In 2020, short sellers have been walloped by Tesla
2020 has been a tough year. But it's been especially brutal for those betting against Tesla stock. According to CNN, "The incredible year for Tesla stock has created a bloodbath for those shorting its shares."
Above: The battle between Wall Street's bulls and bears gets especially heated when it comes to talk of shorting Tesla (Image: Transport Evolved / YouTube)
According to analysis by S3 Partners, short sellers have lost $35 billion on those positions so far this year. "There's nothing that compares to it that I can remember," said Ihor Dusaniwsky, managing director at S3 and an expert in stock shorting.
To put that loss into context, Tesla short sellers lost more than the US airline industry this year. It turns out the US airline industry posted combined net losses of $24.2 billion, excluding special items, through the first nine months of 2020, the worst losses the industry has ever reported.
"It must be sweet vindication for Tesla CEO Elon Musk, who has made no secret of his hatred of short sellers," reports CNN.
Tesla's stock has gained more than 600% year-to-date. "The meteoric rise in Tesla shares this year has caused pain [to short sellers] unlike anything that has been seen in the market," according to CNN.
Above: Investor Ross Gerber questions the assumptions of Tesla short sellers on various financial news outlets (YouTube: Gerber Kawasaki)
"This is truly a unicorn short," explains Dusaniwsky.
One high-profile short seller, Jim Chanos confessed that he's been trounced by Tesla this year. Chanos reportedly told Fox Business' Charlie Gasparino that it is "impossible" to short Tesla's stock because of the market's infatuation with the company. Not surprisingly, he's finally started to back off his short position.
"It's been painful, clearly," Chanos said. He's never met his nemesis Elon Musk. But if they were to meet, Chanos told Bloomberg, "I’d say, ‘job well done so far.'”
Meanwhile, those that believed in Tesla and invested in Elon Musk since the early days have been rewarded, handsomely. According to the Wall Street Journal, "The electric-car company is up 12,551% since the close on the day of its 2010 IPO, enough to turn a modest $10,000 holding into a $1.3 million luxury beach house."
Source: CNN, Bloomberg, Motley Fool, Wall Street Journal