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You say the shorts don't have any power to hurt tesla, but much of tesla's and elon musk's personal debt is backed by Tesla shares. If the price dips too low,

You say the shorts don't have any power to hurt tesla, but much of tesla's and elon musk's personal debt is backed by Tesla shares. If the price dips too low, it's potentially catastrophic for the company and him.

eli 8y ago
Is there any evidence the short sellers have ever caused the price to move at all?
- AnthonyMouse 8y ago
  Shorting a stock means borrowing shares and selling them (making the seller short of shares they still owe). This puts the shares back on the market and absorbs purchasing demand. By supply and demand the price goes down. Regardless of any change in public sentiment or incentives to publicize dirt, at scale shorting a stock inherently reduces the price while the short positions are open.
  - eli 8y ago
    In practice, at the scale of short selling actually taking place, does it materially impact the price of Tesla shares? Is there even any way to know? Seems like a boogeyman to blame all manner of company ills on. For example, I think very few of the negative press Tesla has received over e.g. union busting or manufacturing defects is due to a short seller conspiracy. That's newsworthy stuff and the media is doing its job.
    - GW150914 8y ago
      Permitting and perpetuating this kind of myth-making is practically part of Elon's fiduciary duty to his shareholders at this point. You can't fault him for doing it, because he has to. You have to admit though, based on comments all over any story about Tesla here at least, that it works as a bogeyman. The only other fiction that’s more powerful is that Musk does everything he does to send humanity to Mars, save the world, etc. Musk has a true talent for figuring out what his target audience wants to believe, and then selling it to them at a premium. Smart, technically minded people (key early adopters of Tesla) are desperate for a way to keep humanity going in the face of climate change, possible impact events, and so on. Musk more or less frames his rather mundane personal aggrandizement and money-making endeavors as lynchpins in just those areas. He helps to convince people who want to believe, that they can help save the world not through anything like sacrifice, but by buying stock or a luxury car! They eat it up, and are enraged at people who scoff, and no one scoffs harder than someone who puts their money on a bet that the stock is overvalued. As a result the short is already a subject of hate, and perfect to pin all of the evils of the world on. It perpetuates a classic tribal narrative and dresses it up in just enough pseudo intellectual finery to convince a target audience which already wants to believe. As a bonus that audience thinks it’s too smart to be fooled that way, and above tribalism, making it easier to sell the story and harder for them to admit what they’ve fallen for. Look at some of these comments, and you see the evidence of just what I’m talking about! The law says a lot of things. I'm ok with short sellers losing their shirts regardless. — I also take the long view; Elon is instrumental to the long-term outcome for Tesla, our species, and our planet. — Because he made short sellers look like idiots? I think not. I just bought more. — SEC suing Elon Musk is , quite frankly one of the most abhorrent actions a US govt agency can ever do against genuine American Entrepreneurship and American innovative spirit. There is not a single human being on the planet who comes close to Elon Musk when it comes to big , bold innovation and tech entrepreneurship who is putting his heart and soul into leading the human race into the future. — you can’t disrupt or otherwise show up all of these players: the us/eu/russian/chinese space industries (and by extension the governments of china and russia), the oil industries of russia/saudi/usa, the major auto manufacturers, power companies, professional car and truck drivers, and the us dealership association (what am i forgetting), all of whom are politically very well connected, and some of whom have their hordes of paid shill internet commenters, and upvoting/downvoting bot nets (not that that would ever happen on hn (and if it would it’s against hn rules to suggest it)) and expect not to get trounced. elon might have fucked up by sending that tweet, but the response here, on reddit, and by the gov’t is way out of proportion, esp considering everything positive that this man has accomplished and is currently working on. — He didn’t screw anyone over. Wall street gamblers lost money, and our culture coddles Wall Street bros like helpless babies. Traders who lost money wouldn’t have had the stock to trade without Elon in the first place! — The entire world will lose if Elon is forced out. He’s the biggest fighter for climate change and space travel in modern history, greater than Al Gore in marketing and execution, greater than Buzz Aldrin, Tyson, and cosmos. I’d much rather have an honest relatable Elon Musk than a suit. I’d rather have creativity than suffocating structure. — The subtext is that Elon intentionally bumped the stock price to screw over short sellers like Jim Chanos. But the rationale behind 10b5 is to protect investors from fraud. Right, we are not concerned with protecting short-sellers who spend all day on twitter making up negative stories about their targets. — The battery and solar operations side of TSLA are critical to spaceX's mission to Mars. Can't have a martian colony without being able to harvest and store energy. Additionally the CV being done at Tesla could prove critical