Tesla Bond Shorts Hit Record High, Stock Slumps Below $300

While Tesla shares have slipped but remain above Nov '17 lows, Tesla's bond yields have surged to a new record high (the same a Colombia) and bond short-sellers are adding as the price plunges.

99% of lendable supply for shorting Tesla's high-yield bond has been used, sending the cost for new short positions in the bond to their highest ever, Sam Pierson, director, securities finance, at IHS Markit said in a Monday note.

Bets against that bond account for the bulk of the total short demand of $261 million for Tesla debt, according to IHS Markit.

Traders bet against a stock by borrowing and then selling shares in expectations they can buy them back cheaper later, or cover their shorts. It works the same for bonds basically.

However, as Pierson notes, as bond prices have plunged, yields surged, short-sellers have not covered at all...

"While equity short sellers continue to hang around, shorts in the most liquid TSLA bond have made a tidy profit so far in 2018...

They have not covered to lock in the profit, suggesting that they think the credit will continue to deteriorate."

Signaling expectations of further pain to come from the cash-burning company...

All of which has pushed Tesla's bond yield above those of Romania, Peru, Chile, and Philippines, and in line with Colombia...

 

As CNBC reports, short interest in Tesla shares has also increased to 17.9 percent, Pierson said. The total dollar amount of nearly $8.7 billion is second only to the $9.7 billion short balance in shares of Apple, the largest U.S. stock, according to exchange data as of the end of February cited by Pierson.

"Tesla shares may be nearing a cross-road," Pierson said.

"With the short demand for Tesla increasing through the recent sell-off - and the short demand for bonds fully utilizing the available supply - it appears short sellers are looking for more downside before they begin to cover."

And while the share price has entered a bear-market from their September highs, bond yields suggest significantly more pain to come...

Tesla share price fell back below $300 this morning...

Gonna need to sell a few more firethrowers...

Comments

silverer buzzsaw99 Tue, 03/27/2018 - 10:08 Permalink

Ha. True. My neighbor is a big believer in Tesla and Musk. When I told him Tesla would probably be bankrupt within ten years, he shrugged it off and said Musk will be successful. Well, it turns out he's right. Musk is successful. He'll walk away with millions no matter what happens. On the other hand, the shareholders simply chased a paper dream.

In reply to by buzzsaw99

Donald J. Trump Tue, 03/27/2018 - 09:54 Permalink

Let the Musk bashing begin.  idk when this sucker is going to crash n burn like a Model S on autopilot, but a good indicator will be when the stock starts falling and Leader Musk speaks some crazed shit and nothing happens.  That's when you know his followers have lost faith.  Although I think his new compensation hail mary package says a ton about what the shareholders think.

wmbz Tue, 03/27/2018 - 10:19 Permalink

You know 'Ol Musky longs for the day when Obozo was his butt buddy and he used the revolving door at 1600 Pennsylvania Ave. 

everything1 Tue, 03/27/2018 - 10:27 Permalink

So many things wrong with Tesla, most of the BBB complaints are inability to get parts for repairs, cars like this just drive insurance costs for the rest of us up.

It's a good go at jumping forward with technology, but Tesla will likely get reeled back by competitors eventually.

Odd how they can't seem to ramp up production either, you might think they would have partnered with other big automakers to increase production to meet demand vs. try themselves and suffer quality control problems.

bshirley1968 everything1 Tue, 03/27/2018 - 10:34 Permalink

You seem to be suffering from the delusion that Tesla/Elon are interested in "business" or "profits" or "production".

This is as big of a "pig in a poke" as ethanol. Less than zero return on investment.....in terms of energy and viability. Now in terms of creating FRN's out of thin air by stirring up false hopium and fantasy world economics, they are a major producer.

In reply to by everything1

spoonful Tue, 03/27/2018 - 10:29 Permalink

Elon Musk has taken the great name of Nikola Tesla and dragged it through the mud with his phony business models.  If the Fed stopped buying his stock he'd be broke. 

spoonful Tue, 03/27/2018 - 10:29 Permalink

Elon Musk has taken the great name of Nikola Tesla and dragged it through the mud with his phony business models.  If the Fed stopped buying his stock he'd be broke. 

3-fingered_chemist Tue, 03/27/2018 - 11:15 Permalink

Worthwhile idea, but the execution has been terrible. Did they hire a single person that knows anything about an assembly line?

Tesla should have been thinking small EVs with short range. Cheaper to build and buy. Vehicles that could be marketed to the USPS or city drivers for example. All the electronic gizmos and do dads are pointless and just break anyway.

 

everything1 3-fingered_chemist Tue, 03/27/2018 - 13:09 Permalink

They should have but that market is cornered by Europe and Asia.  They would have had to make something really great, and/or cheaper, not happening, instead they went for power, and luxury, and they are doing surprisingly well.  As you can see by the leaf sales, and it's the better in it's class model, little cars are not all that popular, but gas prices put us back into the age of power again.  With no tax on electric vs. gas you would think people would be pounding down the dealership doors to go all electric, and it's odd that we don't, old habits are just that.  Give us some 70's style inflation, that may change the dynamic.

https://cleantechnica.com/2018/01/27/tesla-surges-renault-zoe-coasts-1-…

In reply to by 3-fingered_chemist

Onan_the_Barbarian Tue, 03/27/2018 - 11:47 Permalink

Tesla made electric cars the coolest things on the road.

But if they can't get the Model 3 sorted soon, they're dead.  But even if the Model 3 is as good as hoped, their competition has basically caught up. 

Tesla should be selling themselves as a design shop for the major car makers.

 

abgary1 Tue, 03/27/2018 - 16:03 Permalink

This is what happens when you try to perpetuate the UNEP's baseless man-made climate change religion.

 

Read Human Caused Global Warming and/or The Deliberate Corruption of Climate Science by Dr. Tim Ball (PhD Historical Climatology, taught University for 25 years, 23 peer reviewed papers) to educate yourself on climate science and the debate.

 

EV's and solar panels will be far less efficient if NASA's prediction of a solar flare minimum occurs and we enter into a cooling trend or ice age. Read The Chilling Stars: A Cosmic Theory of Climate Change (formerly The Chilling Stars:A New Theory of Climate Change) by Svensmark and Calder to understand the Cosmic Ray Theory and the implications of reduced solar flare activity.

analyser Wed, 03/28/2018 - 05:01 Permalink

This looks more like 1937, fed also raising rates on a bad economy. growth stocks like FANG getting hit. deflation

Multiples went from PE of 30 to 12, derating

www.canarydeath.com

This looks more like 1937, fed also raising rates on a bad economy. growth stocks like FANG getting hit. deflation

Multiples went from PE of 30 to 12, derating

www.canarydeath.com