Tesla short sellers lose more than $5 billion in post-earnings rally
$Tesla(TSLA.US$ $BYD COMPANY(01211.HK$ $NIO Inc(NIO.US$ $XPeng(XPEV.US$ The article reported that Tesla short sellers are down more than $5 billion in the past five days, per data from S3 Partners, as the stock has rallied nearly 40% since the company reported quarterly results after the bell on April 23. Tesla stock was up about 15% on Monday alone after reports the electric vehicle maker has won approval to deploy full self-driving autonomous software in China.
My Take: Before you follow others to profit from short selling, note that such trading can incur potentially unlimited losses. Short sellers can get caught in a short squeeze loop if the market, or a particular stock, starts to skyrocket. A short squeeze happens when a stock rises, and short sellers cover their trades by buying back their short positions. Shorting is a margin trading which requires traders to borrow money from the brokerage firm using the investment as collateral. Investors must meet the minimum maintenance requirement of 25%. If the account slips below this, traders are subject to a margin call and forced to put in more cash or liquidate their position. According to Google finance, Tesla stock surges more than 35% to 194 USD in the past 5 days.
Source:
$BYD COMPANY(01211.HK$ $BYD Co.(BYDDF.US$ $S&P 500 Index(.SPX.US$ $Nasdaq Composite Index(.IXIC.US$ $Tesla(TSLA.US$ $VOLKSWAGEN A G(VWAGY.US$ $NIO Inc(NIO.US$ $Li Auto(LI.US$ $XPeng(XPEV.US$ $General Motors(GM.US$ $Ford Motor(F.US$ $Rivian Automotive(RIVN.US$ $MERCEDES-BENZ GROUP AG(MBGAF.US$ $TOYOTA MOTOR CORP(TOYOF.US$ $GEELY AUTO(00175.HK$ $Stellantis NV(STLA.US$
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I reflected trading experiences by writing journals. My comments are for educational purposes not financial advice.
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CasualInvestor : Ouch
Ah Vivi : Where are the short sellers mocking Tesla stock holders? Smoking cocaine from Alex karp? Long term investing always wins.