in automating prefabrication of living spaces and life support infrastructure. Can't be doing anything like that remote controlled with 8 min latency. — What a joke, there are plenty of scumbag and criminal leaders of corporations and this is the guy who doesn't walk. It'll be a sad day for the world if this guy goes to jail. — I know where Elon comes from, what missions and goals he has stated for years now, and what he is trying to accomplish. I promise you, Elon legitimately thought there would be an opportunity to go private again. He's said he wanted to do so in the past, and even has said they never wanted to go public, but were left with no choice. I don't think any part of Elon was trying to commit fraud or security manipulation. He made a mistake, we all do. He said something that should not have been said at that given point of time. I'm sure he was excited. He even said he typed that tweet in the car after leaving SpaceX.
      - kamaal 8y ago
        Its hard to disagree with the comments. Somethings are just not worth doing, regardless of whatever little virtue fight is at stake. Punish Musk and you handover the keys to the auto-industry kingdom to Germany and Japan on a platter. You also risk scaring away, Musk like entrepreneurs to other countries. Emmanuel Macron wants to set up a SV competitor in France, and UK tops the world in quality universities. Germany too could put up a tough fight. Most of the world already has infrastructure to dethrone SVs dominance over creating high quality value and leadership. This is beyond countries like India and China having millions of super hungry entrepreneurs wanting to prove themselves. Even if there is small chance of this happening, you risk losing trillions of dollars of future worth economy, talent, IP, ecosystem and culture to competing countries. And all of this for what? A few overzealous prosecutors and short sellers on the market, all of whom are inconsequential and sometimes even a net negative to the economy. In my country(India). Plenty of small to even large business people are known to indulge in blatant corrupt practices. Government does nothing because you rather have them at home, than compete with someone like them in a competing country. Prosecuting Musk will make US Justice system win a tiny inconsequential virtue war, but it will be massive shooting in the foot at the country level.
      - anonu 8y ago
        > one of the most abhorrent actions a US govt agency can ever do against genuine American Entrepreneurship This is because the current Administration is anti Silicon Valley and anti Clean Energy. It makes sense for them
    - AnthonyMouse 8y ago
      > In practice, at the scale of short selling actually taking place, does it materially impact the price of Tesla shares? Is there even any way to know? If you divert some of the water from a river, the water level goes down. How much does it go down? You can calculate it if you know the values of all the variables that go into it. If you don't know all their values, does that mean the principle ceases to operate? > Seems like a boogeyman to blame all manner of company ills on. Not being responsible for 100% of all problems is not equivalent to being responsible for 0% of all problems.
    - sobani 8y ago
      > In practice, at the scale of short selling actually taking place, does it materially impact the price of Tesla shares? Is there even any way to know? Right now >28% the TSLA float is sold short[0]. I can't imagine that not have an impact on the price. [0] https://www.gurufocus.com/term/ShortPercentageOfFloat/NAS:TSLA/Short-Percentage-of-Float/Tesla%20Inc https://www.gurufocus.com/term/ShortPercentageOfFloat/NAS:TS...
- goshx 8y ago
  No, I don't think all that negativism in the news about a company that is disrupting the automotive industry in less than 15 years, have a product that customers literally make lines to buy and they love it when they finally receive them are brought up by short sellers. I mean, who would not want a company like that to succeed? /sacarsm
quirkot 8y ago
In what way would that be catastrophic for the company?
- deelowe 8y ago
  If the stock falls below a certain price, they have to pay down debt. This is a requirement when you use stock as collateral.
- dx87 8y ago
  From what I understand, and I'm sure I'm using the wrong terminology, they got loans to run the company using Tesla stock, and if the value dips below a certain amount, the loan terms say they need to be repaid with cash instead of stock.
matwood 8y ago
What exactly did the shorts do here? Musk has brought on all this scrutiny himself. The shorts didn't bail out Solar City, miss nearly every production target, use TSLA as a way to personally finance a lavish lifestyle, or commit securities fraud. The shorts are all over this stock because of issues like the above. They were not the cause of those issues.
- DSingularity 8y ago
  Winner winner chicken dinner. Lol. Musk over extended. Plain and simple. He played it risky and now, when it didn’t work out, he is pissed. In response he waged war via twitter on those who took risks in the other direction. Would have been wiser for him to focus on finding a way to cut his losses so he can continue fighting. Instead he played with fire and was burned.
- JoshCole 8y ago
