Short sellers in the US stock market suffered a massive loss of $195 billion last year! Regional banks have become profitable tools, while shorting Tesla has resulted in devastating losses.
In 2023, the bear market suffered huge losses, with short positions in US stocks losing $195 billion last year. However, regional banks and vaccine manufacturers in the United States stood out in the bear market, becoming the most profitable bearish bets. First Republic Bank and Moderna made $1.6 billion and $1.2 billion respectively. However, the bearish bets on large tech companies resulted in heavy losses, with Tesla's short position losses reaching $12.2 billion. Overall, the bear market's book losses at the end of 2023 amounted to nearly $195 billion, offsetting two-thirds of their earnings in 2022.
Zhitong App has learned that shorting regional banks and vaccine manufacturers in the United States is one of the few bright spots for short sellers in 2023. Due to the sharp rise in the US stock market last year, short sellers suffered their largest cumulative losses since the peak of the pandemic.
According to data from S3 Partners LLC, the collapse of First Republic Bank (FRCB.US) made it the most profitable bearish bet in 2023, with a book profit of $1.6 billion. Vaccine producer Moderna (MRNA.US), which plummeted 45% in 2023, ranked second, earning short sellers $1.2 billion betting on the stock's decline.
Regional banks and healthcare stocks are the best bearish bets in 2023.
These results highlight some important events that have impacted the market in 2023, including the regional bank crisis that erupted in the spring and the decline in demand for COVID-19 vaccines.
However, short sellers targeting large tech companies suffered significant losses. Large tech stocks soared in 2023, leading a comprehensive rebound in the US stock market after a year of market turmoil.
According to S3's data, overall, short sellers had a book loss of nearly $195 billion at the end of 2023, offsetting about two-thirds of the nearly $300 billion in gains they made during the market crash in 2022. Short sellers had a cumulative loss of about $142 billion in 2021 and $242 billion in 2020.
Short sellers targeting Tesla (TSLA.US) suffered the most severe losses, as the stock price of this electric vehicle manufacturer nearly doubled in 2023, resulting in a book loss of $12.2 billion for short sellers. Nvidia (NVDA.US) ranked second, causing short sellers to lose $11.2 billion, followed closely by the so-called "Big Seven," semiconductor companies, and cryptocurrency trading platform Coinbase (COIN.US).
The "Big Seven" caused significant losses for short sellers.
Ihor Dusaniwsky, Managing Director of S3's Predictive Analytics department, said on Thursday that since short sellers tend to invest the most dollars in stocks with the highest previous year's gains, 73% of every dollar shorted has generated a negative return. However, he stated that last year the number of stocks that made profits or losses for short sellers was more balanced.
"Surprisingly, the number of stocks that made profits and losses for short sellers is almost the same," Dusaniwsky said, adding that in the communication services, consumer staples, healthcare, materials, and utilities sectors, there were actually more stocks that made profits for short sellers than those that made losses.