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Tesla stock’s soaring short interest numbers

Tesla stock's soaring short interest numbers

Global adoption of electric vehicles has reached record highs, which opens fundamental opportunities for Tesla Inc. (NASDAQ: TSLA), the sector leader. However, Tesla is the most shorted stock in dollars, although with a low short float.

A short position is a bearish bet on a stock performance that can be used as a valuable indicator of overall sentiment. The total capitalization used on shorts can be combined with both the company’s market cap and exchanged volume, offering insights to traders and investors.

Notably, Tesla stocks have accumulated over $18.63 billion in short positions, according to data from S3 Partners and Nasdaq’s short interest dashboard. This results in the most shorted stock by dollars’ capitalization.

However, it is still a neutral signal for the stock market standards when adjusted with TSLA’s total market cap of $706.1 billion. The approximately 3% of the short float (or short interest) is far below the bearish threshold of 10%. And even lower than the alarming threshold of 20% float.

Tesla stock price analysis

In the meantime, Tesla is trading at $222.11 per share on Nasdaq. TSLA has accumulated over 87% gains since the beginning of 2023, at $118.47 per share. Elon Musk’s company has traded as high as $296 per share year-to-date.

TSLA YTD price chart. Source: Finbold

Interestingly, Tesla Inc. has massively outperformed its smaller competitor, Lucid Group Inc. (NASDAQ: LCID). Jim Cramer recommended LCID as “the next Tesla” in November 2021, and Lucid stocks have been 93% down in price since.

All things considered, the good relative performance of Tesla in the stock market is probably triggering some investors to open short positions, who are betting against what could be an overbought asset.

If the short interest on TSLA stocks continues to increase close to 10% float, this could signal a dominant bearish sentiment. Nevertheless, high short capitalizations also create short squeeze opportunities for the bulls, with massive liquidations ahead.

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