Tesla is the most profitable short pick of 2022, with nearly $14 billion in proceeds since Elon Musk agreed to buy Twitter

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Tesla Inc. shares plunged toward their fifth consecutive daily decline Thursday, adding more to short sellers’ returns from betting against the electric-vehicle maker.


shares dropped as much as 11% to an intraday low of $122.26 on volume of more than 140 million shares Tuesday, compared with a 52-week average daily volume of about 81 million shares. A close lower than $125 would be the first for Tesla since September 2020. For the week, shares are down about 16%, which would challenge the previous week for the worst since 2020. Tesla stock is on the road to its worst month, quarter and year on record.

The decline has pushed Tesla’s market capitalization below $400 billion, dropping it to 10th on the list of most valuable companies in the S&P 500 index
Visa Inc.

moved higher than Tesla on Tuesday, when Tesla’s intraday trading levels put its valuation around $392 billion cap, below Visa’s $418 billion. Walmart Inc.
at $383 billion, was sneaking up on Tesla with a chance to knock it out of the top 10.

Read: Tesla’s stock drop has been bad. But this company has wiped out more investor wealth in 2022

Short sellers, whom Tesla Chief Executive Elon Musk has made a point of targeting previously, are having a happy holiday if they bet against Tesla this year, S3 Partners’ Managing Director of Predictive Analytics Ihor Dusaniwsky said in a note. He pointed out that Tesla has been the most profitable stock to short in 2022.

“Short sellers have been backing up their TSLA short exposure for good reason, it is the most profitable short, in dollar value, of 2022,” Dusaniwsky said. Tesla shorts are up $15 billion year-to-date in mark-to-market profits in 2022, with a gain of $4.54 billion in December alone, according to S3 data.

“Since Elon Musk’s Twitter bid on 4/14/22, TSLA shorts are up $13.74 billion in mark-to-market profits,” Dusaniwsky said.

The analyst said short interest in Tesla has been declining since April because of the price drop, but short selling has increased since August, with 3.05% of the stock’s float short, making it the second largest short behind Apple Inc.

and its $16.78 billion in short interest.

Read from Monday: Tesla analysts say they can’t ignore Elon Musk’s Twitter ‘nightmare’ anymore

Tesla shares were under pressure Thursday after the company doubled the discount it offers to customers who “take delivery of a new Model 3 or Model Y between December 21 and 31, 2022 for a $7,500 credit and 10,000 miles of free Supercharging,” according to its website, raising concern that demand in the EVs is slipping. Tesla buyers are no longer eligible for a U.S. tax credit of up to $7,500 for purchasers of electric vehicles, but that incentive could return in 2023, which could be a disincentive to purchase a Tesla in the U.S. this year.

Tesla shares are off 64.2% for the year, while the S&P 500 has fallen 18.6% and the Nasdaq Composite Index

is down 33.7%.

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