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Cost to Borrow Tesla Shares for Shorting Hits 85%

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#161
luvb2b said:
i'd guess probably around 29 million, but that's just a guess. next official report is in about 10-11 days.
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I was thinking about this on the bus. If they didn't pull the weird option trade to keep rolling their short higher, they would've suffered a margin call and be done with it at around $40. The fact that they are rolling it up means that they are actually suffering a bigger loss. Which I think is happening.
 
#162
Causalien said:
I was thinking about this on the bus. If they didn't pull the weird option trade to keep rolling their short higher, they would've suffered a margin call and be done with it at around $40. The fact that they are rolling it up means that they are actually suffering a bigger loss. Which I think is happening.
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the stooges option trade doesn't help avoid losses, only helps avoid borrowing charges. the short doesn't get rolled up in price, it just rolls from short stock to short calls and back again.
 
#164
lots of shares available to borrow today

02-May-13 -46.10%
01-May-13 -48.23%
30-Apr-13 -50.73%
29-Apr-13 -52.80%
28-Apr-13 -53.86%
27-Apr-13 -53.86%
26-Apr-13 -51.61%
25-Apr-13 -48.73%
24-Apr-13 -47.42%
23-Apr-13 -47.73%
22-Apr-13 -47.73%
21-Apr-13 -47.20%
20-Apr-13 -47.20%
19-Apr-13 -42.60%
18-Apr-13 -37.34%
17-Apr-13 -37.59%
16-Apr-13 -36.66%
15-Apr-13 -37.34%
14-Apr-13 -38.72%
13-Apr-13 -38.72%
12-Apr-13 -38.78%
11-Apr-13 -38.97%
10-Apr-13 -44.23%
9-Apr-13 -49.97%
8-Apr-13 -56.28%
7-Apr-13 -57.34%
6-Apr-13 -57.34%
5-Apr-13 -60.92%
4-Apr-13 -75.23%
3-Apr-13 -82.24%
2-Apr-13 -82.25%
1-Apr-13 -83.00%
31-Mar-13 -84.45%
30-Mar-13 -84.45%
29-Mar-13 -84.45%
28-Mar-13 -82.66%
27-Mar-13 -77.29%
26-Mar-13 -85.35%
25-Mar-13 -75.84%
24-Mar-13 -60.69%
23-Mar-13 -60.69%
22-Mar-13 -59.51%
21-Mar-13 -54.77%
20-Mar-13 -49.85%
19-Mar-13 -49.04%
18-Mar-13 -44.88%
17-Mar-13 -43.94%
 
#166
Norbert said:
Article at SeekingAlpha about the high cost of shorting:

Tesla: The High Cost Of Shorting Increases Chances Of Short Covering - Seeking Alpha

Maybe a short thinks: 'They made it that far, but that only increases the chances of them failing really soon now' .... or they are even more invested in oil and don't care about the cost. ;)
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The short thesis is simply that demand for Model S is not sufficient to drive sustained production levels at a rate Tesla will be able to maintain positive operating margins with, once current "excess" demand from early adopters is met. From there, various levels of bearishness will lead to conclusions about the viability of the company, or likelihood of dilutive equity raises, or just simply comparing some very low level of sustained profitability against the current valuation.

At its heart is an assumption about global consumer's willingness/interest in adopting EV technology. Among the short sellers I know/have met/have read, 100% of them have not driven the car, and/or are fixated on the topic of range and long distance recharging above all else.
 
#167
ModelS8794 said:
The short thesis is simply that demand for Model S is not sufficient to drive sustained production levels at a rate Tesla will be able to maintain positive operating margins with, once current "excess" demand from early adopters is met. From there, various levels of bearishness will lead to conclusions about the viability of the company, or likelihood of dilutive equity raises, or just simply comparing some very low level of sustained profitability against the current valuation.

At its heart is an assumption about global consumer's willingness/interest in adopting EV technology. Among the short sellers I know/have met/have read, 100% of them have not driven the car, and/or are fixated on the topic of range and long distance recharging above all else.
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This.

im bullish and long on telsa, but demand generation and the state of the economy are my main concerns. I find it somewhat reassuring that tesla has not started a major advertising blitz. If they had, it would definitely be bearish.

I also believe dilution is inevitable to start model x (unless it can be built on the same line?), but one can hope that they will make enough money in the next 12 months that the dilution is minimal. Either way, I'll be buying on an offering as long as it is for cap ex spending.
 
