The soaring stock price of Tesla has once again taught the short sellers a lesson.
Due to Tesla's third-quarter financial report released on Wednesday far exceeding expectations, the extremely strong profit increase has shocked the market. On Thursday, Tesla's stock price surged by 22% in a single day, marking the largest one-day gain since 2013 and increasing the market value by $150 billion. As a result, the short sellers experienced a rapid evaporation of wealth.
According to a report from S3 Partners, short sellers suffered approximately $3.5 billion in market value losses in this market trend, wiping out their $1.7 billion profit so far this year and resulting in current unrealized losses of $1.8 billion.
Tesla's performance not only caught the short sellers off guard, but even analysts were surprised. Prior to the financial report announcement, the market generally expected Tesla's stock price to continue to decline due to the sustained low demand for electric vehicles, with analysts on average expecting a 10% decline in quarterly profit. However, Tesla's financial report delivered a positive signal, with a 9% year-on-year profit growth, far exceeding expectations.
CEO Elon Musk even revealed to investors, &#34;The company expects car sales to grow by 20-30% next year.&#34;
From the perspective of options positions, investors were not prepared for a significant increase. Options trading implied that traders expected a rise of around 6% in the stock price after the financial report. Analysis suggests that considering Tesla's stock price has risen by at least 9% after the release of the previous seven quarterly reports, this number itself is quite low.
Now, some investors have regained confidence. Analysis points out that these investors believe that the worst period of slowdown in electric vehicle demand may have passed, and the company is steadily advancing in the development of fully autonomous driving vehicles, prompting many to buy the stock again.
On Thursday, the premium for three-month call options exceeded that of put options for the first time, and several analysts raised their target price for Tesla. Data from S3 shows that only about 2.9% of Tesla's freely tradable shares are shorted, hovering around the company's so-called &#34;historical low point&#34;.
Despite the exceptionally strong rise in Tesla's stock price, market observers including Matthew Unterman from S3 Partners and Stuart Kaiser, U.S. stock trading strategist at Citigroup, believe that there is almost no sign indicating that this surge is being driven by so-called &#34;short squeeze&#34;. Kaiser stated:
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&#34;Tesla's short position is very low, and Thursday's stock price trend was driven by unexpectedly strong performance, rather than positive short covering in an undervalued stock context.&#34;
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TSLA

According to a report from S3 Partners, short sellers suffered approximately $3.5 billion in market value losses in this market trend, wiping out their year-to-date profit of $1.7 billion and resulting in current mark-to-market losses of $1.8 billion

- Tesla's stock surged 22% following a strong Q3 earnings report, marking its largest single-day increase since 2013 and adding $150 billion in market value.  
- Short sellers faced significant losses, totaling approximately $3.5 billion, erasing their earlier profits for the year and resulting in current losses of $1.8 billion.  
- Analysts were surprised by Tesla's performance, which showed a 9% year-over-year profit increase, and some investors are regaining confidence, believing the worst of the electric vehicle demand slowdown may be over.

How difficult is shorting US stocks? The money Tesla's short sellers made this year was wiped out in just one day