Investors Bet Against Tesla–and Lost $8.4B in Five Weeks

https://www.wsj.com/articles/investors-bet-against-teslaand-lost-8-4-billion-in-five-weeks-11581284236

by dcgudeman • 6 years ago

15 12 6 years ago

Live by the word, die by the sword. I know short sellers play a vital role in the game, but they also play dirty tricks. Sometimes they win, sometimes they get slaughtered.

icebraining2• 6 years ago

What kind of dirty tricks?

arcanus• 6 years ago

'Markets can remain irrational far longer than you can remain solvent'

I have little sympathy for short sellers. Betting on any company to fail is a negative perspective. It's particularly foolhardy to bet against Elon.

I also do not find the common economic argument, that short selling introduces price efficiency, compelling. Most public markets are able to efficiently manage price discovery without negative pressures, such as housing markets, wages, etc. Furthermore, the advantage appears to be extracted purely as profit by the short seller.

ignasl• 6 years ago

Stock market is much much much more efficient compared to housing and wages. One of many reasons is of course ability to short sell. In addition to price discovery short selling provides support when overpriced companies share price free falls and investors starts to panic. It also provides incentive to uncover outright frauds.

Furthermore, the advantage appears to be extracted purely as profit by the short seller. So? Do you work for free? Short selling is extremely risky business as we could see here with TSLA. Even if you are right you can get obliterated by a short squeeze. It's basically impossible to go against solid company and damage it. And there is no reason to - there are plenty of badly managed companies with questionable financials that you could go after.

Agustus• 6 years ago

Short sellers have a place in the market. They put in place a mechanism, in real markets, to hold a stock to honesty.

Imagine if WeWork could be shorted, people would have been able to hold the stock price down. Instead of the last minute moment where everyone looked around and went: It’s a REIT!

Where I share your sentiment on short sellers and longs are the ones who fake information / overpromote it to make some money, which distorts the market for the commoners.

icebraining2• 6 years ago

http://archive.is/uYhKN

H8crilA• 6 years ago

Those sensational headlines. TSLA is 22% below the peak 3 trading days ago. Can we have a silly headline like this, given the change in market cap?

TSLA bulls lose $38B in 3 days.

onetimemanytime2• 6 years ago

the shorts had to cover their positions, doesn't matter how the stock is doing days or weeks after that..."The market can remain irrational longer than you can remain solvent" and all.

WheelsAtLarge• 6 years ago

It's very hard to short stocks. Most high flyers will eventually collapse. The problem is that you can't tell the difference between the bubbles and the actual winners.

You don't have to cover your shorts unless you breach a limit that the brokerage has set. That limit is based on how much liquidity you have. I suspect the majority of the shorts that can continue to hold their position are still shorting hoping to get out at a better price.

mc3• 6 years ago

are the shorts all emotive humans saying "damn it I lost money, boo hoo!", or is much of that money just bundled up money hedging against something and doesn't really care.

new_realist• 6 years ago

Traders don’t bet for or against companies like Tesla. They bet on the movement of their stock, which is governed by the behavior of crowds.

deweller• 6 years ago

What?

Markets are driven by the collective perception of the future performance of the company. Sure it is wildly speculative at times, but buying or shorting a stock is ultimately a bet on the future performance of the company.

Investors Bet Against Tesla–and Lost $8.4B in Five Weeks

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