Investors who are betting that Tesla Inc. shares are poised for a fall were sitting on a paper loss of nearly $2 billion Thursday, after the stock rallied more than 16% following its latest quarterly earnings. Tesla short sellers were down $1.7 billion in mark-to-market losses on the 35.1 million Tesla shares that they have shorted, according to S3 Partners LLC, a company that has access to and tracks real-time short interest data. Short sellers take a view on a stock that it will fall in price. They then borrow the shares so they can sell them, hoping they can later scoop them up at a lower price, return them to the original lender and pocket the difference. The Silicon Valley car maker reported mixed second-quarter results late Wednesday and Wall Street appeared to seize on the company’s renewed promises of profitability going forward. Tesla TSLA, +2.39% said it lost $718 million, or $4.22, in the quarter, compared with $336 million, or $2.04 a share, in the year-ago period. Adjusted for one-time items, Tesla lost $520 million, or $3.06 a share, compared with $220 million, or $1.33 a share, a year ago. Revenue rose to $4 billion from $2.77 billion a year ago. Read more:Live Blog: Tesla earnings send stock higher Analysts polled by FactSet had expected an adjusted loss of $2.88 a share on sales of $3.99 billion. Beyond the numbers, Chief Executive Elon Musk struck a more conciliatory tone with analysts on the earnings call and even apologized for his bad manners on the previous quarter’s earnings call. KeyBanc Capital Markets analyst Brad Erickson said Musk delivered “maybe the most valuable apology of all time.” That call, and a series of Twitter spats between Musk and his perceived detractors, had many questioning whether the executive was suited to the role of head of a public company. Read:Tesla stock rallies after ‘most valuable apology of all time,’ but profitability questions remain See also:Elon Musk seems to have learned a few lessons, but the big one remains Tesla is the most shorted stock in the U.S. market, according to S3. Before today’s stock move, the short sellers were up $276 million in 2018. They are now facing $1.4 billion in year-to-date mark-to-market losses. “We are not seeing a large amount of buy to covers yet, with such a large price move on the open most short sellers that are looking to cover are waiting for a retracement before placing buy-to-cover orders,” said Ihor Dusaniwsky, managing director, predictive analytics at S3. “They’ve already been bloodied on the open without the ability to get out of their positions at anywhere near yesterday’s market close so they are waiting to see if they can make back a few bucks before realizing their losses.” Long-term short sellers will likely dismiss today’s move, as they have in the past suffered worse paper losses and responded by adding to their positions. “But I would imagine shorter term momentum short sellers would be quick on the trigger to exit their positions after suffering a 10% loss in just one day,” said Dusaniwsky. Tesla shares have gained about 12% in 2018, while the S&P 500 SPX, +0.19% has gained 5.8% and the Dow Jones Industrial Average DJIA, +0.03% has gained 2.5%. Highlights From Elon Musk's Combative Tesla Earnings Call Elon Musk: Robot software will make Tesla worth as much as Apple<doc-sep>Bloomberg (Bloomberg) -- Credit Suisse Group AG executives ignored warnings from colleagues about troubled steel tycoon Sanjeev Gupta as they channeled $1.2 billion of client funds to his businesses, according to people familiar with the matter.Bankers in Credit Suisse’s commodity trade-finance unit blacklisted Gupta’s Liberty Commodities Ltd. in 2016 because they suspected some of its deals weren’t legitimate, the people said. When they learned about two years later that the bank was lending to his companies through a suite of investment funds, which eventually grew to $10 billion, they flagged their worries to leaders in compliance and the division that housed the loans, one of the people said.The disclosure that Credit Suisse may have put clients at risk despite internal concerns over Gupta’s businesses adds a new twist to the debacle stemming from the March implosion of Greensill Capital, the finance firm at the center of the three-way relationship.Investigations, LawsuitsThe U.K. Serious Fraud Office is now investigating Gupta’s group of companies for suspected fraud, including in its financing deals with Greensill, according to a May 14 statement. Credit Suisse has sued to force Gupta’s Liberty Commodities into insolvency and has since shut the funds that made the loans and launched an internal investigation. Investors are staring at losses as the bank confronts embarrassing lawsuits.