  The idea that Tesla is drastically missing its production targets is overstated. It originally claimed that what was later named the Model 3 would begin production in 2017. This claim was made as far back as 2014. This occurred as projected. It has since been ramping up steadily. The rate of that ramp up has been slower than initially projected, but is well within the long-term projected numbers. Critically, Tesla ramp up is already high enough that it is now leading the US in sales of electric vehicles. The numbers are decidedly in favor of Tesla, who sells almost as many vehicles a month as the other electric providers sell in a year. This should be a good thing in your eyes, considering the impact of climate change which will be felt by this generation. However, the legacy of effect of sowing doubt about climate change and automobiles is bearing itself out. The seeds were sown and they now sprout. Enough idiots were convinced to bet against renewable energy and now they're going to do their best to damn the rest us. This seems to me like a woe to the world moment. The world is trying to take down someone seeking its good. It reminds me of the persecution of Jesus Christ. Read through this thread and see the false witnesses being refuted by his co-laborers and friends. Read the testimony of the people saying that his product is good. Read the empirical reports on the quality of his work. When the righteous are persecuted, it is done, not because they are evil, but because they are good. Nobody is afraid of the incompetent fool, but rival automaker executives line up to plead that Elon Musk should be removed from his position, now that they realize the danger they are in.
compcoffee 8y ago
>If the price dips too low, it's potentially catastrophic for the company and him. Shorting a stock doesn't magically make its price drop.
- greenshackle2 8y ago
  More buys = higher price. More sells = lower price. Shorting is selling* . This is neither magic nor controversial. * And buying back later of course. But in the meantime, does a short-sell look any different than a sell on the order book?
  - compcoffee 8y ago
    Every transaction has a buyer and a seller. Shorting is selling? Selling to whom? Ah, right, a buyer. Telsa share price has risen through extreme short interest for years. How?
    - AnthonyMouse 8y ago
      > Shorting is selling? Selling to whom? Ah, right, a buyer. A buyer who would otherwise have had to buy from a seller who wanted a higher price. The stock price is really the value for which shares were most recently exchanged. If the price is $500, shares were exchanged for $500. That isn't the same as what other people value the shares at, which is different for each person. The people who own shares value them at more than their market price (or they would sell) and the people who can afford but don't own shares value them less (or they would buy). Someone could own shares and value them at $600, so they wouldn't even sell at $550, meanwhile another owner values them at no more than $500.02, so they sell as soon as the price hits $500.02. That's where the bid/ask spread comes from. The lowest seller values the shares at $500.02, the highest buyer values them at $499.98, so the seller keeps their shares and the buyer keeps their money, and the share price is still considered to be $500.00 because that's what the last actual sale went through as. To get another transaction either the seller or the buyer has to "cross the spread" and meet the other side's price and then the price goes up or down based on whether it was the buyer or the seller. So what happens when someone makes a short sale? They borrow shares and cross the spread to sell for $499.98. Now the share price has gone down two cents. Moreover, the buyer willing to pay $499.98 now has their shares. The next highest bid is $499.97. If another short seller supplies that buyer with shares, the share price drops again and so does the bid price, because the previous high bid already has their shares. The more short sellers, the lower the sale price. This is one of the reasons why short selling is frequently unprofitable. If you're not an early short seller, you're selling shares for $450 that all else equal would be worth $500 once the existing shorts close their positions, and at some point you have to buy them back. Which means to make money the company doesn't just have to lose value, it has to fail hard enough to prevent your profits from being erased by other shorts buying back shares to close their positions. > Telsa share price has risen through extreme short interest for years. How? If the share price would rise by $3 while short selling would cause it to decline by $1 then on net the price rises by $2, i.e. $1 less than it would have but still a positive value.
jeffreyrogers 8y ago
Shorts don't affect the stock the price that way. They profit if the price goes down, sure. And lots of short interest might make people more likely to sell, which will drive the price down, but just shorting a stock doesn't have much effect on the price.
- sobani 8y ago
  Shorting is selling a stock. Selling a stock lowers its price. The way shorting works is Alice lends a stock from Bob and gives him a small compensation for that. Then Alice sells that stock she lend. Somewhere in the future Alice will buy the stock and give it back to Bob. If the price goes up enouogh, Alice will (be forced to) cut her losses. For this she has to buy a stock, which will increase the price further. This can lead to a so called 'short squeeze' when shorters Carol and Dave also (are forced to) cut their losses, driving the price up even further. Right now >28% the TSLA float is sold short[0]. That must have an impact on the price. Also should a TSLA short squeeze ever happen, that's going to be epic. There will be enough Tesla believers that it's probable going to be hard to find that 28% for anything close to reasonable prices. [0] https://www.gurufocus.com/term/ShortPercentageOfFloat/NAS:TSLA/Short-Percentage-of-Float/Tesla%20Inc https://www.gurufocus.com/term/ShortPercentageOfFloat/NAS:TS...

