Short interest in Tesla is appearing to rise after declining in June, financial research firm S3 Partners’ director of research Ihor Dusaniwsky wrote in a note Thursday. Over 400,000 shares were shorted this week alone, he wrote. Though Tesla’s notional short interest exposure dropped, Dusaniwsky observed short sellers were actually not adding to their short positions.
In other words, short sellers were not “actively ‘topping off’ their positions in order to keep their notional exposure stable,” he wrote, but were merely content taking their “unrealized profits.”
Even when short sellers were down over $5 billion in unrealized losses, he continued, “there was no rush to exit their positions.”
He added: “Tesla shorts may be one of the only stocks that is totally immune to a price short squeeze, and with ample lendable stock borrow inventory available, there is little chance of a technical stock loan related short squeeze,” the analyst wrote. A “short squeeze” occurs when a stock’s price is driven higher as a result of short sellers rushing in to cover their positions.
Investors ought to focus on the range between $290 and $300, Oppenheimer’s Wald said this week on CNBC’s “Power Lunch.” He added that Tesla will likely continue working in the long-term — so long as the stock remains above that range.
“The stock was capped below that level from 2014 into 2016. We broke through that level this year. Now we are correcting back; typically the former breakout level becomes support,” Wald said.
“Now we’re slicing down pretty quick. From a near-term trading basis, I would like to see that stock stabilize, and I think you want to see a multi-week, maybe even a multi-month base begin to develop,” the analyst added.
Correction: This story has been revised to reflect that Ihor Dusaniwsky is head of research for financial analytics firm S3 Partners.
