Tesla is #4 of the 10 most-shorted U.S. stocks:
Well, this is good news if you're ultimately bullish on Tesla and you're in a longish position.
This would be bad news for investors who hold Tesla as some portion of some larger, more general strategy and your opinion is influence by generic market information and analysts and stuff. I'm not saying that's a bad thing. Most investors are likely not experts on everything they invest in and look to other sources of information for decision making.
But if you're reading this here, then you probably buy and sell TSLA based on what you know specifically about Tesla and the market. If you're holding Tesla longer term, it's probably because you believe it's product quality and business model will make it very successful in the future, not because you're betting on some generic strategy of investing in tech or alternative cars or whatever.
Short-sellers must to borrow shares and pay interest to short them. Since there aren't enough shares to go around (too many bearish investors who don't know the real story), the interest rate has surged in recent weeks. Fidelity Investments, a market-maker in this arena, is currently paying 17% on loaned Tesla shares. It would be most satisfying to make the claim that Detroit auto execs betting on Tesla's failure have financed the purchase of a Model S. I am attempting to do just that.
Jack, do you have any proof of fidelity paying this?
Holy crap, the interest is 17%? What exactly is that a percentage of? The value of the shares at the time borrowed?
That would make shorting TSLA even riskier than I had originally thought. The value of TSLA has to drop a lot in order to make a decent amount of money.
Wait for a dip and buy calls, not puts. Much safer.