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Tesla’s stock surged 17% in the two days following its second-quarter deliveries report, leading to an estimated $3.5 billion loss for short sellers, according to data from S3 Partners. The surge reflects a significant rebound in Tesla’s stock, which has increased 73% since April.
Key Developments:
- Stock Movement: Tesla’s shares closed at $246.39 on Wednesday and are approaching the level needed to erase its year-to-date losses. The stock’s rise has been fueled by a better-than-expected deliveries report.
- Deliveries Report: Tesla delivered 443,956 vehicles in Q2, surpassing Wall Street’s estimate of 439,000. Although deliveries fell 4.8% year-over-year, the decline was less severe than the 8.5% drop in Q1.
- Short Interest: Short interest in Tesla is at 3.5% of the float, with 97 million shares shorted and a notional value of $22.4 billion.
Financial and Strategic Context:
- Discounts and Promotions: To boost sales amid strong competition and an aging lineup, Tesla has been offering various incentives, including price cuts and low- or zero-interest financing. Recent promotions include discounts in Germany and Norway and financing deals in China and the U.S.
- Cybertruck Challenges: Tesla’s Cybertruck, despite being a high-profile new model, has faced a slow start with quality issues leading to multiple recalls.
Upcoming Reports and Analysis:
- Earnings Report: Tesla’s earnings report later this month is anticipated to show a 2.9% revenue decline to $24.2 billion, following a 9% drop in Q1. Analysts will be watching for insights into Tesla’s financial health and market strategies.
- Market Sentiment: Analysts like Ronald Jewsikow from Guggenheim Partners caution that while discounts drive volume growth, they can also pull forward demand, making future sales targets challenging.
Elon Musk’s Remarks:
- Impact on Short Sellers: Tesla CEO Elon Musk celebrated the financial impact on short sellers, including a personal jab at Bill Gates, who has previously shorted Tesla stock. Musk’s comments were made on X (formerly Twitter), and he expressed confidence in Tesla’s future innovations, including the potential of the Optimus humanoid robot.
- Public Perception: Tesla faces challenges beyond financial performance, including brand deterioration linked to Musk’s public statements and political activity. Recent polls indicate that Musk’s controversial behavior might be affecting Tesla’s brand image among some consumers.
Strategic Outlook:
- Future Prospects: Tesla’s emphasis on software updates and future technology, like autonomous driving and the Optimus robot, aims to bolster its market position. However, the company’s core automotive business continues to face significant competitive pressures and internal challenges.
Tesla’s recent stock performance highlights the volatile nature of the market and the substantial impact of company reports on investor sentiment and short-selling positions.