- Tesla shares shot up $ 45, or nearly 20%, on Thursday after the company reported a rare quarterly result. Most analysts had expected a loss.
- Stock price gains plagued short sellers – bearish investors who bet stocks will fall – with a $ 1.5 billion loss on Thursday alone.
- Tesla is still one of the shortest shares in the market.
Wall Street card sellers, many of whom have long believed Elon Musk's electric car manufacturer Telsa is a junker, was overstated on Thursday, losing around $ 1.5 billion in a day on its bearish games after the company reported rare quarterly profits.
Telsa's share price jumped about $ 45 to nearly $ 300 after Musk's company late Wednesday reported that the company had made a profit in the third quarter of $ 342 million. Analysts had expected the company to lose $ 72 million, according to FactSet.
The surprising news sent the stock sharply on Thursday in the largest increase in Tesla's shares since 201
This is only the fourth time Tesla has had a profitable quarter in the last five years, or 20 quarters. Tesla lost nearly $ 600 million in the first six months of the year, but is now expected to pull back profitable quarters in the second half, earning a further $ 200 million in the last three months of 2019.
Telsa has long been one of the shortest stocks Wall Street – and Musk has often publicly fought short sellers and other critics.
In an apparent effort last year to return to short sellers, Musk tweeted that heat an offer of $ 420 per share. No actual takeover bid occurred, and Musk and his company eventually shared a $ 40 million fine to settle a lawsuit and exchange commission, claiming that he had intentionally mislead the shareholders. Musk did not admit wrongdoing.
Yesterday, 32.6 million shares in Telsa were sold short, according to S3 Partners, which tracks the data. It was down from earlier this year when 43.7 million Tesla shares were sold short in early June.
But the loss for short sellers, at least for now, is just a pit stop in what has been the last year or so a very profitable trip. Even after Thursday's jump, Telsa's shares are still down 10.5% in 2019. S3 Partners estimates that card sellers still collectively made $ 500 million on Tesla's shares this year.
And it's unlikely that Tesla's card sellers will disconnect anytime soon. Despite the profit jump, Tesla's sales, which missed expectations, were down from the previous quarter and from a year ago.
A good portion of the profits in the third quarter came from the fact that Tesla was able to recognize as a profit some cash it had already collected for pre-sale of its "call" function, which became available in September.
Tesla, like other automakers, will also be affected by the continuing trade tensions with China.