Tesla’s $5.7 Billion Blow to Short Sellers: Stock Surge Fuel Gains Amid Potential Bitcoin Accumulation

Tesla (TSLA) has emerged as a top performer in the S&P 500, inflicting significant losses on short sellers who have bet against the electric vehicle manufacturer that has invested in Bitcoin.

Since releasing its second-quarter delivery report on July 2, Tesla’s stock has surged over 25%, building on gains exceeding 44% performance over the last 30 days. This dramatic price increase led to an estimated $5.7 billion in unrealized losses for short sellers targeting the company.

Tesla also witnessed a surge in short interest, according to stock market data tracker Ortex, first reported on by Finbold, which reached 3.84% last week, a level not observed since 2021, the year Tesla hit record highs and enjoyed its most successful year to date.

While the short interest has dipped slightly to 3.80%, translating to roughly 105.3 million shorted shares, the average cover remains low at 0.68 days. This short timeframe makes short sellers particularly vulnerable to further price increases.

Source: Ortex

On July 2, Tesla reported second-quarter deliveries of 443,956 vehicles, exceeding Wall Street’s expectations of 439,000. While deliveries did decline 4.8% year-over-year, this decrease is less severe than the 8.5% drop observed in the first quarter.

This suggests that demand for Tesla vehicles remains resilient despite an aging product lineup and growing competition from other electric car manufacturers. The firm has recently implemented various sales incentives, including discounts, low- or no-interest financing, and other perks.

These measures, such as price reductions in Germany and Norway and zero-interest loan promotions in China, have helped mitigate the decline in sales and maintain consumer interest.

The company was notably one of the first to add Bitcoin as a treasury reserve asset, initially putting $1.5 billion in the cryptocurrency and accepting BTC payments. While these were later dropped and some of the firm’s Bitcoin holdings have been sold, BitcoinTreasuries data shows Tesla still holds 9,720 BTC. This makes it the third-largest publicly-traded firm holding BTC, behind MicroStrategy and Marathon.

The firm, however, could be accumulating Bitcoin again, as data from Arkham Intelligence through a feature tracking Tesla’s Bitcoin wallet shows that it’s currently holding onto 11,509 BTC, a figure that marks a significant increase from the 9,720 BTC reported during the company’s last earnings report.

Tesla’s history with Bitcoin is tumultuous, as after acquiring $1.5 billion worth of the cryptocurrency during its bull run, the firm sold about 10% of its holdings in an initial test, that was followed by it dumping around 75% of its remaining holdings in the second quarter of 2022.

After selling those coins the company hasn’t reported any significant changes to its Bitcoin holdings, and while it’s natural for large wallets to receive small amounts of BTC in potential dusting attacks, an increase of 1,789 BTC (around $120.4 million) suggests the electric car maker is once again accumulating.

The company reversed its stance on Bitcoin shortly after investing in the cryptocurrency after its CEO Elon Musk cited environmental concerns related to BTC mining, which also prompted it to halt accepting BTC payments.

Featured image via Pixabay.

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