Electric Shock: Tesla’s Winning Streak Shakes Short Sellers

The unprecedented 13-day winning streak of Tesla shares, which propelled the company’s valuation by a whopping $200 billion, met its conclusion on Wednesday. The meteoric rise, which added more than 40% to Tesla’s share value, ceased with a slight dip, marking an end to an impressive rally that hoisted the U.S. automaker’s market cap to a staggering $814 billion.

The striking surge in Tesla’s valuation during this period was nearly $240 billion, a figure that astonishingly outpaces the total value of Toyota, the globe’s second-most valuable automaker. This significant surge originated from the news that prominent U.S. automakers Ford and General Motors have adopted Tesla’s charging system.

This strategic decision aligns 60% of the U.S. electric vehicle market with the North America Charging Standard (NACS), a Tesla-used system, even in the face of other competing charging mechanisms worldwide.

The share price of the electric vehicle pioneer continues to soar beyond Wall Street’s predictions, sitting at a robust 28% higher than the median target of $200, as per Refinitiv data.

As analysts from Wedbush Securities noted, “What has changed for the Street over the last month is the recognition with the Ford and GM supercharger partnerships that Tesla’s sum-of-the-parts valuation is now finally starting to get tapped into.”

With the rally, Tesla’s towering price-to-earnings ratio significantly overshadows other automakers. Tesla’s forward price-to-earnings ratio sits around 62, trailing closely behind Amazon.com’s 63.7. In stark contrast, Ford and GM’s P/Es stand at 8.2 and 5.6 respectively, according to Eikon data.

Drawing parallels to Amazon’s share gains, which consistently shattered investor expectations over the years, Tesla’s performance seems to follow a similar trajectory. Despite a significant slump in 2022 where Tesla shares plummeted 65% in value, the 13-day rally reversed the tide causing short sellers a significant loss.

The rally dealt a $7 billion blow to short sellers in mark-to-market losses, tallying their year-to-date losses to nearly $12.7 billion, as reported by S3 Partners.

Haye Kesteloo
Haye Kesteloo

Haye Kesteloo is the Editor in Chief and Founder of EVXL.co, where he covers all electric vehicle-related news, covering brands such as Tesla, Ford, GM, BMW, Nissan and others. He fulfills a similar role at the drone news site DroneXL.co. Haye can be reached at haye @ evxl.co or @hayekesteloo.

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