eli 8y ago

Is there any evidence the short sellers have ever caused the price to move at all?

AnthonyMouse 8y ago
Shorting a stock means borrowing shares and selling them (making the seller short of shares they still owe). This puts the shares back on the market and absorbs purchasing demand. By supply and demand the price goes down. Regardless of any change in public sentiment or incentives to publicize dirt, at scale shorting a stock inherently reduces the price while the short positions are open.
- eli 8y ago
  In practice, at the scale of short selling actually taking place, does it materially impact the price of Tesla shares? Is there even any way to know? Seems like a boogeyman to blame all manner of company ills on. For example, I think very few of the negative press Tesla has received over e.g. union busting or manufacturing defects is due to a short seller conspiracy. That's newsworthy stuff and the media is doing its job.
  - GW150914 8y ago
    Permitting and perpetuating this kind of myth-making is practically part of Elon's fiduciary duty to his shareholders at this point. You can't fault him for doing it, because he has to. You have to admit though, based on comments all over any story about Tesla here at least, that it works as a bogeyman. The only other fiction that’s more powerful is that Musk does everything he does to send humanity to Mars, save the world, etc. Musk has a true talent for figuring out what his target audience wants to believe, and then selling it to them at a premium. Smart, technically minded people (key early adopters of Tesla) are desperate for a way to keep humanity going in the face of climate change, possible impact events, and so on. Musk more or less frames his rather mundane personal aggrandizement and money-making endeavors as lynchpins in just those areas. He helps to convince people who want to believe, that they can help save the world not through anything like sacrifice, but by buying stock or a luxury car! They eat it up, and are enraged at people who scoff, and no one scoffs harder than someone who puts their money on a bet that the stock is overvalued. As a result the short is already a subject of hate, and perfect to pin all of the evils of the world on. It perpetuates a classic tribal narrative and dresses it up in just enough pseudo intellectual finery to convince a target audience which already wants to believe. As a bonus that audience thinks it’s too smart to be fooled that way, and above tribalism, making it easier to sell the story and harder for them to admit what they’ve fallen for. Look at some of these comments, and you see the evidence of just what I’m talking about! The law says a lot of things. I'm ok with short sellers losing their shirts regardless. — I also take the long view; Elon is instrumental to the long-term outcome for Tesla, our species, and our planet. — Because he made short sellers look like idiots? I think not. I just bought more. — SEC suing Elon Musk is , quite frankly one of the most abhorrent actions a US govt agency can ever do against genuine American Entrepreneurship and American innovative spirit. There is not a single human being on the planet who comes close to Elon Musk when it comes to big , bold innovation and tech entrepreneurship who is putting his heart and soul into leading the human race into the future. — you can’t disrupt or otherwise show up all of these players: the us/eu/russian/chinese space industries (and by extension the governments of china and russia), the oil industries of russia/saudi/usa, the major auto manufacturers, power companies, professional car and truck drivers, and the us dealership association (what am i forgetting), all of whom are politically very well connected, and some of whom have their hordes of paid shill internet commenters, and upvoting/downvoting bot nets (not that that would ever happen on hn (and if it would it’s against hn rules to suggest it)) and expect not to get trounced. elon might have fucked up by sending that tweet, but the response here, on reddit, and by the gov’t is way out of proportion, esp considering everything positive that this man has accomplished and is currently working on. — He didn’t screw anyone over. Wall street gamblers lost money, and our culture coddles Wall Street bros like helpless babies. Traders who lost money wouldn’t have had the stock to trade without Elon in the first place! — The entire world will lose if Elon is forced out. He’s the biggest fighter for climate change and space travel in modern history, greater than Al Gore in marketing and execution, greater than Buzz Aldrin, Tyson, and cosmos. I’d much rather have an honest