IHS Markit: Tesla shares end week flat despite earnings volatility
09 May 2018 New York
Image: Shutterstock
Tesla shares ended the week flat, despite earnings volatility, according to a research note from Samuel Pierson at IHS Markit.
Pierson said: “The much discussed Tesla earnings report and conference call certainly added to the volatility, though net impact was fairly muted, with shares ending the week barely changed from where they started.”
He added: “Short sellers have continued to increase bets against the firm, which currently total more than $12.6 billion.”
“The short balance in dollar terms has increased 45 percent since the year-to-date low price observed 2 April, resulting from both share price appreciation (16 percent) and an increase in shares shorted (24 percent). The borrow cost has continued to trend up, with substantial spikes around proxy record dates.”
In the piece, ‘Short selling in earnings season’, it is also reported that Diebold Nixdorf shares and bonds dipped after reporting, and Witness Frontier Communications ripped on exceeded expectations—short demand for all three firms aforementioned, was expressed through equities and bonds.
Pierson said: “Earnings season can be a minefield for short sellers, with the known catalysts providing immediate feedback to a short thesis. Witness Frontier shares have appreciated more than 40 percent since their earnings report on 1 May.”
In terms of numbers, Pierson stated there were 27 million shares short (for Witness Frontier), representing a 6 million share decline from the 2018 high on 3 April.
Pierson stated: “It’s worth noting that some portion of the short demand is used to hedge long positions elsewhere in the capital structure, including the convertible preferred shares. Following the report short sellers added 6.3 million shares to the position, putting the total short back over 33 million shares.”
Pierson said: “The much discussed Tesla earnings report and conference call certainly added to the volatility, though net impact was fairly muted, with shares ending the week barely changed from where they started.”
He added: “Short sellers have continued to increase bets against the firm, which currently total more than $12.6 billion.”
“The short balance in dollar terms has increased 45 percent since the year-to-date low price observed 2 April, resulting from both share price appreciation (16 percent) and an increase in shares shorted (24 percent). The borrow cost has continued to trend up, with substantial spikes around proxy record dates.”
In the piece, ‘Short selling in earnings season’, it is also reported that Diebold Nixdorf shares and bonds dipped after reporting, and Witness Frontier Communications ripped on exceeded expectations—short demand for all three firms aforementioned, was expressed through equities and bonds.
Pierson said: “Earnings season can be a minefield for short sellers, with the known catalysts providing immediate feedback to a short thesis. Witness Frontier shares have appreciated more than 40 percent since their earnings report on 1 May.”
In terms of numbers, Pierson stated there were 27 million shares short (for Witness Frontier), representing a 6 million share decline from the 2018 high on 3 April.
Pierson stated: “It’s worth noting that some portion of the short demand is used to hedge long positions elsewhere in the capital structure, including the convertible preferred shares. Following the report short sellers added 6.3 million shares to the position, putting the total short back over 33 million shares.”
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