(Bloomberg) -- Investors betting against Tesla Inc. are not backing down despite the impressive run in shares that has boosted the stock price more than 36% just this year.
The stock’s rally has led many to speculate about a possible short squeeze, where the share price is driven up as short sellers rush to close their positions. But experts say there is no conclusive data that point to that.
“Unfortunately there isn’t very much to go on in terms of tangible data,” IHS Markit’s Samuel Pierson said, discussing a potential rush in Tesla short covering.
“I would think the impact of short covering is likely to be far less than long buying overall, just based on traded volume year to date,” Pierson said. However he added that it was possible short covering played a role in the recent rally.
About 19.8% of Tesla’s free float is held short, according to data from S3 Partners. While the number has come down significantly from 36.4% in early June, it has not changed much since early December.
Shares of the electric-vehicle maker have risen 121% over the past three months, helped by a surprise third-quarter profit, strong deliveries for the fourth quarter and the opening of a new plant near Shanghai. The company is poised to report fourth-quarter results next week.
S3 Partners’ Ihor Dusaniwsky said the latest rally was not “squeeze based,” noting that shares shorted have actually increased by 171,000 shares over the last week, or about 0.65%.
“This is probably longer-term shorts re-adjusting their positions and some new shorts jumping into the deep end of this rally hoping for a short term pull back if the Tesla bulls take a breather,” Dusaniwsky said.
©2020 Bloomberg L.P.
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