“We are currently focusing our efforts on recovering our investors’ money,” Will Bowen, a spokesman for Credit Suisse in London, said in an emailed statement, adding that the bank’s internal probe will focus on “all of the issues” linked to the funds. “We are committed to learning the lessons and will share the relevant lessons learnt at the appropriate time.”Andrew Mitchell, a spokesman for the Gupta Family Group Alliance, or GFG Alliance, a collective of businesses linked to Gupta including Liberty Commodities, denied any wrongdoing.The Greensill saga represents just one of the two disasters that rocked Credit Suisse in the first half of 2021. Since Greensill began unraveling, the bank has announced a $5.5 billion hit from the blowup at Archegos Capital Management.ApologiesFormer Chairman Urs Rohner apologized to shareholders and his successor, Antonio Horta-Osorio, who arrived at the end of April, has promised a sweeping strategy review.Chief Executive Officer Thomas Gottstein, who was head of the division that oversaw trade finance, wasn’t aware of the internal concerns about Gupta that had prompted the bank to cut him off, according to a person familiar with the matter.Employees at the trade-finance unit, which lends money for the buying and selling of commodities, cut ties with Gupta in 2016 after becoming skeptical toward his Liberty Commodities, the people said. They distrusted the documents the company provided, triggering doubts about its transactions, they said. In one example reported by Bloomberg, the company had presented another bank with what seemed to be duplicate shipping receipts. A spokesman for Gupta has denied any wrongdoing.Banking TiesLiberty Commodities pledged assets to Credit Suisse as security for borrowings in 2013 but by early 2016, all such commitments had been extinguished, indicating that the financing relationship had ceased, U.K. Companies House filings show. And while Gupta’s company listed the Swiss bank as one of its lenders in its 2014 annual report, it didn’t in the following year’s report, which is dated May 2016, according to the filings.Their counterparts at other banks, including Macquarie Group Ltd. and Sberbank PJSC, halted trading with Liberty Commodities around the same time because of similar concerns; Goldman Sachs Group Inc. also stopped in 2016, Bloomberg has reported.Nevertheless, executives at Credit Suisse’s asset-management division -- which creates investment products for clients and charges a fee for overseeing them -- began arranging a suite of funds focused on supply-chain finance in 2017. The entities bought securitized loans packaged by Greensill, a firm created by Australian businessman Lex Greensill. Much of the debts were linked to Gupta’s businesses.WarningsOfficials at the commodity trade-finance unit were concerned when they found out about the funds’ links to Gupta and took their fears to Thomas Grotzer, general counsel for the bank’s Swiss division. They also warned Luc Mathys and Lukas Haas, the bankers who helped oversee the trades at the asset-management unit.Grotzer was promoted last month to interim global head of compliance at Credit Suisse. He didn’t respond to requests for comment. Mathys, head of fixed-income at the asset-management division, and Haas, a portfolio manager, were put on temporary leave in March. Neither responded to requests for comment.The bank pushed ahead with the funds and marketed them to investors as being made up of short-term debt secured on invoices, assets considered so safe that Credit Suisse gave the largest vehicle its lowest rating for risk. Yet part of the loans were linked to mere possible future revenues.Other parts of the bank continued working with Gupta as well. Credit Suisse’s investment bankers were due to lead an initial public offering for Liberty’s U.S. steel arm, which was ultimately pulled, according to a statement from the company. Gupta also announced that the Swiss bank would finance his planned acquisition of Thyssenkrupp AG’s steel unit, which fell apart earlier this year.Credit Suisse has so far recouped about $5.9 billion of the $10 billion in these supply-chain funds, but it remains unclear how much will be returned ultimately to investors. Loans to Gupta’s businesses are among a batch of debts that are the “principal sources of valuation uncertainty,” the bank said earlier this month.Liberty Commodities’s external legal advisors investigated “alleged rumors concerning the paperwork” it used in 2019, according to Mitchell, the spokesman for GFG Alliance. They found no evidence to substantiate the rumors, nor was the company “ever subject to further complaints or proceedings,” he said.