#168
ModelS8794 said:
The short thesis is simply that demand for Model S is not sufficient to drive sustained production levels at a rate Tesla will be able to maintain positive operating margins with, once current "excess" demand from early adopters is met. From there, various levels of bearishness will lead to conclusions about the viability of the company, or likelihood of dilutive equity raises, or just simply comparing some very low level of sustained profitability against the current valuation.
Click to expand...
I have no positions in any way on TSLA but I'd say the above are all legitimate concerns. Given the high starting price of the Model S (even higher now that the 40 kwh option has been axed as a choice), what will the demand picture look like once the backlog has died down?

They could make it up with growth elsewhere, but in places like Europe, that's going to be limited and to me will tail off, given the dire economic situation there (BBC News - Eurozone unemployment at record high as inflation drops) of 12.1% unemployment in the Eurozone. Economies are actually contracting in many countries there unlike the meager growth that we have here in the US. As mentioned in that article "Greece and Spain recorded the highest unemployment rates in the eurozone, at 27.2% and 26.7%".

China became the world's largest auto market but I'm unclear of TSLA's plans there. AFAIK, importing cars into that country == VERY expensive car. Building them there apparently (if I'm not mistaken), requirements of joint ventures w/Chinese automakers. I don't think TSLA would want to do that. And, they have their own DC fast charge standard, it's not CHAdeMO nor J1772 CCS.
ModelS8794 said:
At its heart is an assumption about global consumer's willingness/interest in adopting EV technology. Among the short sellers I know/have met/have read, 100% of them have not driven the car, and/or are fixated on the topic of range and long distance recharging above all else.
Click to expand...
Yep, this is very true. Just look at the plug-in vehicle sales figures at Hybrid Market Dashboard - HybridCars.com and compare them to the rest of the auto market (e.g. By the Numbers News - Autoblog and April 2013 U.S. Passenger Car Sales Rankings - Top 149 Best-Selling Cars In America - Every Car Ranked - GOOD CAR BAD CAR).

The range and long distance recharging is obviously not much of an issue for the Model S, but it's too expensive/out of reach or risky for many, leaving folks w/either EVs w/much less range and/or PHEVs.

I'm sure if you talk to many who don't follow EVs or aren't EV enthusiasts, there's a lot of anti-EV talk, FUD, and misinformation floating around amongst them. The folks who aren't into EVs make up a vast majority of auto buyers/people.
 
#169
cwerdna said:
The range and long distance recharging is obviously not much of an issue for the Model S, but it's too expensive/out of reach or risky for many, leaving folks w/either EVs w/much less range and/or PHEVs.
Click to expand...

I agree this is the direction the short people are coming from, but it is fundamentally flawed. It starts by looking at EV's as a whole and saying they are lacking except for the Model S, and then discounts the Model S because most people can't afford it. Sure most people can't afford it, but that's besides the point. The question is whether the Model S is an appealing car for people who can afford it, and I'd say the answer is a definite yes. The fact that many people aren't even considering it currently because they aren't aware how nice a car it is to drive just shows how big an untapped market there is for it.
 
#170
cost to short still over 40%, a couple lenders have shares but locates still kinda tight.

07-May-13 -42.11%
06-May-13 -43.48%
05-May-13 -44.98%
04-May-13 -44.98%
03-May-13 -45.41%
02-May-13 -46.10%
01-May-13 -48.23%
30-Apr-13 -50.73%
29-Apr-13 -52.80%
28-Apr-13 -53.86%
27-Apr-13 -53.86%
26-Apr-13 -51.61%
25-Apr-13 -48.73%
24-Apr-13 -47.42%
23-Apr-13 -47.73%
22-Apr-13 -47.73%
21-Apr-13 -47.20%
20-Apr-13 -47.20%
19-Apr-13 -42.60%
18-Apr-13 -37.34%
17-Apr-13 -37.59%
16-Apr-13 -36.66%
15-Apr-13 -37.34%
14-Apr-13 -38.72%
13-Apr-13 -38.72%
12-Apr-13 -38.78%
11-Apr-13 -38.97%
10-Apr-13 -44.23%
9-Apr-13 -49.97%
8-Apr-13 -56.28%
7-Apr-13 -57.34%
6-Apr-13 -57.34%
5-Apr-13 -60.92%
4-Apr-13 -75.23%
3-Apr-13 -82.24%
2-Apr-13 -82.25%
1-Apr-13 -83.00%
31-Mar-13 -84.45%
30-Mar-13 -84.45%
29-Mar-13 -84.45%
28-Mar-13 -82.66%
27-Mar-13 -77.29%
26-Mar-13 -85.35%
25-Mar-13 -75.84%
24-Mar-13 -60.69%
23-Mar-13 -60.69%
22-Mar-13 -59.51%
21-Mar-13 -54.77%
20-Mar-13 -49.85%
19-Mar-13 -49.04%
18-Mar-13 -44.88%
17-Mar-13 -43.94%
 
#171
Very interesting dynamic. It seems clear that shorts are getting squeezed, and it is easy to assume (although with no data to back it up), that short positions are changing hands. At the same time it seems like a short squeeze is going on.

