When Tesla Retail Investors Suffer Losses...Short Selling Forces Earned 20 Trillion Won

[Asia Economy Reporter Yujin Cho] Tesla, the top stock for retail investors in the U.S., has repeatedly plunged to the point where its stock price was halved, benefiting only short sellers.

The Wall Street Journal (WSJ) reported on the 21st (local time) that Tesla short sellers have earned $15 billion (about 20 trillion KRW) in profits this year. According to financial information firm S3 Partners, Tesla short sellers bet on the stock price decline during the early stages of the COVID-19 pandemic in 2020 when Tesla's stock price soared. Tesla shares, which traded at $30 per share in early 2020, peaked last November by surpassing $400, and its market capitalization exceeded $1 trillion. According to S3, investors who shorted Tesla stock during this period (2020?2021) recorded a total book loss of $51 billion.

Tesla's soaring stock price has sharply declined this year, falling to its lowest level in two years. On this day, Tesla shares listed on the U.S. Nasdaq market closed down 0.17% at $137.57. Following an 8% plunge the previous day, the stock has continued to decline for four consecutive trading days. Since the end of October, the stock price has accelerated its plunge, halving in two months. The market capitalization, which once exceeded $1 trillion, has shrunk to $434.4 billion.

[Image source=Reuters Yonhap News]

WSJ reported that despite the sharp stock price decline, the only group not giving up on Tesla is retail investors. According to Vandaresearch, U.S. retail investors have purchased a total of $15.2 billion worth of Tesla shares, making Tesla the most net-bought stock by retail investors this year, surpassing Apple. The domestic situation is no different. According to the Korea Securities Depository, among Korean investors investing in the U.S. stock market (as of the 21st), Tesla was the most net-bought stock this year, with net purchases amounting to $2.7 billion (about 3.5 trillion KRW).

U.S. IT media TechCrunch reported that Tesla plans layoffs again this year and next year. Automotive media Electric, citing Tesla sources, reported that Tesla is expected to carry out layoffs in the first quarter of next year in preparation for an economic recession and maintain a hiring freeze. Tesla reduced its workforce by 10% this year alone. Foreign media analyzed that Tesla is trying to cut costs to maintain margins amid a situation where external growth is difficult due to weakening market demand.

Concerns about demand slowdown in China, Tesla's largest market, and various negative factors such as owner risk arising after CEO Elon Musk's acquisition of Twitter suggest that Tesla's stock price decline will continue. Since acquiring social media platform Twitter at the end of October, Musk has appeared to focus more on Twitter management and accelerated the stock price plunge by selling Tesla shares to raise acquisition funds.

Experts' outlook on Tesla's stock price is also lowering. Andrew Left, founder of Citron Research, said, "Tesla is still an expensive stock. The decline is not over yet," predicting further drops. According to financial information firm FactSet, Tesla's price-to-earnings ratio (P/E) over the past 12 months is 46.7 times, which is much lower than 1,196 times in April last year but still significantly exceeds the S&P 500 average of 18.1 times.

This content was produced with the assistance of AI translation services.