Tesla short sellers lost $ 40 billion in 2020. Elon Musk more than tripled it

Tesla short sellers lost $ 40 billion in 2020. Elon Musk more than tripled it

by
Its personal net worth rose like one of its SpaceX rockets and increased by more than $ 100 billion. And its harshest critics, alias investors who cut short Tesla (TSLA) S3 Partners, on the assumption that the share price would fall, lost a record $ 40.1 billion against it.

The critics, with whom Musk has had a very hard, very public word fight over the years, would deliver a healthy return if Tesla shares fell in value, but would risk huge losses if the stock continued to rise.

And, boy, did it rise and it did rise by 743% during the year.

According to Ihor Dusaniwsky, managing director of S3 and an expert on the subject, the losses of investors who cut Tesla shares short were losses by investors who cut Tesla shares short, by the short investors of other companies – last year or ever – defense.

In fact, the losses Tesla shorts endured were more than the short losses for the next nine companies – combined. Losses on number 2 appeal (AAPL) in 2020 amounted to $ 6.7 billion, which is just a little more than the Tesla shorts lost in December alone. Amazon (AMZN) according to S3, the shorts cost $ 5.8 billion.
Tesla has long been a favorite play for short-term investors, controlling about 19% of the stock in early 2020. For anyone who believes the company is a paradigm-changing, leader of clean energy with unlimited potential, other investors believe it is an over-hardened niche player who will soon be overwhelmed by larger, more established automakers.

Many of the shorts were forced to admit defeat last year. About two-thirds of the short positions were wound up during 2020, which in itself was a factor that contributed to Tesla shares rising higher, as the short investors were forced to buy share prices to leave their positions.

“It’s been a gentle tailwind in Tesla’s price movement all year,” Dusaniwsky said.

But the year ended with short investors still owning about 5.5% of Tesla’s shares, which equates to a $ 31 billion bet against the company’s future prospects. By comparison, there are currently $ 13.3 billion and $ 10.2 billion against Apple and Amazon, respectively, with shorts holding less than 1% of each of the companies’ shares.

Musk’s very profitable year

Musk regularly struggled with short sellers and shot on Twitter and made public comments. But above any joy he experienced due to their losses last year, their collective pain does not compare to his own personal gains.

Musk’s stake of 170 million shares rose by a whopping $ 106 billion in 2020, and that’s only part of the profit he earned from Tesla’s performance. He came in this year with options to buy another 22.9 million shares, when adjusted for the company’s five-for-one shares. These options increased by $ 14.2 billion.

Tesla reached half a million target in 2020
Over the course of 2020, Musk also qualified for options to purchase an additional 33.8 million shares, part of its only compensation package that it collects when the company reaches certain market values ​​and operating targets. He qualified for four separate options in 2020, ending the year worth $ 21.5 billion after considering the exercise price.

And he plans to be eligible to get two more share options to buy another 16.9 million shares early this year, given the company’s recent financial and market performance. These additional options will be worth $ 10.7 billion, based on the share price for the year-end.

Musk should soon have enough options to buy another 73.5 million shares in Tesla at an average price of about $ 50 per share. It is currently trading at over $ 700.

Musk has not yet exercised any of the options he now has, which is not uncommon. Managers who have granted stock options rarely use them until they are ready to sell the shares, or when the options are about to expire.

All of this has left Musk the second richest man in the world, with a net worth estimated by Forbes at $ 162 million, behind only Jeff Bezos, CEO of Amazon, whose net worth is $ 187 billion. Bezos’ current holdings in Amazon increased “only” $ 75 billion over the course of 2020.

.Source