one can explain a lack of a short squeeze if it doesn't happen. SCTY might have had some material things happen to avoid the short squeeze but I'm still mighty puzzled on how exactly did it all go down last year. Maybe the jump to $50+ was the short squeeze after all.
adiggs
Well-Known Member
I agree there will always be a short interest in TSLA, but I think we're talking about new shorts, after the current shorts have drowned. I firmly believe TSLA will go above 300 this year, even without a short squeeze. And how will the shorts fare once they are all underwater? A significant number will have to close their positions, leading to further upwards pressure on the SP. Where we will stop is hard to tell, maybe 320, maybe 420?
In the short term, unjustified shorting is great, because it temporarily depresses the SP under the correct valuation of the company (allowing traders to buy shares at discount prices), and then at some point, assuming the value of the company continues to increase, the difference between the correct valuation and the depressed SP becomes too much to maintain for the shorts, and you get an upwards correction. This leads to an overshoot above the correct valuation, and short term traders if they can time it right, can buy very low and sell very high, within a short amount of time. Without shorts, the stock is much less volatile, and there is less opportunity for making big money for short term traders.
Just to quickly show what I mean - correct valuation in blue, SP with shorting in red:
Right after a short squeeze, you will get a large number of new shorts, even some long term bulls will be shorting, because quite correctly, the current SP will be over the correct valuation of the company.
LargeHamCollider
Battery cells != scalable
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