Key Points:
- Tesla’s stock rose 17% after better-than-expected Q2 delivery numbers. Short sellers lost an estimated $3.5 billion as Tesla’s stock rallied.
- Tesla delivered 443,956 vehicles in Q2, surpassing estimates. To boost sales despite declining demand, Tesla offered various incentives.
- The new Cybertruck has faced quality problems and recalls. Analysts predict a 2.9% revenue decline in the upcoming earnings report.
- CEO Elon Musk criticized short sellers and highlighted future projects. Musk’s controversial public statements have damaged Tesla’s brand image.
Tesla’s recent report on better-than-expected second-quarter deliveries has significantly affected traders betting against the electric vehicle maker’s stock. The shares have surged 17% in the two days following the report, leading to an estimated $3.5 billion in losses for short sellers, according to S3 Partners.
This surge has continued a difficult period for those shorting Tesla, as the stock has climbed 73% since hitting a low in April. After closing at $246.39 in shortened trading on Wednesday, Tesla’s stock is close to erasing its losses for the year. Currently, short interest in Tesla stands at 3.5% of the float, or 97 million shares shorted, with a notional value of $22.4 billion.
Tesla reported second-quarter deliveries of 443,956 vehicles, surpassing Wall Street’s expectation of 439,000. While this represented a 4.8% year-over-year decline, it was less severe than the 8.5% drop in the first quarter, indicating stronger-than-anticipated demand for Tesla vehicles.
Despite the positive delivery numbers, Tesla’s performance remains under scrutiny. The company has been facing a sales decline due to an aging product lineup and increased competition. Tesla has offered various incentives to boost sales, including discounts, low- or no-interest financing options, and other perks. In the second quarter, Tesla reduced prices in Germany and Norway and offered zero-interest loan promotions in China. In the U.S., the company provided a three-year, 2% APR financing deal for its rear-wheel drive Model 3.
The introduction of Tesla’s newest model, the Cybertruck, has been slow, marred by quality issues that led to four voluntary recalls in the U.S. within a year. Tesla’s upcoming earnings report later this month is expected to shed more light on the company’s financial health, with analysts predicting a 2.9% revenue decline to $24.2 billion, following a 9% drop in the first quarter.
CEO Elon Musk, whose net worth has surged by about $15 billion in the past two days, took the opportunity to criticize short sellers, including Microsoft co-founder Bill Gates. Musk predicted that short sellers would suffer further losses once Tesla advances its autonomous driving and Optimus humanoid robot projects.
Despite these developments, Tesla continues to face challenges in its core automotive business. Although the company frequently updates its in-vehicle software, it has yet to deliver on its promise of self-driving capabilities. Additionally, Tesla’s brand image has suffered partly due to Musk’s controversial public statements and political activities, which have alienated some left-leaning consumers.
