The sharp surge in Tesla share price on Tuesday slammed short sellers of the stock with $1.11 billion in losses for the day on paper, pushing their performance for the year into the red, according to financial analytics firm S3 Partners.
Tesla shares jumped 13 percent on Tuesday after long-time critic and short-seller Andrew Left’s Citron Research said it had a change of heart and is now betting the electric-auto producer’s stock will rise.
Tuesday’s sharply higher Tesla stock price turned what had been a profitable year for short sellers into paper losses totaling $257.3 million so far in 2018.
Short sellers aim to profit by selling borrowed shares with the hope of buying them back later at a lower price.
As of the close of trading on Tuesday, Tesla short interest stood at $9.94 billion, with 33.79 million shares shorted, or about 26.5 percent of the company’s float, according to S3 data. That made it the most shorted US stock, according to S3 data.
The electric-car maker surprised markets by launching the new model on Oct. 18 in a move that came as US tax breaks for Tesla cars are about to decrease.
The company is expected to post third-quarter results on Wednesday.
Chief Executive Elon Musk has pledged to report quarterly profits in the second half of this year as the company gained traction with production, and deliveries, of its new Model 3 sedan.
Tesla has just increased the price for its new Model 3 sedan launched last week by $1,000, to $46,000, according to the company’s website.
Tesla shares were trading less than 1 percent lower, at $292.71, on Wednesday morning.
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