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Market Extra: Tesla short sellers have made nearly $7 billion so far this year

Bill Gates wasn’t the only investor to make big money betting against Tesla. As it turns out, short-sellers reaped nearly $7 billion in profits from their bets against the electric vehicle manufactures between the start of 2022 and Friday.

Data provided by Ortex Research showed that through Friday’s session, investors with the temerity to bet against the electric vehicle juggernaut – a trade that has produced painful losses for many a Tesla bear in recent years – had earned $6.8 billion in realized and unrealized gains since the start of 2022. Just one day earlier, their total unrealized and realized gains had been north of $8 billion, before stocks powered higher heading into the weekend, cementing a rebound that broke a historic streak of weekly losses.

Tesla alone jumped 7.3% on Friday, while the tech heavy Nasdaq-100 rose more than 3%, eating into short sellers profits.

To put all this in context: Tesla shares
TSLA,
-0.18%

are down more than 28% since the start of the year, but at one point the company’s shares had shed roughly half of their value.

The data confirm that betting against megacap technology stocks has been one of the most profitable trades so far this year.

Of course, Tesla wasn’t the only major tech stock to help short sellers book market-beating gains. Investors who bet against the Nasdaq-100’s roster of 102 stocks, a group that’s heavily weighted toward tech, earned more than $60 billion gains, either realized or on paper, between the start of the year and Thursday. The Nasdaq-100 is down more than 22% since the start of the year.

Additionally, investors who were bold enough to bet against Amazon
AMZN,
+4.40%
,
Facebook
FB,
-0.76%

and Netflix
NFLX,
+1.15%

have earned $3.5 billion, $3.6 billion and $3.4 billion since the start of the year through Friday, according to Ortex, which sources its data on short interest from a pool of broker dealers, prime brokers and agent lenders.

Since the start of the year, a broad-based selloff in stocks has offered plenty of opportunity for short sellers to profit. Investors “short” a stock by borrowing shares of a company and selling them on the open market, hoping to profit by buying them back later and returning them to the lender, preferably at a lower price. Investors who engage in short selling must also pay lenders interest in order to borrow the shares. The S&P 500 is down more than 13.3%
SPX,
-0.63%

so far this year, while the Dow Jones Industrial Average is down 9.2%
DJIA,
-0.67%
.

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