(Reuters) -Tesla short sellers are up an estimated $11.5 billion for the year-to-date and positioning is bearish going into the electric vehicle maker’s quarterly results due after market close, according to the latest report from S3 Partners.
Tesla shares have tumbled 40% so far this year and analysts are expecting a weak report as January-March deliveries slid 13%, with market share losses to Chinese rivals, and brand damage stemming from CEO Elon Musk’s political work as part of the Trump administration.
Investors who sell securities short borrow shares and then sell them, as they bet that the stock will fall so they can buy the shares back at the lower price in order to return them to the lender and pocket the difference.
With a 10 million or 15% increase in shares sold short so far this year, S3 managing director Matthew Unterman writes that it is the most profitable short globally ahead of chip maker Nvidia, in which short sellers are up $9.4 billion.
“With short interest climbing and sentiment deteriorating, Tesla’s post-earnings path hinges on results and guidance clarity,” wrote Unterman.
“A confirmed break above recent short interest resistance could suggest deepening bearish conviction, especially with analysts openly questioning leadership focus,” he said.
Wedbush analyst Dan Ives, traditionally a Tesla bull, said earlier this month that Musk should either “exit stage left” or step back from his political role in the U.S. Department of Government Efficiency (DOGE) and return his focus to Tesla.
Tesla investors were also anxious ahead of the earnings report to know if the company’s plans to roll out a cheaper car and a robotaxi service this year are on track.
Unterman expects volatility in the stock going forward with the direction depending on “whether TSLA can counter rising pessimism.”
After three straight days of losses, Tesla shares were up 6% at around $241 on Tuesday.
(Reporting By Sinéad CarewEditing by Marguerita Choy)
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