- Tesla shares raised $ 45, or nearly 20%, on Thursday after the company reported a rare quarterly profit. Most analysts expected a loss.
- Stock price appreciation is limited by short sellers – bearish investors who are betting on stocks will fall – with $ 1.5 billion in paper loss on Thursday alone.
- Tesla remains one of the shortest stocks on the market.
Wall Street short sellers, many of whom have long believed that Elon Musk Telsa's electric car maker is junk, transferred on Thursday, losing about $ 1.5 billion a day from its bearish bets after the company reported a rare quarterly profit.
Telsa's stock price jumped from about $ 45 to about $ 300 after Musk announced late Wednesday that the company had made $ 342 million in third-quarter profit. Analysts say the company will lose $ 72 million, according to FactSet.
This surprising news sent the shares out on Thursday at the biggest Tesla share increase since 201
This is only the fourth time Tesla has had a winning quarter in the last five years, or 20 quarters. Tesla lost nearly $ 600 million in the first six months of the year, but is now expected to pull in profit margins in the second half, earning another $ 200 million in the last three months of 2019.
Telsa has long been one of the most Wall Street's shortest stock – and Musk often publicly fights short sellers and other critics.
In an apparent effort last year to return to short sellers, Musk tweeted that hein a $ 420 buyout offer. No real buy-in offer happened, and ultimately Musk and his company split a $ 40 million fine to settle a Securities and Exchange Commission case, claiming they deliberately misled shareholders. Musk made no mistake.
As of yesterday, there were 32.6 million Telsa shares sold shortly, according to S3 Partners, which tracks the data. This was less than early this year when 43.7 million Tesla shares were sold in early June.
But the loss for short sellers, at least for the time being, is simply stopping at what has been the last year or so, a very profitable ride. Even after Thursday's jump, Telsa's shares continued to decline by 10.5% in 2019. S3 Partners estimates that short sellers still collectively made $ 500 million in bets against Tesla shares this year.
And Tesla's short sellers are unlikely to shut down anytime soon. Despite the jump in profits, Tesla's sales, which missed expectations, were lower than the previous quarter and a year ago.
Much of the third quarter's profit comes from the fact that Tesla has been able to recognize short-term profit, which it had already raised for pre-sales of its "summon" feature, which became available in September.
Tesla, like other car manufacturers, is also likely to be affected by the ongoing commercial tensions with China.