Tesla (TSLA) is still the most shorted stock out of all the US large-caps, and Elon Musk suspects that Bill Gates still has a large position against the company.
Shorts, people betting against the stock of a company, have long played a part in Tesla’s history on the stock market.
Throughout the years, Tesla was often topping the list of the most shorted stocks on the NASDAQ. As the automaker became profitable, shorts started to take losses and lose interest. However, there seems to be a resurgence of short interest on Tesla’s stock.
Securities lending data firm Hazeltree announced this week that Tesla has now been the most shorted large-cap stock (excluding smaller companies) in the US for three months in a row.
Short interest on Tesla’s stock is at 82 million shares, which is worth almost $22 billion. That might sound like a lot, but it is less than a day’s worth of trading on the stock.
One of the most prominent Tesla shorts is Bill Gates. There were several rumors that the Microsoft founder was shorting Tesla in 2020 and 2021, but he never wanted to confirm it publicly – though he did confirm it to Musk.
The issue came back to light through the new Musk biography, which came out this week.
Biographer Walter Isaacson recalled a meeting Gates and Musk had at Gigafactory Texas in 2022:
There was one contentious issue that they had to address. Gates had shorted Tesla stock, placing a big bet that it would go down in value. he turned out to be wrong. By the time he arrived in Austin, he had lost $1.5 billion. Musk had heard about it and was seething. Short-sellers occupied his innermost circle of hell. Gates said he was sorry, but that did not placate Musk. “I apologized to him,” Gates says. “Once he heard I’d shorted the stock, he was super mean to me, but he’s super mean to so many people, so you can’t take it too personally.”
The book says that as of mid-2022, Gates still had a short position on Tesla.
Musk commented on the situation on X yesterday. He believes that Gates might still have his short position on Tesla, and he seems to be still mad about it:
Gates placed a massive bet on Tesla dying when our company was at one of its weakest moments several years ago. Such a big short position also drives the stock down for everyday investors. To the best of my knowledge, Gates *still* has that massive bet against Tesla on the table. Someone should ask him if he does. The lack of self-awareness and hypocrisy of Gates who had the nerve to ask me to donate to his mostly window-dressing environmental causes, while simultaneously aiming to make $500M from Tesla’s demise, boggles the mind.
Someone should probably “community note” Musk’s comment though, because shorting a stock doesn’t necessarily mean that you are looking to make money on someone’s “demise.” It just means that you think the stock is overvalued.
I understand not liking someone betting against you. That’s understandable, but historically, shorts have technically helped Tesla’s stock quite a bit.
There were a few times when shorts were squeezed out of the stocks – resulting in massive increases in stock value.
The main problem with shorts is when they take a position and start spreading misinformation about the company, but I don’t think Gates fit that category. He thought the stock was overvalued. That’s it.
I am long Tesla, but I think there are logical bear cases against the company.
Author: Fred Lambert