Warned Ya! Elon Eviscerates Shorts Resulting in $3.5b in Losses

Goooood morning friends and Happy Monday!

Today is set to be another action packed day as US stocks resume trading after clearing all-time highs on Friday while Index Futures are continuing the All-Time High tune this morning during pre-market. 

(Source: Giphy) 

So as we patiently sip on our coffees this morning, it’s clear the market sentiment is bullish. With the current soaring price action along with the recently released June jobs report, investors are embracing the idea that the Fed is not only getting closer to a rate cut…

But more importantly, the money printer is on the cuffs of going “burrrh” very soon. So yeah that’s exciting to keep in mind. 

(Source: Giphy) 

Now, obviously only time will tell what the future holds, but as of this morning we have quite a bit of news that will definitely have an impact on where the market will take us throughout the day today. 

One such story is the furious rally of our favorite billionaire nerd, Elon Musk’s, electric vehicle behemoth: Tesla. 

Elon Flying High (Source: Wall Papers) 

Of course, we all know how Tesla shocked the market last week by dropping some rather unexpected delivery numbers causing the stock to rally north of 27%…

(Source: CNBC) 

But the interesting part about it all, is that it seems as if Elon took a page right out of Roaring Kitty’s playbook. 

According to reports, about 18% of the 500 hedge funds tracked by Hazeltree had their money on Tesla’s downfall by the end of June. This was the highest level of short interest in over a year and for what it’s worth the short idea seemed to be working.

(Source: Giphy) 

According to S3 Partners, short sellers had pocketed $1.37 billion in profits year-to-date. Not bad at all. In fact, I wouldn’t be surprised if there were a few trips to the strip club with that kind of P&L for these hedge funds… 

However, just when they thought they had it right, Elon pulled another rabbit out of his hat completely eviscerating short sellers as if he’d baited them himself. 

(Source: Reddit) 

The carnage began as Tesla reported second-quarter deliveries of 443,956 vehicles, slightly above Wall Street’s estimate of 439,000. 

Even though deliveries were down 4.8% from last year, the drop wasn’t as bad as the 8.5% dip in the first quarter. This glimmer of hope blew past analyst expectations as investors jumped on the news faster than a cat on a laser pointer - resulting in Tesla squeezing it’s way to a nice six-month high. 

(Source: Quartz) 

Now when it comes to Elon, this tale isn’t surprising. The guy’s ability to keep Tesla above water is no doubt incredible… but it’s also satisfying to watch. 

He’s the odd ball when it comes to billionaires, in a weird but cool way, so it’s not hard to sit back and enjoy the fact that not only did Elon feel confident enough to “warn” short sellers about betting against Tesla…

(Source: New York Post) 

But to actually watch him eviscerate shorts is a whole ‘nother level of “G.O.A.T.” performance. (Greatest of All Time for you non-catchphrase people). 

(Source: CNBC) 

Because not only did this eventual 27% Tesla rally wipe out the year’s losses, but in a blink of an eye, short sellers were struck with over $3.5 billion in losses. Ooof…  

So with Tesla shares finishing last week at $252.36, the message is as clear as ever, betting against Tesla (or even Elon for that matter) is like betting against gravity. Just don’t friggin do it folks…

(Source: Giphy) 

And with trading resuming this morning, it’s no secret that all eyes will be on whether the rally will continue squeezing out the shorts, or will it fatigue to a pull back of some sort. 

Now keep in mind, even with this soaring rally, it’s still not all sunshine and rainbows for Tesla. With the broader EV market facing its own set of troubles, the company has been throwing around discounts and zero-interest financing deals at buyers like confetti just to keep sales rolling.

(Source: Green Car Reports)

Obviously, it seems it’s working… for now anyway. But the real test will be Tesla’s earnings report on July 23rd. Analysts are predicting a 2.9% revenue decline, which isn’t great, but again, when it comes to Elon anything can happen.

(Source: Giphy) 

Will he wiggle his finger and reveal another trick up his sleeve? Or will the original “short” Tesla idea actually prove itself right in the long term as sales and deliveries end up drying up?

Again, only time will tell… but it’s definitely worth keeping an eye on as the day unfolds. In the meantime, have a great Monday friends!

P.S. You bet your bottom dollar I’m watching SPDR S&P Retail ETF very closely today… (refer to this article to see what I mean). 

(Source: Giphy) 

Stocks.News holds positions in Tesla as mentioned in the article.