Tesla (TSLA) shares fell over 18% after coming under significant pressure from the company’s disappointing Q3 earnings call and demand concerns. Among those that capitalized heavily on this decline were Tesla short sellers, who bagged $3 billion since the earnings report. 

Tesla Erases $213B Off Market Cap Since Q3 Earnings Call

Short sellers targeting Tesla stock raked in $3 billion from the company’s substantial share price drop triggered by the poor earnings report published on October 19. According to data from financial analytics platform Ortex, the dollar value of short interest in Tesla shares stood at about $18.08 billion, representing 3.21% of free float. This data concerns the period from the earnings date report through Friday, October 27.

Notably, the stock plummeted over 18% since the earnings call, wiping about $213 billion off its market cap, per TradingView data. Apart from the disappointing earnings report, which missed earnings and revenue estimates and showed a year-over-year margin drop from 17.2% to 7.6% due to price cuts, other factors also contributed to the dip.

One of them is discouraging remarks by Panasonic, the longtime Tesla partner and supplier. The electronics giant said it had reduced battery cell production in Japan for the period ending September 2023, raising concerns among investors about softening demand for EVs.

In addition, tepid comments by Elon Musk on Cybertruck also put off investors. The first deliveries of the electric pickup truck are scheduled for November-end, but Musk said it will “take a year to 18 months before it is a significant positive cash flow contributor.”

Just a Car Company, After All?

Tesla’s lackluster third-quarter financial report, coupled with the resulting decline in its stock price, has rekindled debates among analysts and investors regarding the true nature of the company. In other words, is Tesla just an automotive manufacturer, or is it on its way to becoming a tech industry powerhouse?

One of the key arguments Tesla bears are holding against the tech narrative is its yet-to-be-released Full Self-Driving (FSD) solution. According to American investment manager Jim Chanos, the company has been “selling the FSD product since 2016, and it still doesn’t exist.”

On the other hand, some keep faith with Tesla, seeing the current period as a temporary blip. 

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