Tesla Is Biggest Short in North America

Shares in electric car maker Tesla Motors Inc. (TSLA) dipped below $300 Thursday after a disappointing third-quarter earnings showed the company had experienced manufacturing difficulties that delayed production of its Model 3 vehicle. By trading below $300 a share, Tesla officially entered bear market territory, a 20 percent decline from its recent high. Furthermore, it was the first time Tesla had traded below $300 since May 4. 

However, there is good news for some. Short sellers of Tesla stock continue to claw back some losses after a tough 2017, recording mark-to-market gains of $1.13 billion over the past month. And with total shorts at $8.27 billion, Tesla is the biggest short in North America, according to S3 Partners, a financial analytics firm.

Source: S3 Partners

Even as U.S. indices surge to record highs, overall short selling continues to climb. S3 Partners said total short interest in the U.S. and Canada region stands at $776 billion. (See also: Difference Between Short Selling And Put Options.)

FAANG Pain

Despite the relief for Tesla bears, 2017 continues to be a tough one for equity skeptics. None more so than those betting against the relentless FAANG stocks. Astonishingly, each of the five FAANG stocks (Facebook, Apple, Amazon, Netflix, and Google) traded to record highs over the last two weeks, and with combined short interest of $23.8 billion, it has been a painful year. (See also: The Next Big Tech Stock Isn't a FANG.)

According to S3 Partners, three of the five least profitable shorts over the last month belong to the FAANG group with Amazon, Apple and Netflix cost short tells a combined $1.98 billion. 

Source: S3 Partners

Tesla Speed Bump

Despite a waning share price, many believe the Model 3 production is a minor blip in the road for Tesla investors. "Model 3 reservation holders may not be thrilled about the fact that they have to wait longer than they thought for their vehicle, but it likely won't cause them to cancel their orders en masse," Jessica Caldwell, director of industry analysis website Edmunds.com, said after the release of Tesla Q3 earnings. 

Caldwell added that many Model 3 customers have placed deposits on their purchases.

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