tesla's soaring stock price has once again taught the short sellers a lesson.

Due to Tesla's third-quarter financial report released on Wednesday far exceeding expectations, the extremely strong profit increase has shocked the market. On Thursday, Tesla's stock price surged by 22% in a single day, marking the largest single-day increase since 2013, with a market cap increase of $150 billion. As a result, short sellers experienced a rapid evaporation of wealth. Today, Tesla continued its strong upward momentum, closing up over 3%.

According to a report from S3 Partners, short sellers suffered a market value loss of approximately $3.5 billion in this market trend, wiping out their profit of $1.7 billion so far this year, resulting in a current unrealized loss of $1.8 billion.

tesla's performance not only caught the short sellers off guard, but even analysts were surprised. Before the financial report was released, the market generally expected tesla's stock price to continue to decline due to the sustained low demand for electric cars, with analysts on average expecting a 10% decline in quarterly profits. However, tesla's financial report provided a positive signal, with a 9% year-on-year profit growth, far exceeding expectations.

CEO Musk even revealed to investors, "The company expects car sales to increase by 20-30% next year."

From the perspective of options positions, investors were not prepared for a substantial increase. Options trading indicates that traders expect the stock to rise by around 6% after the financial report is released. Analysis suggests that considering tesla's stock price has risen by at least 9% after the release of the previous seven quarterly reports, this number itself is quite low.

Currently, some investors have regained confidence. Analysts point out that these investors believe the worst period of slowing demand for electric cars may have ended, and the company is steadily advancing in the development of fully autonomous driving cars, so they are all buying back the stock.

On Thursday, the premium of three-month call options exceeded put options for the first time, and several analysts have raised their target price for Tesla. Data from S3 shows that only about 2.9% of Tesla's freely tradable shares are shorted, hovering near what the company calls a "historic low point."

Despite Tesla's exceptionally strong stock price performance, market observers including Matthew Unterman from S3 Partners and Stuart Kaiser, a stock trading strategist at Citigroup in the USA, believe that there are hardly any signs indicating that this surge is being driven by so-called "short squeezing." Kaiser stated:

"Tesla's short position is very low, and Thursday's stock price movement was driven by unexpectedly strong performance, rather than positive short covering under a backdrop of undervalued stocks."

Editor/Lambor