Tesla short sellers lost $ 40 billion in 2020. Elon Musk made more than three times as much

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His personal net worth rose like one of his SpaceX rockets, increasing by more than $ 100 billion. And his loudest critics, aka investors who went short Tesla (TSLA) Assuming the stock price fell, S3 Partners lost a record $ 40.1 billion in bets against him, according to an analysis by S3 Partners.

Those critics, with whom Musk has waged a very hard, very public war of words over the years, would get healthy returns if Tesla stock fell in value, but risked big losses if the stock continued to rise.

And, boy, is it up 743% over the year.

The $ 40.1 billion in losses incurred by investors shorting Tesla stock were in contrast to the losses suffered by other companies’ short investors – last year or ever – according to Ihor Dusaniwsky, S3 general manager and an expert on this area.

In fact, the losses suffered by Tesla shorts were more than the short losses for the next nine companies – combined. Losing on number 2 Apple (AAPL) in 2020 came in at $ 6.7 billion, which is just slightly more than the Tesla shorts lost in the month of December alone. Amazon (AMZN) the shorts cost $ 5.8 billion, according to S3.
Tesla has long been a favorite game for short investors, holding about 19% of the stock when 2020 kicked off. For all those who believe the company is a paradigm-shifting, clean energy leader with unlimited potential, other investors argue that it is an overhyped niche player that will soon be overwhelmed by larger, more established car makers.

Many of the short films had to admit defeat last year. About two-thirds of short positions were phased out in 2020, which in itself was a factor contributing to Tesla stocks moving higher, as short investors were forced to buy more expensive stocks to exit their positions.

“Tesla’s price movement was a gentle tailwind throughout the year,” said Dusaniwsky.

But the year ended with short investors still holding about 5.5% of Tesla’s stock, amounting to a $ 31 billion bet against the company’s future prospects. In comparison, $ 13.3 billion and $ 10.2 billion are currently being bet against Apple and Amazon, respectively, with shorts controlling less than 1% of the shares of each of those companies.

Musk’s very lucrative year

Musk has regularly fought with short sellers, snapping photos of them on Twitter and in public comments. But aside from all the joy he feels from their losses last year, their collective pain cannot be compared to his own personal gain.

Musk’s stake of 170 million shares increased in value by a whopping $ 106 billion in 2020, and that’s just part of the profit he made from Tesla’s performance. He entered the year with options to buy an additional 22.9 million shares, adjusted for the company’s five-for-one stock split. Those options increased in value by $ 14.2 billion.

Tesla reached a goal of half a million cars by 2020
During the course of 2020, Musk also qualified for options to purchase an additional 33.8 million shares, part of his options-only compensation package that he collects when the company hits certain market values ​​and operating targets. He qualified for four separate tranches of options in 2020, which closed the year worth $ 21.5 billion, taking into account the strike price.

And he’s poised to qualify for two more tranches with options to buy another 16.9 million shares sometime early this year, given the company’s recent financial and market performance. Those additional options would be worth $ 10.7 billion based on the stock price at the end of the year.

All things considered, Musk should soon have enough options to buy another 73.5 million shares of Tesla at an average price of about $ 50 a share. It is currently trading above USD 700.

Musk has yet to exercise one of the options he has now, which is not uncommon. Executives who have been granted stock options rarely exercise them until they are ready to sell the stock or the options are about to expire.

All of this has left Musk the second richest man in the world, with a net worth that Forbes estimates at $ 162 million, behind only Amazon CEO Jeff Bezos, whose net worth is $ 187 billion. Bezos’ current holdings in Amazon “only” increased by $ 75 billion in value over the course of 2020.

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