Short sellers have set their sights on electric vehicle (EV) and solar energy stocks, both of which have been experiencing a downward trajectory in recent times.
A recent report from the treasury and liquidity management platform Hazeltree highlights that luxury EV startups like Rivian (RIVN) and Lucid (LCID), as well as the EV giant Tesla (TSLA), found themselves among the top 10 most heavily shorted stocks within the large-cap and mid-cap stock categories in October.
The report utilizes a “crowdedness” score to identify stocks that the highest percentage of investment funds are currently shorting.
One noteworthy deviation from the list of renewable energy and EV stocks was ExxonMobil (XOM), the oil industry giant. In October, ExxonMobil emerged as the most crowded large-cap stock with a crowdedness score of 99, displacing Tesla from its position after four consecutive months as the top shorted security.
In the small-cap stock category, renewables companies like Sunrun (RUN) and Sunnova Energy (NOVA) also featured in the list of the top 10 most crowded stocks, showing a significant percentage of investment funds taking short positions in these companies.
Stocks related to solar, wind, and electric vehicles have been facing challenging times recently, affected by industry headwinds and a backdrop of rising interest rates.
Short selling is a strategy where an investor borrows a stock and subsequently sells it on the open market, intending to repurchase it later at a lower price. The process of buying the stock back to close the short position is referred to as “covering the short.”
Renewable energy and electric vehicle stocks have faced a consistent downward trend over the past several months. Notably, Rivian’s stock has experienced a decline of approximately 35% since mid-July, while Lucid’s stock has seen a decline of about 49% over the same period. Sunrun and Sunnova have witnessed even more substantial drops, with both stocks falling by more than 50% since mid-July.
