S3 Partners Research updated on Wednesday on the short interest backdrop in the U.S. Auto & Truck manufacturing sectors. Ihor Dusaniwsky noted short interest on automaker names is at $43.6B, with about $33.3B of that tally in electric vehicle stocks. The largest short by dollars is Tesla with $26.3B of short interest with Rivian Automotive Inc , NIO Inc ADR , Lucid Group Inc and Li Auto Inc ADR all distant laggards strictly by dollars. The auto sector continues to be a favorite target of short sellers. Float for automakers at an average of 6.14% is higher than the U.S. market average of 4.99% and average stock borrow costs of 1.49% in fees are almost double the U.S. market average of 0.77% in fees.
There were only five automaker stocks with over $100M of year-to-date mark-to-market profits for shorts, while there were six stocks with over $100M in year-to-date mark-to-market losses. The EV stocks that have been big winners for shorts in 2023 are Mullen Automotive, Lordstown Motors (OTC:RIDEQ), Faraday Future, Workhorse Group (WKHS), and Canoo (GOEV). On the flip side, shorts have been scorched this year with trades on Tesla (TSLA), Rivian Automotive , Li Auto , XPeng , Lucid Group , Nikola , and Electrameccanica Vehicles all highly unprofitable.
Looking ahead, S3 Partners warned on four electric vehicle stocks that are "crowded shorts" based on proprietary data. Fisker , Hyzon Motors (HYZN), Lucid Group , and Nikola (NKLA) are seen as the names at risk of being unprofitable trades for the short crowd.
In the broader auto retail sector, highly-shorted Carvana jumped 40% on Wednesday after announcing a cooperation deal with activist investor Elliott Management. Vroom (VRM) broke 17.66% higher.
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