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Jul 9, 2020

Tesla shorts to amass first-ever US$20B bet against a stock

Tesla now worth more than oil super majors like Exxon

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Tesla Inc.’s skeptics are undeterred by Elon Musk poking fun at them over the carmaker’s stock surge, with the amount of shares being sold short heading for a milestone.

The Model 3 maker’s stock is poised to be the first to hit a short-interest level of US$20 billion, according to research firm S3 Partners. The value of shares that have been sold short has climbed recently to US$19.95 billion.

S3 said in a report Thursday that both Tesla and Nikola Corp. shares look like candidates for a short squeeze, referring to when short sellers are forced by a stock’s gain to close their position, which in turn drives the price even higher.

Tesla’s squeeze is more obvious -- its 233 per cent gain this year likely is forcing out short sellers who’ve hit their limit for losses. The potential for a squeeze in Nikola, which is developing fuel-cell and battery-electric semi trucks, has more to do with high borrowing fees, S3 said.

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