Equities

Tesla Dethroned by Chevron as Top Short, Moses Sees 70% Drop

Tesla dethroned by Chevron as most crowded short sell, amid investor skepticism and shifting market sentiments.

By Barry Stearns

5/15, 16:59 EDT
AMC Entertainment Holdings, Inc.
Chevron Corporation
Tesla, Inc.
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Key Takeaway

  • Tesla Inc. loses its position as the most crowded short sell to Chevron Corp, with a Hazeltree score of 97/99.
  • Investor Danny Moses predicts a 70% drop in Tesla's share price, citing concerns over its core business and strategic focus.
  • Despite a year-to-date decrease of 29.7%, Tesla shares up by 5.0% over the past year; Chevron shares rose by 34.0%.

Tesla's Short Selling Status

Tesla Inc, the electric vehicle leader, has recently seen a shift in its position among the most crowded short sells, according to the latest report from Hazeltree. The company, which had maintained the top spot for three consecutive months, now ranks second in the April Hazeltree Shortside Crowdedness Report with a score of 97 out of 99, placing it just behind Chevron Corp. This change comes as Tesla's first-quarter financials, along with its production and delivery figures, fell short of analysts' expectations, contributing to a growing concern among investors regarding the company's future direction. Despite this, 3.8% of Tesla shares are currently short, indicating a continued interest in short selling the stock.

Investor Sentiments and Predictions

Investor Danny Moses, known for his role in "The Big Short," has expressed a bearish outlook on Tesla, predicting a 70% drop in its share price to $50. Moses cites issues within Tesla's core business and a shift in focus towards robotaxis, AI, and autonomy as reasons for potential investor impatience. Tesla's CEO, Elon Musk, has historically been vocal against short sellers, often highlighting the company's ability to outperform market expectations despite skepticism towards electric vehicles and Musk's leadership.

Price Action and Market Movements

As of the market close on Wednesday, Tesla shares were trading at $173.99, marking a 5.0% increase over the past year but a 29.7% decrease year-to-date in 2024. In contrast, Chevron shares ended at $163.05, up 34.0% over the last year and 9.0% since the beginning of 2024. These movements reflect the broader market's fluctuating sentiment towards both the electric vehicle sector and traditional energy companies.

Meme-Stock Mania and Short Seller Losses

The resurgence of meme-stock mania has led to significant losses for short sellers, with a Goldman Sachs basket tracking the performance of heavily-shorted stocks falling approximately 11% over two sessions. This decline was exacerbated by surges in stocks like GameStop Corp. and AMC Entertainment Holdings Inc., which have historically been popular among retail traders. Short sellers of these stocks have faced over $1.3 billion in mark-to-market losses in May alone, highlighting the volatile nature of betting against companies with high short interest.

Street Views

  • Hazeltree (Neutral on Tesla):

    "Tesla is one of the most crowded stocks for short selling. Tesla ranked second in the April Hazeltree Shortside Crowdedness Report with a score of 97 out of a possible 99."

  • Danny Moses (Bearish on Tesla):

    “Everything is kind of falling apart in their core business. He’s pointing everybody to robotaxis and AI and autonomy. It’s really become a ‘show me’ story in terms of if it’s an auto company, and I think people are going to start to lose patience over time here for what the company is going to be."