Tesla, GoPro, SolarCity Among The Hottest Short Positions

Tesla, GoPro, SolarCity Among The Hottest Short Positions

Short-sellers are jumping all over shares of Tesla Motors Inc (NASDAQ:TSLA), GoPro Inc (NASDAQ:GPRO) and SolarCity Corp (NASDAQ:SCTY) these days, as news about all three companies continues to move the markets. The three stocks are in third, fourth and fifth place, respectively, on Astec Analytics’ hot stocks short list for the Americas for the week ending October 7.

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In first place was ExxonMobil, while Crane Co. was in second place. Cliffs Natural Resources was Astec’s top pick (above the “top five”) for last week.

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Volatility marks short sales of Tesla stock

Astec said in its weekly short-selling newsletter that Tesla is still a hot stock in this area, although it is marked by volatility, not only on the long side but on the short side as well. The firm said Sept. 28 marked a 12-month low for short interest in Tesla stock as the shares rallied back over $200. However, the low in short-selling was quick to reverse as investors added new short positions, marking a more than 10% increase by the end of last week.

The firm said the rebound in short sales of Tesla shares included a backwards dip on the last day of the week, which it noted looked well-timed as Tesla stock approached $214 per share before hitting a ceiling and then falling back below $200 to end the week. Astec referred to the $200 level as a “seemingly magic” level and noted that with the pending SolarCity merger, it will be difficult to make a call on where the automaker’s stock will go next.

Tesla shares declined by as much as 0.47% to $200 on Tuesday as they appear headed back down below that magical level Astec called out.

GoPro short interest falls, but still high

Astec reports that GoPro fell to fourth place on its list of the top five (really six, including their “top pick”) hot short positions. The firm reports that short interest in the action camera maker declined by about 5% last week as shares slipped about 2% to end the week at $16.34 per share.

However, short interest as a proportion of shares that were available to borrow grew by more than 2%. The firm explains that this suggests that the supply of shares that could be borrowed contracted because investors were selling their shares. It adds that more than 95% of available shares are now borrowed, and when this is combined with a 2% decline in GoPro’s share price in each of the previous two weeks, short-sellers seem to expect the stock to decline even further.

Indeed, short-sellers are probably rejoicing this week as GoPro stock has been tumbling. The shares ended Monday in the read and then slumped even further on Tuesday, falling by as much as 4.34% to $14.98. So far, all the price target increases GoPro received after it unveiled the HERO5 cameras and Karma drone have not played out.

SolarCity is a crowded short trade

Of course the big news surrounding SolarCity lately is its pending acquisition by Tesla. There’s a growing pile of class-action lawsuits being filed over the merger as shareholders attempt to block it. Astec reports that more than 97% of SolarCity’s available shares are being borrowed, which means it is a very crowded short position right now. This is making it very expensive to borrow SolarCity shares, as the firm reports that the cost rose 10% just last week.

“With borrow costs rising, no room for extra shorting activity and a share price struggling to stem the losses, the future does not look bright for SolarCity,” the firm wrote, unless Chairman “Elon Musk can pull something exceptional out of the sky.”

SolarCity shares slipped by as much as -0.77% to $19.44 during regular trading hours on Tuesday.

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Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at Mjones@valuewalk.com.
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