Short sellers were winners gaining nearly $304B as stocks stumbled

By | December 22, 2022

Stocks don’t have to rise for investors to profit.

The decline in stocks in 2022 made money for short sellers who are on track for their first yearly gain since 2018, according to a report from analytics firm S3 Partners.

Short sellers are investors who bet on declines in a company’s share price.

The short sellers have logged $303.7 billion in realized and unrealized gains, a fourfold increase compared with 2018, their last profitable year.

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Tesla CEO Elon Musk alongside the electric automaker’s logo. (Getty Images/AP / Getty Images)

The math breaks down to a 31.2% return on total average short interest of $973.6 billion throughout the year.

Investors betting against Tesla led the way in terms of dollar gains, with investors seeing $15 billion in realized and unrealized profits on some $19.3 billion of shares sold short.

Shares of the electric carmaker are down roughly 60% year-to-date.

Other top winners for shorts include Amazon, Meta Platforms, Apple and used car seller Carvana Co.

ticker Security load Change change %
TSLA TESLA INC. 137.57 -0.23 -0.17%
AMZN AMAZON.COM INC. 86.77 +1.58 +1.85%
META META PLATFORMS INC. 119.76 +2.67 +2.28%
AAPL APPLE INC. 135.45 +3.15 +2.38%
CVNA CARVANA CO. 4.32 +0.16 +3.85%

The S&P 500 is down almost 19% this year and on track for its biggest annual percentage loss since 2008.

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Federal Reserve Chairman Jerome Powell

US Federal Reserve Chairman Jerome Powell. (AL DRAGO/AFP via Getty Images / Getty Images)

The Federal Reserve’s most aggressive rate increases in decades dried up risk appetite.

Higher interest rates were one problem, but some stocks had other issues.

Some investors believe Tesla CEO Elon Musk’s purchase of Twitter is diverting his time running the electric car company. Musk’s Tesla share sales have also weighed on the stock.

Stock traders at NYSE

Stock traders work at the New York Stock Exchange. ((AP Photo/Mark Lennihan) / AP Newsroom)

Massive rallies by mega stocks in the past couple of years spelled bad news for short sellers.

Shorts lost $142.4 billion in 2021 and took a $241.7 billion hit in 2020.

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Investors who bet against oil companies as energy prices surged, took a hit as shares of Exxon Mobil, Occidental Petroleum, Chevron and Marathon Petroleum notched big gains.

Reuters contributed to this report.

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