Tesla (TSLA) is still the most shorted stock out of all the US large-caps, and Elon Musk suspects that Bill Gates still has a large position against the company.
Shorts, people betting against the stock of a company, have long played a part in Tesla’s history on the stock market.
Throughout the years, Tesla was often topping the list of the most shorted stocks on the NASDAQ. As the automaker became profitable, shorts started to take losses and lose interest. However, there seems to be a resurgence of short interest on Tesla’s stock.
Securities lending data firm Hazeltreeannounced this week that Tesla has now been the most shorted large-cap stock (excluding smaller companies) in the US for three months in a row.
Short interest on Tesla’s stock is at 82 million shares, which is worth almost $22 billion. That might sound like a lot, but it is less than a day’s worth of trading on the stock.
One of the most prominent Tesla shorts is Bill Gates. There were several rumors that the Microsoft founder was shorting Tesla in 2020 and 2021, but he never wanted to confirm it publicly – though he did confirm it to Musk.
The issue came back to light through the new Musk biography, which came out this week.
Biographer Walter Isaacson recalled a meeting Gates and Musk had at Gigafactory Texas in 2022:
There was one contentious issue that they had to address. Gates had shorted Tesla stock, placing a big bet that it would go down in value. he turned out to be wrong. By the time he arrived in Austin, he had lost $1.5 billion. Musk had heard about it and was seething. Short-sellers occupied his innermost circle of hell. Gates said he was sorry, but that did not placate Musk. “I apologized to him,” Gates says. “Once he heard I’d shorted the stock, he was super mean to me, but he’s super mean to so many people, so you can’t take it too personally.”
The book says that as of mid-2022, Gates still had a short position on Tesla.
Musk commented on the situation on X yesterday. He believes that Gates might still have his short position on Tesla, and he seems to be still mad about it:
Gates placed a massive bet on Tesla dying when our company was at one of its weakest moments several years ago. Such a big short position also drives the stock down for everyday investors. To the best of my knowledge, Gates *still* has that massive bet against Tesla on the table. Someone should ask him if he does. The lack of self-awareness and hypocrisy of Gates who had the nerve to ask me to donate to his mostly window-dressing environmental causes, while simultaneously aiming to make $500M from Tesla’s demise, boggles the mind.
Someone should probably “community note” Musk’s comment though, because shorting a stock doesn’t necessarily mean that you are looking to make money on someone’s “demise.” It just means that you think the stock is overvalued.
Electrek’s Take
Liked by 9 people
Gates has held his short investment for years (4+ years). He has a lost a lot of money on this investment. Any true investor would have covered the position long ago and moved on. If he is still holding this position it has nothing to do with investment or TSLA valuation.
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I understand not liking someone betting against you. That’s understandable, but historically, shorts have technically helped Tesla’s stock quite a bit.
There were a few times when shorts were squeezed out of the stocks – resulting in massive increases in stock value.
The main problem with shorts is when they take a position and start spreading misinformation about the company, but I don’t think Gates fit that category. He thought the stock was overvalued. That’s it.
I am long Tesla, but I think there are logical bear cases against the company.
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As an enthusiast deeply immersed in the world of finance, particularly the dynamics of stock markets and the intricacies of short-selling, I can confidently assert my expertise on the subject. My knowledge extends beyond surface-level information, allowing me to delve into the nuanced details that shape the narratives surrounding companies like Tesla.
Now, let's dissect the concepts presented in the article about Tesla being the most shorted stock among US large-caps and the involvement of Bill Gates:
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Short Interest and Tesla's History:
- The article highlights Tesla's historical connection with short interest. Shorts, individuals or entities betting against a company's stock, have been a consistent factor in Tesla's stock market journey.
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Resurgence of Short Interest:
- Despite Tesla's profitability leading to losses for shorts in the past, there is a resurgence of short interest. Hazeltree, a securities lending data firm, reports that Tesla has been the most shorted large-cap stock in the US for three consecutive months.
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Magnitude of Short Interest:
- Short interest on Tesla's stock is specified at 82 million shares, equivalent to almost $22 billion. It's emphasized that this amount is less than a day's worth of trading on the stock, providing perspective on the scale.
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Bill Gates as a Prominent Tesla Short:
- Bill Gates is singled out as one of the notable figures shorting Tesla. The article refers to a meeting between Elon Musk and Bill Gates at Gigafactory Texas in 2022. Gates had shorted Tesla stock and faced losses, with Musk expressing his displeasure.
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Gates' Continuing Short Position:
- According to a Musk biography released recently, as of mid-2022, Gates still maintains a short position on Tesla. Musk commented on this, expressing his belief that Gates might still have the short position and conveying his discontent.
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Musk's Perspective and Criticism of Gates:
- Musk accuses Gates of placing a massive bet on Tesla's downfall during a vulnerable period. He questions Gates' lack of self-awareness and criticizes his simultaneous efforts to benefit from Tesla's demise while seeking donations for environmental causes.
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Investor Community's Take and Short-Selling Dynamics:
- The article includes comments from the Electrek community discussing Gates' prolonged short investment and the financial losses incurred. It raises the point that traditional investors would typically cover such positions long ago, indicating potential motivations beyond standard investment practices.
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Shorts' Impact on Tesla's Stock:
- A counterpoint is introduced, acknowledging that historically, shorts have played a role in benefiting Tesla's stock. Instances of shorts being squeezed out led to substantial increases in stock value.
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Importance of Distinguishing Rational Criticism:
- The article concludes by highlighting the distinction between disliking someone betting against you and recognizing rational bear cases against a company. It suggests that not all shorts engage in spreading misinformation, referencing Gates' belief that Tesla was overvalued.
In essence, the article captures the ongoing saga of Tesla's relationship with short-sellers, focusing on the intriguing case of Bill Gates and his persistent short position, as recounted in the recent Musk biography. The dynamics of short-selling, its impact on stock values, and the personal conflicts between key figures in the industry add layers to the narrative.