“LCL has ongoing banking relationships with separate financial institutions,” Mitchell said, referring to Liberty Commodities. “The trade-finance market has been hugely challenging for all but the very largest commodities traders in recent years. Nevertheless, no financial institution has been left out of pocket as a result of lending money to LCL. On the contrary, they have received substantial commercial returns.”More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.<doc-sep>Investors betting against Tesla were dealt a $1.7bn (£1.3bn) loss today, after shares in the electric car maker surged on signs it is finally starting to bring its cash-burn under control. Tesla shares closed up 16.2pc on Thursday, at $349.54, recording their biggest rally in more than four years. According to financial analytics company S3 Partners, this rise means short sellers of Tesla stock suffered $1.7bn in paper losses on the day. Tesla is the most shorted US stock, with Bloomberg estimating that more than 27pc of its shares have been borrowed and sold on by investors looking to buy them back at a lower price at a later date. Ihor Dusaniwsky, head of research at S3, said there had not been a "large amount of buy to covers yet", meaning that not many of the traders shorting Tesla had sought to close out their positions. “Long-term short sellers will probably shrug off this loss, as they were down billions in the past and not only kept their positions but built them up," he said.<doc-sep>Investors betting against Tesla lost more than $1 billion Thursday as the company's shares rallied the most in over four years, according to estimates from financial technology firm S3 Partners. Tesla stock closed more than 16 percent higher Thursday at $331.90 per share, meaning short sellers have taken over a $1.1 billion mark-to-market loss on their 35.1 million of shares shorted, estimates S3. With the price move Tesla's short interest is now $11.7 billion and remains the most shorted stock in the U.S. market, according to S3's head of predictive analytics Ihor Dusaniwsky. "Today's $1.1 billion mark-to-market loss has turned a profitable year for short sellers, they were up $276 million in year-to-date mark-to-market profits prior to today's rally, into a loss," Dusaniwsky said in an emailed statement. He added that shorts are now down $831 million in year-to-date mark-to-market losses. Tesla chief executive Elon Musk has actively criticized and trolled investors short his company's stock this year. Most recently, the CEO bashed Greenlight Capital's David Einhorn's bet against his company after the hedge fund manager said the firm's bet against Tesla "was our second biggest loser" in the most recent quarter.<doc-sep>
Investors betting against Tesla lost about $1.3 billion after a tweet from CEO Elon Musk's verified account which mentioned taking the company private, according to estimates from financial technology and analytics firm S3 Partners. Tesla shares rose 11 percent Tuesday, meaning short sellers lost about $1.3 billion in mark-to-market losses, according to estimates from Ihor Dusaniwsky, S3's head of predictive analytics. Dusaniwsky said the cumulative mark-to-market paper loss for Tesla short sellers is about $3 billion this year and 35 million shares are held short. Tesla shares jumped after a tweet from Musk's verified Twitter account that mentioned taking the company private at a $420 per share price. One of the more notable short sellers in Tesla's stock, Jim Chanos of Kynikos Associates, commented on Musk's tweet to CNBC. "The short position is the best thing the stock has going for it. 'Musk vs The Shorts' is a far better narrative than 'Tesla vs Mercedes/Audi/Porsche,'" Chanos said. Musk's tweet came after an earlier report from the Financial Times that said Saudi Arabia's sovereign wealth fund bought a 3 to 5 percent stake in the electric car maker, according to people with direct knowledge of the matter. That report had already lifted Tesla's stock about 30 minutes earlier. Tesla stock was halted at $367.25 per share shortly after 2 p.m., before closing up 11 percent after resuming trade at 3:45 p.m. Musk later explained in an email to company employees why he is considering taking Tesla private, but also said "a final decision has not yet been made." The email was published on Tesla's corporate blog. --With reporting by Scott Wapner