Cars and Drivers

Why Tesla's Short Interest Tripled From a Year Ago

Chris Lange

Published: February 25, 2021 10:33 am

Tesla Inc. (NASDAQ: TSLA) saw its short interest pull back into the most recent settlement date, although the stock has been correcting recently. Note that the number of shares short was still roughly triple that a year ago.

Short sellers reduced their positions in the two-week period ending on February 12 to 47.69 million. In the previous period, 52.38 million shares were short.

A year ago, just 18.39 million Tesla shares were sold short. One contributing factor to the rise over the past year has been that Tesla has issued millions of shares in secondary offerings and even conducted a stock split. Furthermore, the stock has risen about 451% over the past 52 weeks.

Tesla stock currently has an average daily volume of 19.51 million shares, so it would take short sellers more than two days to cover their positions.

Recently, Tesla was hit with a horrible dependability rating in a new study from J.D. Power. In the survey, researchers looked at dependability for cars that are three years old. That means this study looked at 2018 models.

The industry average for the 2018 models in the study based on problems per 100 cars was 121. Tesla cars received a much worse rating of 176, particularly shocking because of the popularity of its brand, the brisk sales and the legendary design.

In addition, the company has to be on the lookout for Apple, as there are rumors that the iPhone giant could be moving into electric vehicles. This very well could be a threat to Tesla.

Tesla stock traded down about 3% Thursday morning to $720.04. The 52-week range is $70.10 to $900.40, and the consensus price target is $610.34.