relatable Elon Musk than a suit. I’d rather have creativity than suffocating structure. — The subtext is that Elon intentionally bumped the stock price to screw over short sellers like Jim Chanos. But the rationale behind 10b5 is to protect investors from fraud. Right, we are not concerned with protecting short-sellers who spend all day on twitter making up negative stories about their targets. — The battery and solar operations side of TSLA are critical to spaceX's mission to Mars. Can't have a martian colony without being able to harvest and store energy. Additionally the CV being done at Tesla could prove critical in automating prefabrication of living spaces and life support infrastructure. Can't be doing anything like that remote controlled with 8 min latency. — What a joke, there are plenty of scumbag and criminal leaders of corporations and this is the guy who doesn't walk. It'll be a sad day for the world if this guy goes to jail. — I know where Elon comes from, what missions and goals he has stated for years now, and what he is trying to accomplish. I promise you, Elon legitimately thought there would be an opportunity to go private again. He's said he wanted to do so in the past, and even has said they never wanted to go public, but were left with no choice. I don't think any part of Elon was trying to commit fraud or security manipulation. He made a mistake, we all do. He said something that should not have been said at that given point of time. I'm sure he was excited. He even said he typed that tweet in the car after leaving SpaceX.
    - kamaal 8y ago
      Its hard to disagree with the comments. Somethings are just not worth doing, regardless of whatever little virtue fight is at stake. Punish Musk and you handover the keys to the auto-industry kingdom to Germany and Japan on a platter. You also risk scaring away, Musk like entrepreneurs to other countries. Emmanuel Macron wants to set up a SV competitor in France, and UK tops the world in quality universities. Germany too could put up a tough fight. Most of the world already has infrastructure to dethrone SVs dominance over creating high quality value and leadership. This is beyond countries like India and China having millions of super hungry entrepreneurs wanting to prove themselves. Even if there is small chance of this happening, you risk losing trillions of dollars of future worth economy, talent, IP, ecosystem and culture to competing countries. And all of this for what? A few overzealous prosecutors and short sellers on the market, all of whom are inconsequential and sometimes even a net negative to the economy. In my country(India). Plenty of small to even large business people are known to indulge in blatant corrupt practices. Government does nothing because you rather have them at home, than compete with someone like them in a competing country. Prosecuting Musk will make US Justice system win a tiny inconsequential virtue war, but it will be massive shooting in the foot at the country level.
    - anonu 8y ago
      > one of the most abhorrent actions a US govt agency can ever do against genuine American Entrepreneurship This is because the current Administration is anti Silicon Valley and anti Clean Energy. It makes sense for them
  - AnthonyMouse 8y ago
    > In practice, at the scale of short selling actually taking place, does it materially impact the price of Tesla shares? Is there even any way to know? If you divert some of the water from a river, the water level goes down. How much does it go down? You can calculate it if you know the values of all the variables that go into it. If you don't know all their values, does that mean the principle ceases to operate? > Seems like a boogeyman to blame all manner of company ills on. Not being responsible for 100% of all problems is not equivalent to being responsible for 0% of all problems.
  - sobani 8y ago
    > In practice, at the scale of short selling actually taking place, does it materially impact the price of Tesla shares? Is there even any way to know? Right now >28% the TSLA float is sold short[0]. I can't imagine that not have an impact on the price. [0] https://www.gurufocus.com/term/ShortPercentageOfFloat/NAS:TSLA/Short-Percentage-of-Float/Tesla%20Inc https://www.gurufocus.com/term/ShortPercentageOfFloat/NAS:TS...
goshx 8y ago
No, I don't think all that negativism in the news about a company that is disrupting the automotive industry in less than 15 years, have a product that customers literally make lines to buy and they love it when they finally receive them are brought up by short sellers. I mean, who would not want a company like that to succeed? /sacarsm

