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Tesla short sellers lose $1.36B after shares jump on Q3 earnings

Tesla Inc. short sellers lost $1.36 billion after the California automaker's stock jumped amid strong third-quarter earnings, according to an S3 Analytics report.

Shares of Tesla were up 17.08% at $298.21 the afternoon after it reported earnings on Oct. 23, beating analysts' expectations.

Tesla became the most valuable U.S. automaker as the company's market cap surged to $53.73 billion as of Oct. 24, better than General Motors Co.'s market cap of $51.18 billion, according to S&P Global Market Intelligence data.

Tesla short sellers were up $2 billion in mark-to-market profits before the jump, according to the report.

"TSLA shorts are down -$1.36 billion in mark-to-market losses, wiping out almost 70% of their year-to-date profits," Ihor Dusaniwsky, S3's managing director of predictive analytics, said.

Tesla did not immediately respond to a request for comment by S&P Global Market Intelligence.

Since June, the number of shorted shares decreased by 5.12 million, or 13.6% of total shares shorted. Ahead of Tesla's third-quarter earnings report, shorts covered 1.53 million shares of their total shares shorted.

"We are expecting more short covering and the continuation of this long-term short squeeze as TSLA's stock price continues to show strength," Dusaniwsky said.

Shares shorted could fall below 30 million if the share price stays in the $300 range, the report added.

"That would be over 2.6 million shares of buying from the short side helping push TSLA's stock price further into short squeeze territory," Dusaniwsky said.

Tesla is the second-largest short in the U.S equity market after Apple Inc., according to the report.