I would assume that a short squeeze combined with a sustained short interest is a pretty bullish development? After all, the shorts have to buy the stock eventually, so one could think of them as "delayed demand" for the stock. And as long as short interest stays close to max, there is no threat of a massive bear attack to push the stock price down.
 
#174
Yeah those data points align with observations on the stock behavior. It's not acting like a substantial short squeeze. Clearly some shorts are clearing and adding upward pressure from about $45, but it's not behaving as a short squeeze as of yet, but more like a supply of long buying with brief short clearing. Just my anecdotal opinion after living through a few of these. I think we might see a pronounced squeeze at some point, but relative to clearing the volume of shorts, I'm more of the opinion it will be a constant put under the sell offs over the next year as EV survival makes itself more apparent
 
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#175
kenliles said:
I'm more of the opinion it will be a constant put under the sell offs over the next year as EV survival makes itself more apparent
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Actually, from a long term investor's point of view, that is better than a short squeeze. Having a good market cap with maxed out short interest must be just about the most ideal financial scenario for a company like this, that may need to go to the stock market at some stage to raise capital for growth.
 
#176
DonPedro said:
Actually, from a long term investor's point of view, that is better than a short squeeze. Having a good market cap with maxed out short interest must be just about the most ideal financial scenario for a company like this, that may need to go to the stock market at some stage to raise capital for growth.
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Agree completely, much better than a dramatic squeeze that long term investors simply have to ride up and back down. And as you say doesn't help Cap raises. Excellent point
 
#177
I wonder if the dynamic we're seeing is a combination of "old" shorts starting to be force to cover (providing buying volume and creating upward pressure on the stock), while we're seeing a new crop of shorts entering the market. After all, if TSLA was a good short at $30, then it's gotta be an outstanding short at $60! Is there a data source that would tell us the degree of turnover within the overall short position? Is the average age decreasing or flat (indicating turnover with new shorts taking old shorts positions), or is it aging / increasing (indicative of stubbornness). Is there data with that granularity?
 
#178
adiggs said:
I wonder if the dynamic we're seeing is a combination of "old" shorts starting to be force to cover (providing buying volume and creating upward pressure on the stock), while we're seeing a new crop of shorts entering the market. After all, if TSLA was a good short at $30, then it's gotta be an outstanding short at $60! Is there a data source that would tell us the degree of turnover within the overall short position? Is the average age decreasing or flat (indicating turnover with new shorts taking old shorts positions), or is it aging / increasing (indicative of stubbornness). Is there data with that granularity?
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the data you're describing doesn't exist to the best of my knowledge.

what you're saying is correct however. there is a degree of rotation of the shorts that take place. at some point what would probably happen is new shorts will just take up all the available shares to borrow and we'll be back at looking at no shares to borrow again. that's when things can get nutty, once there are no shares to borrow then the only ones who can stop a price rise are longs who are willing to sell. and that's also when you see some buy-ins and such happening.

today we're down to around 60,000 shares available at interactive brokers. that number has been as high as 100,000-350,000 in the last week. so for sure you can bet some shorts stepped into the gap this morning even as other shorts were likely forced to cover.

the real key to the whole thing is earnings and guidance. poor earnings or poor guidance and you can forget about worrying about a short squeeze and start worrying about the new longs getting crunched.
 
#179
It seems like if we really are seeing new shorts replacing the old ones that there's probably a difference in their goals. The old shorts at 30 were betting the company would go bankrupt soon and the stock would drop to zero. My guess is that we may have some new shorts who are betting this is a bubble in the stock price, but not necessarily that the company is in trouble. If that was the case and the stock had a correction after earnings I imagine they would take their profits and we would finally see a decline in the short interest. That's the only thing that makes sense to me, since I can't believe rational investors could still believe that the company is going bankrupt soon, and with the borrowing rates it doesn't seem like it would make sense to bet for the long run.
 
#180
Is the cost to short retroactive? For instance, if you started shorting tesla when it wasn't such a hot short target, and you got in for 1% annually, does your annual fee remain locked in or does it rise up as the next incremental share is shorted.
I want to know if those individuals who shorted early are also feeling the pain, or if it is just the new shorts.

In talking to Fidelity brokerage, they said that the cost if i were to short a stock is not fixed, which suggests to me that the cost would go up as the brokerages raise their annual rate.

Second question: Do large hedge funds that are shorting the stock also pay the annual fee?
 
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