Short Sellers Suffered Record Losses in 2023, Thanks To Tesla, Apple and Other Tech Giants

According to data provider S3 Partners Research, short sellers of U.S. and Canadian stocks suffered a colossal recorded loss of $194.9 billion as the U.S. stock market soared significantly last year.

During 2023, the S&P 500 index accrued an increase of 24.2%, while the NASDAQ composite index skyrocketed by 43.4%. This made 2023 an extremely difficult year for short sellers.

S3 data shows that overall, investors' short positions totaled $957 billion last year, with a recorded loss of as high as $194.9 billion.

Data shows that Tesla, Nvidia, Apple, Meta, Microsoft, and Amazon were the six companies that caused the most significant losses for short sellers, and all of these companies are members of the Magnificent Seven.

Among these companies, Tesla caused the most significant damage to those bearish investors: the electric vehicle manufacturer's stock price almost doubled in 2023, causing short sellers to suffer a recorded loss of $12.2 billion.

As for other companies, Nvidia also made short sellers lose $11.2 billion, ranking second; Apple short sellers lost $7.3 billion; Meta short sellers lost $6.6 billion; Microsoft short sellers lost $5.6 billion; Amazon short sellers lost $4.9 billion.

Meanwhile, despite the overall heavy losses for short sellers last year, some investors were still able to make money by short-selling stocks, especially during the banking crisis that rocked the market last March.

Last March, a series of regional banks in the United States collapsed one after another, and First Republic Bank's stock became the most profitable stock for short sellers last year.

In March of last year, First Republic Bank's stock price plunged by over 88% at one point, and short sellers made more than $1.6 billion in recorded profits. SVB Financial Group and Signature Bank, both of which also declared bankruptcy, were the third and eleventh most profitable short-selling targets, respectively.

In addition, vaccine manufacturers were one of the few bright spots for short sellers in 2023.

As the impact of the COVID-19 epidemic gradually faded, this sector saw its largest cumulative drop since the height of the epidemic last year.

Vaccine producer Moderna saw its stock price plummet by 45% last year, earning short sellers betting on a decline in its stock a recorded profit of $1.1 billion, making it the second most profitable short-selling target last year.

Notably, even though 2023 was a disaster year for short sellers, they did make a great fortune in 2022. With the Federal Reserve significantly raising interest rates, causing the S&P 500 index to cumulatively fall by 19.44% for the year, short sellers made nearly $300 billion.

In addition, the losses of short sellers in U.S. stocks in 2023 were still less than in 2020. In 2020, as short sellers increased their short positions by betting that the COVID-19 pandemic would lead to a plunge in U.S. stocks, the fiscal stimulus by the U.S. government and the Federal Reserve's loose monetary policy led to a 16.26% increase in the S&P 500 index that year, leading to a huge loss of $242 billion for short sellers.