Tesla (TSLA) reports second-quarter earnings after the close on July 22 against one of its most bearish positioning backdrops in recent years. Short sellers have steadily increased exposure over the past four months, while the S3 Short Interest Ratio (DTC) has climbed to its highest level since 2021, reflecting a combination of rising bearish positioning and declining trading liquidity.

Short Interest and Short Interest Ratio

• Short interest has risen from 60 million shares in March to nearly 80 million shares today, an increase of roughly 20 million shares (+33%). The steady increase suggests bearish conviction has continued to build heading into earnings. Rather than reducing exposure ahead of a potentially volatile catalyst, short positioning has continued to build alongside weakening price action.

• The S3 Short Interest Ratio has continued to rise, with the 30DDays-to-Cover currently at 1.75 days. The recent increase reflects both higher short interest and softer trading volumes, leaving bearish positioning at its most crowded relative to trading liquidity since 2021.

TSLA 1Y Charts:

Technical Picture

• The stock is trading below its 50-day ($409) and 200-day ($417) moving averages, with both now acting as overhead resistance.

• Tesla failed to sustain its breakout above $430, producing a pattern of lower highs and signaling fading upside momentum.

• RSI has weakened to 39, indicating sellers remain in control without the stock yet reaching oversold territory.

• MACD remains on a bearish crossover, with downside momentum continuing to strengthen.

• Trading volume has moderated during the recent decline, suggesting buying conviction has remained subdued heading into earnings.

Takeaway

• Tesla enters earnings with bearish positioning and weakening technicals reinforcing the same narrative. Shorts have steadily increased exposure, while the S3 Short Interest Ratio has climbed to its highest level since 2021, signaling that bearish positioning has become increasingly crowded relative to available trading liquidity. At the same time, Tesla has broken below key long-term moving averages, momentum has deteriorated, and buyers have yet to regain control. Both positioning and technicals suggest the burden of proof rests with the bulls.

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The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC (“S3 Partners”) to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks, and merits, as well as the legal, tax, accounting, and investment consequences, of such decisions.