It can be a wise exercise to check out which stocks investors are shorting the most in the market at any given time. This helps to give you some idea of investor sentiment about particular companies and may help you make a wiser choice about which companies you will put your own hard-earned money into as well. It might also point you away from some companies that the market has deemed to be worthy of shorting.
To go short a stock is to bet against it. It is the practice of selling shares at the current price with the promise to buy them back and replace them at a later date. The person who does this clearly believes that the price of the shares will be lower at a future date than they are today. A person is profitable with shorting when the value of the stock they have shorted falls.
CNBC is reporting that the biggest short on the market right now is none other than Tesla. This high-flying company has been the darling of Wall Street for some time, so it might come as a bit of a shock to see it on a list of companies that people most want to short. However, that is squarely the position that the company finds itself in at this particular time.
While this might be troubling to some, it can be a badge of honor to others. Tesla took over the most shorted stock award away from Apple. You see, people tend to bet the most one way or the other on the biggest and most popular companies in America. You can expect that a stock that a lot of people own will also be a stock that a lot of other people want to bet against. It is possible to make a lot of money either way.
Right now, investment bank Goldman Sachs has a note out to its readers saying that investors should sell their shares of Tesla. They are unconvinced that the company can meet its target projections for its newest fleet of vehicles. If that turns out to be the case, then there may be a short of rush to the exits to get out of this stock. Goldman Sachs would encourage investors to get out now while there is less traffic for them to compete with. This may be the most troubling sign yet for investors in this high-tech company.