Following Tesla’s (NASDAQ: TSLA) recent declaration of deliveries surpassing expectations, there has been a substantial loss for those who were opposed to the electric vehicle (EV) manufacturer’s stock.
Since the unveiling of the second-quarter delivery report, Tesla’s shares have surged by 17% in just two trading days, resulting in an approximate loss of $3.5 billion for short sellers based on market evaluations, as indicated by figures compiled by Finbold from S3 Partners.
The subsequent rise in TSLA stock value prompted a stern warning from Elon Musk, the CEO, directed at those shorting TSLA, which included Bill Gates, the originator of Microsoft (NASDAQ: MSFT).
According to Ihor Dusaniwsky, the Managing Director of Predictive Analytics at S3 Partners, short sellers have only realized mark-to-market earnings of $1.37 billion, translating to a 7.6% ROI year-to-date.
“Shorting TSLA has proven to be a lucrative venture in 2024 until recently,” Dusaniwsky remarked.
Nevertheless, short sellers observed a decline in their prior gains in June, leading to mark-to-market deficits of $1.95 billion for the month, reflecting a 10.7% drop.
At the most recent closing date, Tesla shares finished at $246.39, nearly nullifying their annual losses.
Currently, short interest in Tesla accounts for 3.8% of the float, comprising 105 million shares that have been shorted, carrying a notional worth of $25 billion.
Efficacy of Cost-Effective Strategies for Tesla
On July 2, Tesla disclosed second-quarter deliveries of 443,956 vehicles, surpassing the projected number of 439,000 by Wall Street. Although these deliveries were down by 4.8% compared to the preceding year, it marked a less drastic downturn than the 8.5% decrease observed in the first quarter.
The delivery report highlighted the persistent strong demand for Tesla vehicles but provided limited insights into the company’s overall performance. Tesla’s automotive segment is facing obstacles due to reduced sales resulting from an aging range of products and increased competition.
To stimulate electric vehicle purchases, Tesla introduced discounts, low-interest or interest-free financing options, and other incentives to enhance sales for several months. For instance, during the second quarter, Tesla decreased prices in Germany and Norway and introduced zero-interest loan schemes in China, even for their base models such as the Model 3 sedan and Model Y SUVs.
In the U.S., Tesla offered buyers of the rear-wheel-drive Model 3 a three-year financing arrangement at 2% APR.
Intensified Focus on Tesla’s Q2 Revenue Report
Despite the positive delivery figures, Tesla’s latest vehicle model, the Cybertruck, had a sluggish introduction due to quality concerns, leading to voluntary recalls in the U.S. in a brief period.
The upcoming earnings report from Tesla, scheduled for July 23, is expected to provide a more comprehensive view of the company’s financial status. Analysts anticipate a 2.9% reduction in revenue to $24.2 billion following a 9% decline in the previous quarter.
This report will play a vital role in understanding Tesla’s capacity to overcome existing challenges and maintain its market standing amidst escalating competition and an aging product line.
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