Tesla has begun charting a familiarly bumpy path as a new member of an old stock index on Monday.
However, one thing that has changed is the number of bets against shares of the electric vehicle maker, with the hope that the stock price would crash lower and enrich the pockets of so-called short sellers.
Shares of Tesla were down 4.4% on Monday in its first day of trading as an S&P 500 member, but that downturn shouldn’t be attributed to those short sellers, with bearish bets against the Palo Alto, Calif.-based company hitting the lowest since at least 2017, according to Ortex Analytics.
Read: As Tesla debuts in the S&P 500, do you know if you’re an owner?
Bearish bets against the company, viewed as one of the most shorted stocks on Wall Street, dropped to 31.4 million in December, “considerably lower than the peak of 93.6 [million] recorded in January of this year,” Ortex reported.
Peter Hillerberg, co-founder of Ortex Analytics, estimated that short sellers have lost a whopping $28.5 billion betting that Tesla’s stock would make a consistent tumble from its record perch, as it headed into its S&P 500 inclusion.
Check out: Tesla’s biggest bull stampedes to a $7,000 price target
However, that hasn’t been the case, with shares of the company run by outspoken leader Elon Musk rising nearly 700% in 2020 thus far, according to FactSet data. By comparison, the S&P 500 index
SPX,
-0.33%
has surged a respectable 14.3% in 2020, the Dow Jones Industrial Average
DJIA,
+0.25%
has climbed nearly 6% in the year to date and the technology-laden Nasdaq Composite Index
COMP,
-0.17%,
where Tesla resides, is on pace for a 42% return on the year.
Still, those moves pale in comparison to Tesla’s surge, which entered the S&P 500 as one of the largest companies in history and the fifth or sixth largest constituent currently.
“As a result, a large number of short sellers have closed their positions, wanting to avoid the ‘hype premium’ that is so often associated with Elon Musk’s company,” wrote Hillerberg in an emailed note.
That said, the analyst says Tesla likely will be tested in the coming days and weeks.
“However, the battle is far from over, we expect many to be waiting on the side lines looking to pounce when the hype dies down,” he wrote.
Read: Tesla joining the S&P 500 Friday is ‘mother of all’ stock-market events
