Tesla, GE Bears Brace for Beating as News Triggers Share Gains

(Bloomberg) -- The week may be starting off on the wrong note for short sellers, as three heavily shorted U.S. stocks are set to see their shares soar on Monday.

Tesla Inc., the most-shorted stock in the U.S. according to financial technology and analytics firm S3 Partners, gained as much as 19 percent in pre-market trading after Chief Executive Officer Elon Musk settled with the SEC, agreeing to step down as the company’s chairman and pay a smaller-than-expected fine. Investors cheered the prospect of a more reined-in Musk and were relieved that he would stay on as CEO.

While some sort of news from Tesla had been expected, General Electric Co.’s decision to oust John Flannery a little more than a year into his job as chief executive officer was a surprise. The company also is taking an impairment charge constituting nearly all of the $23 billion of goodwill associated with its struggling power segment. It is difficult to determine whether the industrial behemoth has finally reached a bottom, but the appointment of Larry Culp, a highly respected industry veteran, and hope for a possible resolution of the troubles of the power business, sent shares up more than 15 percent.

Cannabis company Tilray Inc., whose wild volatility over the past month led to speculations about naked shorting in the stock, is also set for another crazy day after its High Park Farms unit received sales license from Health Canada to sell cannabis under the Access to Cannabis for Medical Purposes Regulations.

About 122 million shares were borrowed to short General Electric as of Friday, the most in more than five weeks, according to S3 Partners data. Tesla’s short interest stands at 33.5 million shares, down from about 42 million shares in early August. Short interest on Tilray soared to 3.9 million shares last week even as the cannabis company advanced 17 percent last week in the eighth consecutive weekly gain.

To contact the reporters on this story: Esha Dey in New York at edey@bloomberg.net;Elena Popina in New York at epopina@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Richard Richtmyer

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