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Tesla remains the most heavily shorted large-cap stock in the U.S. for the third consecutive month, with $22 billion worth of short interest. CEO Elon Musk believes Microsoft founder Bill Gates still holds a massive short position, despite losing $1.5 billion when the bet went sour. Musk blasted Gates for hypocritically asking him to donate to environmental causes while simultaneously trying to profit from Tesla’s downturn.
Tesla’s stock (TSLA) continues to be the most shorted of any major U.S. company, according to new data from securities lending firm Hazeltree. Short interest sits at 82 million Tesla shares, worth nearly $22 billion at current prices. While massive, this pales in comparison to Tesla’s daily trading volume, representing less than a single day’s worth of trades.
Short sellers, who profit when a stock price falls, have long targeted Tesla. But as the electric vehicle maker turned profitable in recent years, short interest declined. Now it appears to be resurging, with Tesla topping short interest lists again.
Among the most prominent Tesla shorts is Microsoft founder Bill Gates. Rumors circulated in 2020 and 2021 that Gates held a large short position, which he never publicly confirmed. But Gates did privately acknowledge the short to Tesla CEO Elon Musk, according to Musk’s new biography by Walter Isaacson.
The book recounts a meeting between Musk and Gates at Tesla’s Gigafactory Texas in 2022. Gates apologized for shorting Tesla, admitting he lost $1.5 billion when the stock soared instead of plunging. Musk remained livid over the ploy. “Once he heard I’d shorted the stock, he was super mean to me,” Gates said, according to the biography.
Musk believes Gates still held his Tesla short as of mid-2022. He vented his frustrations on Twitter yesterday, suggesting someone should ask Gates if he still bets against Tesla.
“Gates placed a massive bet on Tesla dying when our company was at one of its weakest moments several years ago,” Musk tweeted. “Such a big short position also drives the stock down for everyday investors.”
He slammed Gates for hypocritically asking him to donate to Gates’ environmental initiatives, while Gates simultaneously tried to profit from Tesla’s failure. “The lack of self-awareness and hypocrisy of Gates…boggles the mind,” wrote Musk.
Shorting a stock does not necessarily mean wishing for a company’s demise, as Musk suggests. It simply indicates a belief that the shares are overpriced. And historically, shorts have helped, not hurt, Tesla’s share price at times by getting “squeezed” as the stock rose.
Still, large short positions can pressure stock prices down, negatively impacting everyday investors. And shorts sometimes spread misinformation about target companies while profiting off falling shares.
Gates has not publicly responded to Musk’s latest accusations. And Musk provided no evidence that Gates still holds a Tesla short position. But the long-running feud between the two billionaires shows no signs of abating.
Tesla remains one of the world’s most popular stocks among retail investors. The electric vehicle maker commands lofty valuation multiples as demand for its vehicles continues growing rapidly.
But skeptics believe Tesla’s stock price runs too far ahead of its fundamentals. Bears see risks ranging from more competition eating into market share to potential falls in demand during a recession.
Musk has slammed short sellers for years, blaming them for attempts to undermine Tesla. He remains fiercely protective of his company, lashing out at any perceived threats to Tesla’s mission.
While Musk despises shorts, Tesla bulls have earned huge profits during the stock’s meteoric rise of recent years. Shares trade nearly 5x higher than just two years ago.
The Tesla chief believes there are logical bear cases against the automaker. But he takes deep personal offense to shorting from people he views as disingenuous or hypocritical. Only time will tell whether Gates still bets against Tesla bouncing back from its latest bout as the most shorted American stock.
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