I'm curious why interest rates are going up?
Tesla is expected to have a blowout quarter which means the share price should go up after the announcement how many cars they have delivered.
Assuming that people should not want to short more.
May be people are getting shares back to vote for Tesla-Solar City merger?
Interest rates to hold a short position represent a balance between supply (of shares to borrow for shorting) and demand (to establish / maintain a short position).
If supply is steady / stable / constant, but there is demand for more shares to go short, then interest rates will go up to satisfy that demand (either by chasing weaker shorts out of the market, or by drawing more shares into the market to borrow).
If demand is steady / stable / constant, but supply is shrinking, then it'll look the same (interest rates will go up to drive weaker shorts out of the market).
Of course, both can be moving at the same time. If demand is shrinking but supply is shrinking even faster, then that looks like increasing demand in relative terms, and will show up as an increasing interest rate.
This is why the second piece of data to put together with the interest rates is so important = the 2x/month report on short interest - how many shares are short in the market as of a particular day. The history of that value together with the daily updates to interest, provides the best publicly available view into the aggregate short position I know of.
Worth noting that TSLA is the extreme exception when it comes to short positions. None of the other companies I own directly get lent out or earn me interest in my account. The market makers have an adequate supply of shares all on their own, and don't need to borrow shares from retail investors to meet demand to borrow shares to go short.
This dynamic is part of what makes TSLA so interesting to me. There are a bunch of smart people on both sides of this trade, and they all have good reasons to be in the trade that they're in. This kind of divergence in what people see, based on the same available public data, is only achievable when you have people working from different paradigms / mental models. Those paradigms / mental models shape what each sees, and inside of each groups paradigms, they are right. What actually happens with the company and stock price over time becomes an impartial arbiter of who is 'really' right.
Also worth noting, that in a stock as volatile as TSLA, it's possible for everybody to be right by changing the entry point and time frame. For my own part, I'm a buy/hold/forget investor with a time horizon closer to a decade than a year (I expect serious thinking about the position in a few years when Model 3 is shipping in volume).
