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Comment by gizmo | Hacker News Reader

These articles never take into account what investor’s NET exposure is.

An investor who has a lot of tesla shares might write calls to collect premium. Or buy puts for downside protection. Or short tesla shares to offset out-of-the-money calls.

Or maybe an investor has a large position in an ETF that has a position in tesla. If the investor wants to be neutral tesla he has to short the stock in order to cancel out the tesla exposure through the ETF.

I don’t know why the subject of short selling makes peoples brains melt.

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With Tesla specifically, Elon promotes a "short sellers are evil" line.

Which is an integral part of Tesla's PR and marketing strategy.

The idea being to cultivate an underdog attitude amongst owners.

Even on Reddit's EV and Tesla forums you will see people default to wild conspiracy theories in order to defend the actions of the company or explain why EVs are having issues in certain areas.

I don't think you need a huge conspiracy theory when one of the richest people in the world has a billion dollar short position on an EV company.

I know it's fun to hate on billionaires these days, but it's not a conspiracy to short sell. If you look at the PE ratio and look at the automotive market and other telsa ventures, it's perfectly reasonable to believe it will not "clear the runway" with growth. The short sellers also happened to be really wrong this year.

Why does an extremely rich person want to bet a billion dollars against EVs?

I'm assuming here: It was a hunch where he probably was thinking that the incumbent auto-makers would catch up and squash the new guy. People make these decisions all of the time based on what they know and how history has played out.

They're not neccessarily betting against electric vehicles if they short Tesla .. they're betting that other companies will pass them in the race.

They are specifically betting the stock will go down. That could be for a number of reasons and from the article, shorting was slightly profitable in the second half of the year. Perhaps around Cybertruck news.

The simplest answer is they wanted to make money because they thought the stock was over valued. It is probably not due to EVs or Telsa specifically. Some people made a lot of money from it recently. From the article:

> The losses by short sellers are a stark contrast to a year ago, when shorts made a $15.9 billion profit on Tesla shares as the company’s stock lost 65% of the value.

But I'm also not sure where this idea of a whale short seller is coming from. With $13bn in losses almost entirely in 6 months, I would have to imagine there's just some riskier institutional investors.

Another way to look at it is they made it cheaper for people who are bullish on tesla to buy stock.

Gated was hated for ages, received pies in his face and lost over 1 trillion by diversifying his portfolio.

> I don’t know why the subject of short selling makes peoples brains melt.

Because it's an easy target among the financial world, which is divorced from reality in general.

> which is divorced from reality in general.

It's not exactly divorced from reality. You can synthetically create the very same position. While it sounds like what they're doing is attacking markets and economy, that's just not the case. Unless they made both the options and derivatives markets illegal and also made borrowing and lending stock shares illegal, shorting the security is a position that can easily be created. It was organically discovered at the Amsterdam Stock Exchange within like a couple years after it was founded. The exchange didn't invent it and start offering it either. The traders simply realized that if they could borrow/lend and buy/sell, then they can take an inverse position.

Oh, I agree that the hate for short-sellers is overdone.

But the financial world (and the stock market in particular) forces the detachment of "profit" from "(useful) productivity", and this is clear to everyone, even if they don't express it like that.

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