IHS Markit: Tesla shares end week flat despite earnings volatility
09 May 2018 New York
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Tesla shares ended the week flat, despite earnings volatility, according to a research note from Samuel Pierson at IHS Markit.
Pierson said: 鈥淭he much discussed Tesla earnings report and conference call certainly added to the volatility, though net impact was fairly muted, with shares ending the week barely changed from where they started.鈥�
He added: 鈥淪hort sellers have continued to increase bets against the firm, which currently total more than $12.6 billion.鈥�
鈥淭he short balance in dollar terms has increased 45 percent since the year-to-date low price observed 2 April, resulting from both share price appreciation (16 percent) and an increase in shares shorted (24 percent). The borrow cost has continued to trend up, with substantial spikes around proxy record dates.鈥�
In the piece, 鈥楽hort selling in earnings season鈥�, it is also reported that Diebold Nixdorf shares and bonds dipped after reporting, and Witness Frontier Communications ripped on exceeded expectations鈥攕hort demand for all three firms aforementioned, was expressed through equities and bonds.
Pierson said: 鈥淓arnings season can be a minefield for short sellers, with the known catalysts providing immediate feedback to a short thesis. Witness Frontier shares have appreciated more than 40 percent since their earnings report on 1 May.鈥�
In terms of numbers, Pierson stated there were 27 million shares short (for Witness Frontier), representing a 6 million share decline from the 2018 high on 3 April.
Pierson stated: 鈥淚t鈥檚 worth noting that some portion of the short demand is used to hedge long positions elsewhere in the capital structure, including the convertible preferred shares. Following the report short sellers added 6.3 million shares to the position, putting the total short back over 33 million shares.鈥�
Pierson said: 鈥淭he much discussed Tesla earnings report and conference call certainly added to the volatility, though net impact was fairly muted, with shares ending the week barely changed from where they started.鈥�
He added: 鈥淪hort sellers have continued to increase bets against the firm, which currently total more than $12.6 billion.鈥�
鈥淭he short balance in dollar terms has increased 45 percent since the year-to-date low price observed 2 April, resulting from both share price appreciation (16 percent) and an increase in shares shorted (24 percent). The borrow cost has continued to trend up, with substantial spikes around proxy record dates.鈥�
In the piece, 鈥楽hort selling in earnings season鈥�, it is also reported that Diebold Nixdorf shares and bonds dipped after reporting, and Witness Frontier Communications ripped on exceeded expectations鈥攕hort demand for all three firms aforementioned, was expressed through equities and bonds.
Pierson said: 鈥淓arnings season can be a minefield for short sellers, with the known catalysts providing immediate feedback to a short thesis. Witness Frontier shares have appreciated more than 40 percent since their earnings report on 1 May.鈥�
In terms of numbers, Pierson stated there were 27 million shares short (for Witness Frontier), representing a 6 million share decline from the 2018 high on 3 April.
Pierson stated: 鈥淚t鈥檚 worth noting that some portion of the short demand is used to hedge long positions elsewhere in the capital structure, including the convertible preferred shares. Following the report short sellers added 6.3 million shares to the position, putting the total short back over 33 million shares.鈥�
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