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Tesla short-sellers hit as stocks surge by 20 per cent

By Charlotte Ricca

Mark-to-market losses for Tesla short-sellers reach $9bn - which is three times higher than 2019

Investors betting that Tesla shares will decline are facing further hits, as stock surged as much as 20 per cent on Monday .

Short-sellers lost $3.2bn (£2.46bn, €2.89bn) as the share price accelerated on the first day’s trading of the new month, which adds to their record loss of $5.8bn in January.

This latest spike brings the 2020 year-to-date mark-to-market losses for Tesla short-sellers to $9bn. That is more than three times higher than short-seller losses in 2019, which were about $2.9bn.

This latest news is another win for Tesla’s chief executive, Elon Musk, in his battle with the bears.

Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners said: "While we are seeing some momentum short-sellers increasing their positions in anticipation of a short-term pullback, we should see an increase of short covering due to this $700/share level squeeze.”

The automaker is riding on the crest of a wave of recent good news. The company reported higher than expected fiscal fourth-quarter 2019 financial results, while on Monday, a report from Argus Research increased its Tesla price target from $808 from $556, making it the highest estimate on Wall Street.

In addition, Panasonic announced that its battery business, which it runs with Tesla, saw a profit in the fourth quarter.

Tesla’s share price has gone up more than 155 per cent since October 2019.

“This has been quite the run,” said Dusaniwsky, who predicts many short-sellers will hold their positions hoping the stock will drop or slowly exit over time.

"It is more likely to be a continuous slow decline in shares shorted rather than a sudden abrupt plunge. It’s going to take a while for this to shake out.”

FURTHER READING: Tesla world No 2 after share surge

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