Short sellers “battered and bruised” as they take a $6bn hit from Amazon, Apple, Alphabet, AMD and Tesla in July
- Amazon, Apple, Alphabet, AMD and Tesla all contributed to a poor month of performance for short sellers
- Ortex Analytics estimates a cumulative loss of $6bn across five trades; $4.1bn from Tesla
- Ortex co-founder predicts "pendulum" may swing back in favour of short sellers in August and beyond
London, 04 August 2020: Short sellers suffered a bruising July as a number of positions turned against them, leading to a cumulative loss of $6bn across five high-profile tech trades, Ortex Analytics has found.
JPMorgan’s Erdoes From Delivering Alpha: How The Pandemic Is Triggering Deglobalization
The more connected the world has become, the easier it has become for investors to look outside their home country to find alpha. However, the pandemic has resulted in a shift toward deglobalization. In an interview on CNBC's Delivering Alpha, JPMorgan Asset and Wealth Management CEO Mary Callahan Erdoes, Alibaba Executive Vice Chairman Joseph Tsai Read More
Analysis by the data analytics firm found that positions in Amazon, Apple, Alphabet, AMD and Tesla, all contributed to a poor month of returns for the short selling community. In each instance, it appears that losses were further exacerbated due to the short squeeze phenomenon whereby the company share price is driven higher as short sellers race to exit their positions.
Short Sellers Suffer A Huge Loss Driven By Tesla
The largest proportion of losses was driven by Tesla, which is often referred to as the world’s most shorted stock. Data from Ortex Analytics shows that over the course of July, the number of shares shorted has reduced by 26 per cent whilst the share price has simultaneously increased by 32 per cent. Ortex estimates that Tesla will have delivered a loss of $4.1bn to short sellers in July.
A similar "short squeeze" pattern was also identified in share price movements for Amazon, Apple, Alphabet and AMD, collectively contributing to a $1.8bn loss for short sellers in July.
Commenting on the analysis, Peter Hillerberg, co-founder of Ortex Analytics, said: "Short sellers will feel battered and bruised after what has been a very difficult July. Better than expected results during Q2 has caught many off-guard and, in some instances, panic has set in and a rush to the exit appears to have amplified losses. We know, however, that this isn’t the end of the story; already in recent days we’ve seen new positions open as investors seek to take advantage of higher share prices. It’s quite likely that we’ll see the pendulum swing back in favour of short sellers as they adjust to post-Covid market conditions."
Figures based on Ortex Analytics analysis conducted on 03.08.2020