quirkot 8y ago

In what way would that be catastrophic for the company?

deelowe 8y ago
If the stock falls below a certain price, they have to pay down debt. This is a requirement when you use stock as collateral.
dx87 8y ago
From what I understand, and I'm sure I'm using the wrong terminology, they got loans to run the company using Tesla stock, and if the value dips below a certain amount, the loan terms say they need to be repaid with cash instead of stock.

matwood 8y ago

What exactly did the shorts do here? Musk has brought on all this scrutiny himself. The shorts didn't bail out Solar City, miss nearly every production target, use TSLA as a way to personally finance a lavish lifestyle, or commit securities fraud. The shorts are all over this stock because of issues like the above. They were not the cause of those issues.

DSingularity 8y ago
Winner winner chicken dinner. Lol. Musk over extended. Plain and simple. He played it risky and now, when it didn’t work out, he is pissed. In response he waged war via twitter on those who took risks in the other direction. Would have been wiser for him to focus on finding a way to cut his losses so he can continue fighting. Instead he played with fire and was burned.
JoshCole 8y ago
The idea that Tesla is drastically missing its production targets is overstated. It originally claimed that what was later named the Model 3 would begin production in 2017. This claim was made as far back as 2014. This occurred as projected. It has since been ramping up steadily. The rate of that ramp up has been slower than initially projected, but is well within the long-term projected numbers. Critically, Tesla ramp up is already high enough that it is now leading the US in sales of electric vehicles. The numbers are decidedly in favor of Tesla, who sells almost as many vehicles a month as the other electric providers sell in a year. This should be a good thing in your eyes, considering the impact of climate change which will be felt by this generation. However, the legacy of effect of sowing doubt about climate change and automobiles is bearing itself out. The seeds were sown and they now sprout. Enough idiots were convinced to bet against renewable energy and now they're going to do their best to damn the rest us. This seems to me like a woe to the world moment. The world is trying to take down someone seeking its good. It reminds me of the persecution of Jesus Christ. Read through this thread and see the false witnesses being refuted by his co-laborers and friends. Read the testimony of the people saying that his product is good. Read the empirical reports on the quality of his work. When the righteous are persecuted, it is done, not because they are evil, but because they are good. Nobody is afraid of the incompetent fool, but rival automaker executives line up to plead that Elon Musk should be removed from his position, now that they realize the danger they are in.

