Tesla Releases "Short Shorts", May Hint at Profitable Q2

Rob Maurer

Just days after closing their second quarter, Tesla (TSLA) -Get Report has added a new product to their store: "Tesla Short Shorts".

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The product is likely Tesla CEO Elon Musk's latest jab at short sellers of TSLA stock. As of mid-June, more than 15 million shares of TSLA stock were being sold short. At Friday's closing price of $1,208/share, those shares-sold-short would be valued at more than $18B, making Tesla by far the most shorted company by valuation on the Nasdaq stock exchange despite having a much smaller market cap than the runners-up.

Musk has often teased Tesla short-sellers on Twitter, including an April Fool's bankruptcy joke and an offer to send notable Tesla short-seller David Einhorn a box of short shorts. In 2018, Musk also called for an upcoming "short burn of the century", warning Tesla short sellers to exit their positions.

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Within a day of Einhorn receiving the short shorts, Musk tweeted that Tesla would be adding official Tesla short shorts to their online shop soon. The idea has always been connected to teasing Tesla short sellers.

Although it took a couple years, the timing of the release of Tesla Short Shorts is interesting considering Tesla just closed its second quarter and reported delivery numbers well ahead of Wall St. expectations. As the quarter came to a close, a leaked Musk email alluded to the possibility of Tesla "breaking even" for the quarter, likely referencing profitability. Musk seemed satisfied with the results, sending a congratulatory email to employees the day after the quarter ended.

“Just amazing how well you executed, especially in such difficult times. I am so proud to work with you!” - Elon Musk

Tesla Short Shorts may be another indicator of the second quarter results. The essence of the product is to celebrate Tesla's success over those that have bet against the company. It would seem strange to time the release of such a product at the conclusion of an unprofitable quarter given that Tesla's lack of profitability has been a foundational argument of Tesla short sellers for years. 

While it feels strange to analyze such a product from an investment point of view, Tesla is a unique company with a unique CEO. Insight can be gleaned from unusual places. One such place may be in the product description of Tesla's Short Shorts. Emphasis added.

"Celebrate summer with Tesla Short Shorts. Run like the wind or entertain like Liberace with our red satin and gold trim design. Relax poolside or lounge indoors year-round with our limited-edition Tesla Short Shorts, featuring our signature Tesla logo in front with “S3XY” across the back. Enjoy exceptional comfort from the closing bell." - Tesla

Closing bell is a clear reference to the conclusion of trading on a stock exchange each day. Tesla always reports quarterly earnings after market close, or after the closing bell. 

Perhaps it's not such a stretch to imagine that the emphasized statement may have a double meaning that applies not just to Tesla's short shorts, but also to Tesla investors awaiting Tesla's next earnings report. The report is expected on July 22nd or July 29th, 2.5-3.5 weeks from now. Perhaps coincidentally, Tesla adds a note about the expected ship date for Tesla Short Shorts.

"Note: Product will ship within 2-4 weeks" - Tesla

If Tesla reports a profit, they will have achieved four profitable quarters in a row—a full year—for the first time in company history. Maybe not such a bad time to release the celebratory product that is Tesla Short Shorts.

Comments (3)
No. 1-3
Kasper K
Kasper K

So once again, the stock is up 6% in premarket. Aparently investors really like short shorts in the product line ;-D
Rob, can you do an article or an episode on why S&P500 really matters? I was looking at other companies in the index, and as far as I could tell, their day of inclusion made no significant difference - actually more than not the stock was flat or went down during the following 3 months. I just picked 5 random companies I know and looked at them. Hope you can make me smarter once again.

Ken_S
Ken_S

If Tesla did generate a profit this quarter... These shorts will be inducted in the meme hall of fame.

Ryan S
Ryan S

Nice Rob, appreciate the length of this one. Nice and concise, but I feel like I've gained a higher knowledge on the subject.


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