Tesla’s (TSLA) post-earnings stock surge has dealt a brutal blow to short sellers betting against the electric vehicle juggernaut. In the two trading days following Tesla’s Q3 2022 report, short sellers lost a staggering $4.2 billion as the stock price skyrocketed.
Tesla’s results for the third quarter easily surpassed Wall Street’s expectations, with the company reporting higher-than-forecast profits and margins. This set off a frenzy of buying, with Tesla stock soaring more than 20% in a single day – its biggest single-day gain in nearly a decade. Shares rose another 3.3% the following day, further compounding the pain for short sellers.
This isn’t the first time this year that Tesla short sellers have felt the burn. Back in April, a better-than-feared Q1 earnings report resulted in over $5 billion in losses for bearish bettors. Tesla’s volatile stock performance has made it a treacherous battleground for shorts, with the stock swinging wildly on news ranging from delivery numbers to Elon Musk’s ambitious plans for robotaxis.
While Tesla’s Q3 revenue slightly missed estimates, the company’s focus on ramping up production and lowering costs appears to have resonated with investors. Prominent Wall Street analysts from Morgan Stanley (MS) to Bank of America (BAC) reiterated their bullish stances on the stock, with BofA even raising its price target.
However, not everyone is convinced that Tesla’s good times will last. About a third of the analysts covering the stock have a “hold” or “sell” rating, with an average 12-month price target of $228 – well below the current trading level around $269, according to Bloomberg consensus estimates.
Nevertheless, Tesla’s latest earnings triumph has served as a stark reminder of the risks of betting against Elon Musk’s electric vehicle empire. The company’s ability to consistently defy skeptics and deliver blowout results has turned short sellers’ lives into a nightmare. As long as Tesla maintains its momentum, the pain for bearish investors appears far from over.
Price Action
Tesla shares were trading down by 0.14% at $268.57 at the time of publication Monday. The $864 billion market cap name is up more than 8% year-to-date and 36% year-over-year.
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