compcoffee 8y ago

>If the price dips too low, it's potentially catastrophic for the company and him. Shorting a stock doesn't magically make its price drop.

greenshackle2 8y ago
More buys = higher price. More sells = lower price. Shorting is selling* . This is neither magic nor controversial. * And buying back later of course. But in the meantime, does a short-sell look any different than a sell on the order book?
- compcoffee 8y ago
  Every transaction has a buyer and a seller. Shorting is selling? Selling to whom? Ah, right, a buyer. Telsa share price has risen through extreme short interest for years. How?
  - AnthonyMouse 8y ago
    > Shorting is selling? Selling to whom? Ah, right, a buyer. A buyer who would otherwise have had to buy from a seller who wanted a higher price. The stock price is really the value for which shares were most recently exchanged. If the price is $500, shares were exchanged for $500. That isn't the same as what other people value the shares at, which is different for each person. The people who own shares value them at more than their market price (or they would sell) and the people who can afford but don't own shares value them less (or they would buy). Someone could own shares and value them at $600, so they wouldn't even sell at $550, meanwhile another owner values them at no more than $500.02, so they sell as soon as the price hits $500.02. That's where the bid/ask spread comes from. The lowest seller values the shares at $500.02, the highest buyer values them at $499.98, so the seller keeps their shares and the buyer keeps their money, and the share price is still considered to be $500.00 because that's what the last actual sale went through as. To get another transaction either the seller or the buyer has to "cross the spread" and meet the other side's price and then the price goes up or down based on whether it was the buyer or the seller. So what happens when someone makes a short sale? They borrow shares and cross the spread to sell for $499.98. Now the share price has gone down two cents. Moreover, the buyer willing to pay $499.98 now has their shares. The next highest bid is $499.97. If another short seller supplies that buyer with shares, the share price drops again and so does the bid price, because the previous high bid already has their shares. The more short sellers, the lower the sale price. This is one of the reasons why short selling is frequently unprofitable. If you're not an early short seller, you're selling shares for $450 that all else equal would be worth $500 once the existing shorts close their positions, and at some point you have to buy them back. Which means to make money the company doesn't just have to lose value, it has to fail hard enough to prevent your profits from being erased by other shorts buying back shares to close their positions. > Telsa share price has risen through extreme short interest for years. How? If the share price would rise by $3 while short selling would cause it to decline by $1 then on net the price rises by $2, i.e. $1 less than it would have but still a positive value.

jeffreyrogers 8y ago

Shorts don't affect the stock the price that way. They profit if the price goes down, sure. And lots of short interest might make people more likely to sell, which will drive the price down, but just shorting a stock doesn't have much effect on the price.

sobani 8y ago
Shorting is selling a stock. Selling a stock lowers its price. The way shorting works is Alice lends a stock from Bob and gives him a small compensation for that. Then Alice sells that stock she lend. Somewhere in the future Alice will buy the stock and give it back to Bob. If the price goes up enouogh, Alice will (be forced to) cut her losses. For this she has to buy a stock, which will increase the price further. This can lead to a so called 'short squeeze' when shorters Carol and Dave also (are forced to) cut their losses, driving the price up even further. Right now >28% the TSLA float is sold short[0]. That must have an impact on the price. Also should a TSLA short squeeze ever happen, that's going to be epic. There will be enough Tesla believers that it's probable going to be hard to find that 28% for anything close to reasonable prices. [0] https://www.gurufocus.com/term/ShortPercentageOfFloat/NAS:TSLA/Short-Percentage-of-Float/Tesla%20Inc https://www.gurufocus.com/term/ShortPercentageOfFloat/NAS:TS...