ExxonMobil passed Tesla as the most shorted stock last month

Elon Musk’s Tesla was the most shorted stock in the S&P 500 for four consecutive months before dropping to second in October, behind oil major ExxonMobil, HazelTree reported. Mario Tama/Getty Images

ExxonMobil was the most shorted large-cap stock in the S&P 500 last month, according to HazelTree.
Tesla and Apple followed the energy giant in the large-cap sector, according to data from HazelTree.
Fund managers tracked by the firm also bet heavily against Rivian, SNAP, Ford, and AirBnB.

ExxonMobil Corp replaced Tesla as the most-shorted large-cap stock in the S&P 500, according to a report from HazelTree.

Before last month, Elon Musk’s car company had held the top spot as the most shorted stock for four consecutive months. When investors short a stock, they are betting that a company’s share price will decline. 

HazleTree ranks short bets with a “Crowdedness Score” of one to 99, with the highest level representing shares shorted by the greatest percentage of funds tracked by HazleTree. The firm collects data on 12,000 global equities and over 700 funds. 

In the large-cap group, ExxonMobil and Tesla led the way with scores of 99 and 97, respectively, followed by Apple (94), Charter Communications (91), Broadcom (91), Rivian Automotive (86), US Bank Corp (83), SNAP (83), Ford (78), and AirBnB (78). 

The three most-shorted names in the mid-cap sector included SOFI Technologies (99), American Airlines (92), and EV maker Lucid (92). 

The report also highlighted the percentage of institutional investors’ supply of a particular stock to be loaned to short sellers. In order to short a stock, an investor betting against a particular name must borrow the shares. It then sells them immediately. If the share price fall as expected, the short seller buys the shares back and returns them to the lender and pockets the difference in price. 

HazelTree said it tracks how “hot” a stock is in terms of supply and demand from short sellers. 

Rivian Automotive led the way in institutional supply utilization at 37%, well above ExxonMobil’s 3.13% and Tesla’s 2.67%. 

Exxon is down about 6% year-to-date, while Tesla has gained a whopping 76% this year but is dealing with headwinds stemming from uncertain demand for electric vehicles and stiff competition that has led to price cuts on its vehicles over the course of 2023. 

The stock market’s major indexes have enjoyed a strong start to November, with the S&P 500 notching its best winning streak in two years. Yet some of Wall Street’s bearish forecasters aren’t convinced the rally can last. Morgan Stanley chief stock strategist Mike Wilson wrote this week that the gains are likely a bear market rally rather than a sign of prolonged upside.  

“We think last week’s rally in stocks was mainly a function of the fall in back-end Treasury yields,” Wilson wrote in a note Monday. “In our view, the drop in Treasury yields was more related to the lower than expected coupon issuance guidance and weaker economic data as opposed to the bullish interpretation (for equities) that the Fed is going to cut rates earlier next year in the absence of a labor cycle.”