Shares are faring well after combative earnings call

May 7, 2017 – Bloomberg

Tesla Inc.’s Elon Musk is putting some money where his trash-talking mouth is.

The chief executive officer bought about $9.85 million worth of Tesla shares on Monday, his biggest purchase since March 2017, according to a regulatory filing. Musk, 46, already was Tesla’s largest shareholder, and his stake is now approaching 20 percent, according to data compiled by Bloomberg.

The purchase comes just days after Musk taunted Tesla short sellers in a series of tweets about his combative earnings call last week. He promised to “burn” those betting against the electric-car maker, which hasn’t earned an annual profit in its 15-year history and has blazed through more than $1 billion in cash during three of the last four quarters.

“The sheer magnitude of short carnage will be unreal,” Musk wrote in one of his posts Friday. “If you’re short, I suggest tiptoeing quietly to the exit …”

Tesla shares have more than recovered the loss sustained after Musk ranted against what he said were “dry,” “boring” and “bonehead” questions from analysts on the company’s earnings call last week. The stock rose 3 percent on Monday, boosting Tesla’s market capitalization to about $51.4 billion. The carmaker has again surpassed General Motors Co. on that basis by about $190 million.

Short interest in Tesla has been unrelenting, increasing by almost 400,000 shares on Thursday, the day after the conference call, and exceeding 40 million shares for the first time, according to S3 Partners LLC.

“If short-selling demand continues to grow at this pace, short sellers will feel the angst that Tesla Model 3 buyers are feeling — with demand outstripping supply,” Ihor Dusaniwsky, an S3 Partners managing director, wrote in a report Friday.

“Lack of stock loan supply, increased stock loan costs and tapped-out risk limits will eventually curtail short selling in Tesla,” Dusaniwsky said. “As we get closer to this happening, Tesla’s stock price will be more and more dependent on long shareholder buying and selling — the shorts will be on autopilot and the longs will be in the driver’s seat.”