On March 22, 2022, Tesla’s “Gigafactory” in Grünheide, southeast of Berlin, began production of Model Y electric vehicles. – American electric car pioneer Tesla received approval for its “Gigafactory” in Germany on March 4, 2022, paving the way for the start of production shortly after the approval process encountered delays and setbacks. (Photo by Patrick Puller/POOL/AFP) (Photo by Patrick Puller/POOL/AFP via Getty Images)
Patrick Puller | AFP | Getty Images
Tesla’s This week’s better-than-expected delivery report is bad news for traders betting on a decline in the electric car maker’s shares.
The stock has risen 17% in two trading days since the release of the second-quarter report, with short sellers losing about $3.5 billion in market capitalization, according to data from S3 Partners.
It’s been a painful few months for short sellers, with Tesla shares soaring 73% since bottoming in April. The stock closed at $246.39 in brief trading Wednesday, just over $2 away from erasing this year’s losses.
Tesla’s short interest currently accounts for 3.5% of the float, or 97 million shares short, with a nominal value of $22.4 billion.
Tesla on Tuesday reported second-quarter deliveries of 443,956 vehicles, beating Wall Street expectations of 439,000 vehicles. Deliveries fell 4.8% annually, but the decline was not as steep as the 8.5% annual decline in the first quarter.
While the delivery report showed demand for Tesla vehicles remained stronger than expected, it offered a limited view of the company’s performance.
Tesla has for months been trying to spur electric vehicle purchases with discounts, low- or no-interest financing options and other perks as its auto business suffers from a sales slump as its lineup ages and competition becomes fiercer than ever.
For example, in the second quarter, Tesla slashed prices in Germany and Norway and offered zero-interest loan promotions in China, even on its entry-level Model 3 sedan and Model Y SUV. In the United States, Tesla is offering buyers of its rear-wheel-drive Model 3 a three-year financing deal at 2 percent annual interest.
At the same time, Tesla’s latest model, the Cybertruck, got off to a slow start, with quality problems arising in less than a year, resulting in four voluntary recalls in the United States.
On April 15, 2024, a Tesla Cybertruck parked in the open space of a Tesla dealership in Austin, Texas.
Brandon Bell | Getty Images
Tesla’s earnings report later this month will provide a clearer picture of the company’s financial health. Analysts expect revenue to fall 2.9% to $24.2 billion, following a 9% decline in the first quarter, according to LSEG.
“Obviously, the Model Y and Model 3 financing promotions drove a significant increase in sales, but as we’ve seen with other deep price cuts and discounts, demand is stretched and new demand must be created in the third quarter and beyond,” This has proven challenging over the past 18 months,” Guggenheim Partners analyst Ronald Jewikow wrote in a note to clients on Wednesday. He has a sell rating on the stock.
Tesla Chief Executive Elon Musk, whose net worth has increased by about $15 billion over the past two days, celebrated the blow to short sellers. They included personal attacks on Microsoft co-founder Bill Gates, who has a history of shorting stocks and clashing with Musk.
“Once Tesla fully solves the self-driving problem and gets Optimus Prime into mass production, anyone still holding a short position will be wiped out,” Musk wrote in a post on X. Even Gates.
Optimus is a humanoid robot being developed by Tesla. Musk claims these robots will one day make Tesla a multi-trillion dollar company. Tesla’s market capitalization is currently below $800 billion.
Meanwhile, challenges in Tesla’s core automotive business remain.
The company regularly makes improvements to its in-car software and new updates It promises to bring YouTube, Amazon Music, and weather and air quality apps to the driver’s infotainment system. But Tesla still hasn’t provided the software that can turn its existing cars into self-driving vehicles.
Further, a Recent Axios-Harris poll The company is experiencing brand deterioration, at least in part due to Musk’s “antics” and “political rants,” the study found. An investigation by The New York Times Out this week It also said that Musk’s “polarized remarks” and “political activities” are driving away some “left-leaning consumers.”
Musk called for “red wave“Ahead of the upcoming U.S. election, he said he and former President Donald Trump spoke frequently. He also shared, liked and promoted far-right accounts and content on X. In contrast, supporters of electric vehicles Politically they tend to lean left. pew research center and Gallup last year.
watch: Investors ‘overanalyzed’ Tesla deliveries
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