Please ensure Javascript is enabled for purposes of website accessibility

Tesla Motors Shorts Held Steady Last Month Ahead of Earnings

By Evan Niu, CFA - May 19, 2016 at 7:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Bearish sentiment stayed relatively flat for the second half of April.

Image source: Tesla.

The latest short interest numbers for Tesla Motors (TSLA 4.88%) are in, and surprisingly, the bears are taking a step back even as shares have fallen in recent weeks.

Considering the generally high level of short interest and broader skepticism surrounding Tesla, it's incredibly important for investors on both the long side and the short side to keep an eye on these numbers. Tesla is a quintessential battleground stock, so you always want to know what the other side is up to.

One goes up, one goes down

As of the April 29 settlement date, there were 28.4 million shares held short, a sequential decline of about 663,000 shares from the April 15 settlement date. Meanwhile, days to cover actually increased from 3.36 to 7.02.

Days to cover represents how long it would hypothetically take for all short shares to be purchased and covered, based on average daily share volume. The increase in days to cover here is primarily a function of a decline in average share volume, which fell from 8.6 million to 4 million. In absolute terms, short interest did decline modestly.

Settlement Date

Short Interest

Days to Cover

April 29

28.4 million


April 15

29.1 million


March 31

32.3 million


March 15

32.2 million


Feb. 29

34 million


Feb. 12

31.5 million


Data source: Nasdaq.

In fact, current short interest is now at a 2016 low.

The April 29 settlement date translates to a trade date of April 26, while the April 15 settlement date translates to a trade date of April 12. Between those trade dates, shares gained a modest 2.3%, which is fairly negligible in the scheme of a stock that's as volatile as Tesla. This makes sense since the sequential decline in short interest was also pretty modest. We've seen other periods in 2016 where the change in short interest measures in the millions.

This also means that shorts were not increasing their bearish bets on Tesla ahead of its first-quarter earnings release, even as shares had started to reapproach all-time highs, stretching the valuation even further. Instead, they were holding steady.

The next one will be meaningful

Since this latest data point was just before first-quarter earnings, that also means it does not factor in Tesla's important announcement that it was accelerating its production plans by a full two years. Shares have fallen by a fair amount since the earnings release, which I believe shows that investors remain slightly skeptical about the company's ability to hit its target.

In a couple of weeks when the mid-May figures are released, we'll know for sure if the weakness was the result of more shorts piling on after earnings -- or if long investors were selling because they were either disappointed with the results or they're skeptical of Elon Musk's grand plan.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
$658.80 (4.88%) $30.64

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.