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Tesla shorts are having a much, much better year than in 2020

Views: 10     Author: Site Editor     Publish Time: 2021-05-26      Origin: Site

New York (CNN Business)Those betting against Tesla shares are doing very well so far in 2021, following a disastrous 2020, as shares have lost about a third of their value over the last four months. There just are fewer people shorting the stock this time around.

Investors who want to bet on a stock dropping in value will do what is known as shorting the shares. Sometimes they do that by buying what is known as a "put option," which give investors the right to sell a stock at a specified price.

While shorting a stock pays off if the stock price falls, it can cause unlimited losses if the stock price climbs. And in 2020, when Tesla (TSLA) shares soared 743%, it resulted in unprecedented $40 billion in losses for those shorts, according to analysis by S3 Partners.

But so far this year the Tesla shorts are up $4 billion, at least on paper, according to S3, by far the best performance of short positions on any stock in the market. That's more than the estimated profit short sellers made on the next four most profitable companies they targeted: chipmaker AMD (AMD), Chinese electric vehicle maker Nio (NIO), streaming provider Fastly (FSLY) and solar energy company Sunrun (RUN).

The short seller's profits have got to be angering Tesla CEO Elon Musk. While few if any CEOs like investors who short their stock, Musk has waged a long-running and very high-profile feud with Telsa's shorts.

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