Why Tesla And SolarCity Are Two Of The Most Expensive Shares To Sell Short

FIS' Astec Analytics provides its clients with intra-day short-selling market data every week.

Two stocks that that saw plenty of short-selling activity this week were Tesla Motors Inc (NASDAQ: TSLA) and SolarCity Corp (NASDAQ: SCTY). Let’s take a look into the top stocks in the Americas from a security lending perspective.

Tesla

Astec’s top pick last week traded positions with SunEdison Inc (NYSE: SUNE) this week. Tesla had been witnessing an acceleration in its share price, accompanied by a surge in short interest recently. While “signs of a stall were possible towards the end of the prior week,” the stumble seemed only temporary, as the stock went back to surging and closed the week up 4.5 percent. The launch of the new Model 3, the company’s affordable vehicle, seemed to have a lot to do with the spike in the stock.

Related Link: Sunedison Arguably The Most Expensive Stock To Short On The Market

"Tesla is struggling to move from a niche car maker that makes ground-breaking products but also great losses to a mass manufacturer of vehicles,” the report said. Analysts say the company needs to sell more than half a million Model 3 cars to start making money; With only $1.1 billion of cash left, this will be no cakewalk.

Nonetheless, confidence seems to be building up, at least in the hedge fund world, as short interest fell 10 percent by volume over the past week.

SolarCity

SolarCity also falls into this category, as short interest rose 2.5 percent over the last week. After a volatile couple of weeks, investors seem quite disoriented, as rumors about founder Elon Musk considering to take the company private continue to circulate and create uncertainty around where the stock price will go next.

“With short sellers retaining significant unrealized profits based on the share price falling from its peak of more than $62.50, they appear content to wait and see whether a bid will drive the price up and pare some of their gains. If no bid appears, they will potentially count some more profits as the support for the price drains away,” Astec's note concluded.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above