Benzinga - by Shanthi Rexaline, Benzinga Editor.
Tesla, Inc. (NASDAQ:TSLA) has relinquished its title as the most-shorted stock, slipping to the third position, according to data from S3 Partners‘ Ihor Dusaniwsky shared on Wednesday.
What Happened: As of Jan. 12, approximately $18.52 billion worth of Tesla shares were held as short bets. This places the electric vehicle maker in the third spot, trailing behind Apple, Inc. (NASDAQ:AAPL) and Microsoft Corp. (NASDAQ:MSFT), both with around $18.63 billion and $18.61 billion in shorted shares, respectively.
Source: S3 Partners via Dusaniwsky’s X handle
Other “Magnificent 7” stocks, including Nvidia Corp. (NASDAQ:NVDA), Amazon, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META), followed closely in the fourth, fifth, and sixth positions. Their shorted shares amounted to $14.26 billion, $11.79 billion, and $11.47 billion, respectively.
The only “Mag 7” stock missing from the top 10 most-shorted list was Alphabet, Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG), which had $6.28 billion in short bets and secured the 11th position.
Tesla’s Elevated Short Interest: Despite its ranking, Tesla maintained the highest short interest among the “Mag 7” shares, with short interest representing 3.06% of the total float.
| Short Interest | |
| Tesla | 3.06% |
| Meta | 1.38% |
| Nvidia | 1.10% |
| Amazon | 0.84% |
| Alphabet | 0.69% |
| Apple | 0.65% |
| Microsoft | 0.65% |
Source: S3 Partners via Dusaniwsky’s X handle
Incidentally, General Motors Corp. (NYSE:GM) had an even higher short interest of 8.17%, followed by T-Mobile US, Inc. (NASDAQ:TMUS) at 5.65%. The metric stood at 4.56%, 4.08%, and 3.86%, respectively, for Palo Alto Networks, Inc. (NASDAQ:PANW), RTX Corp. (NYSE:RTX), and Uber Technologies, Inc. (NYSE:UBER)
Advanced Micro Devices, Inc. (NASDAQ:AMD), which is touted as the biggest beneficiary of the second wave of AI, had a short interest of 3.02%.
Why It’s Important: Shorting refers to selling a borrowed stock in anticipation of a falling price. If the stock drops in line with expectations, the short seller buys back the stock at a lower price and pockets the difference as a profit. The trading strategy could misfire if the stock belies expectations and rises, leaving the short seller staring at a loss.
Dusaniwsky noted that Tesla shorts lost $12.5 billion in 2023 and were down 64.64% on an average short interest of $18.9 billion. Since 2010, Tesla shorts were down $61.9 billion, he added.
Shares of the EV maker ended 2023 with a gain of about 101%, with the strength in the first half compensating for the weakness in the later half. The slew of price cuts announced by the company across geographies produced what analysts call a “sugar high,” which did not last long. As margin worries preoccupied the minds of traders, they sold off the stock after the company reported a double miss in the third quarter.
The weakness has continued into the new year and a reversal in sentiment could hinge on the company’s delivery strength and how it manages its margin profile and.
The increased short bets on Apple shares likely reflect the faltering fundamentals at the company. iPhone demand, especially in the key Chinese market has slowed, and the tech giant has yet to find its next big hit hardware product. The Vision Pro is widely expected to have a slow uptake in the first two years, given its pricier nature, lack of compelling appeal, and form factor.
Tesla ended Wednesday’s session down 1.98% at $215.55, according to Benzinga Pro data.
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Read Next: Why Is Tesla Least Loved Among ‘Magnificent Seven’ By Institutional Investors? Fund Guru Gary Black Lists 5 Key Reasons
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