A new report from short-selling research firm S3 Partners shows that electric vehicle maker Tesla (TSLA) is the most widely shorted automotive stock on Wall Street.
Shorting a stock is a bearish bet that a company’s share price will decline over a specific period, often within a one-to-six-month timeframe.
Short sellers are currently betting $22 billion U.S. that Tesla’s stock price will move lower, according to data from S3 Partners. Almost 3% of Tesla’s stock is currently sold short.
The bets against Tesla are nearly 10 times greater than the second most heavily shorted vehicle stock, Rivian Automotive (RIVN).
Ford Motor Co. (F) is the third most heavily shorted vehicle stock on Wall Street with $1.9 billion U.S. bets against its share price.
The high valuation of Tesla’s stock makes it a popular target among short sellers. Tesla’s shares currently trade at 58 times forecasted 2024 earnings.
The average stock listed in the benchmark S&P 500 index trades for about 18.4 times future earnings estimates.
The report on automotive stocks comes as the big three U.S. vehicle manufacturers, Ford, General Motor (GM), and Stellantis (STLA) endure a strike by the United Auto Workers (UAW).
Tesla’s stock tends to trade in volatile patterns. The company’s share price fell 20% in August after second-quarter financial results were released but has since risen 25% to currently trade at $265.28 U.S. per share.