Tesla One of the Most Shorted US Stocks in 2023: Report
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Tesla One of the Most Shorted US Stocks in 2023: Report

After topping the list in 2022, Tesla was once again one of the most shorted large-cap stocks last years.
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Hedge funds intensified their bearish stance in 2023, targeting auto titans Tesla (NASDAQ: TSLA) and Ford (NYSE: F), along with communications giant Charter Communications (NASDAQ: CHTR), as reported by Hazeltree. After a strong stock market performance last year, Wall Street expects a notably tougher 12 months for Tesla in 2024. 

Most Shorted Stocks in 2022 Top the List Again

Tesla, alongside auto peer Ford Motor and communications company Charter Communications, was the most shorted stock in 2023 by hedge funds, according to a report by Hazeltree.

Interestingly, these companies were also the most shorted large-cap US-based stocks in 2022. However, the report states that the number of money managers betting against Tesla and Ford was lower than last year. 

Technology dominated short interest sector-wise, while consumer products and healthcare companies held the highest short positions in mid and small-cap equities, respectively.

“High inflation and interest rates could be behind short sellers’ focus on consumer cyclical stocks. It was no surprise to see Tesla top the list of most shorted stocks in 2023 after seeing it lead the pack in our monthly Shortside Reports.”

– Tim Smith, managing director, data insights at Hazeltree.

Tesla’s 2024 Outlook

With a year-to-date surge of about 130%, Tesla was among the primary catalysts propelling the S&P 500’s gains in 2023, alongside the AI-driven Nvidia and Meta Platforms.

However, the latter part of last year highlighted notable fundamental challenges for the world’s largest electric vehicle (EV) maker, with its total operating margin plummeting from 17.2% to 7.6% year-over-year in Q3.  

The reduced profitability comes from a series of price cuts Tesla imposed throughout 2023, and analysts are not too hopeful about these challenges going away anytime soon. Tesla’s core EV business and the broader auto industry are expected to remain under pressure in 2024. As such, the company’s “delivery and revenue estimates for 2024 and 2025 will come down materially,” Bernstein analysts wrote in a recent note.

FactSet predicts that Tesla’s earnings will rebound after a 25% dip in 2023, reaching $3.06 per share. Yet, despite an expected 45% surge in revenue to $118.5 billion, Wall Street foresees a 6% decrease in earnings per share (EPS) for 2024, dropping to $3.83 when compared to the figures from 2022.

Meanwhile, the company has also been overtaken by its Chinese rival, BYD, as the world’s EV maker. 

On a positive note, Tesla bulls are pinning their hopes on the forthcoming next-generation electric vehicle priced at $25,000. During 2023, Tesla emphasized its ongoing advancements in developing this new platform. Although specifics about the vehicle remain largely undisclosed, Tesla provided a tantalizing glimpse of a vehicle silhouette at its annual shareholder meeting.

Many analysts expect Big Tech stocks to continue their uptrend in 2023. Do you expect Tesla to follow the herd or fall behind? Let us know in the comments below. 

Disclaimer: The author does not hold or have a position in any securities discussed in the article.