Fall in tech stocks in 2022 helps fuel recovery for short sellers

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Tesla\u0027s fall from grace helped short sellers earn aggregate profits of US$300 billion. Find out more.

The revival of the strategy suggests stock-picking investors could reap outsized returns in the coming years now that individual companies and sectors are plotting more diversified paths in markets rather than wafting higher in unison.

Securities lending — a practice where investors can temporarily transfer stocks, bonds and exchange-traded funds — is the bedrock of short selling, and it was in high demand in 2022. Matt Chessum, securities finance director at S&P Global Market Intelligence, said worries about the impact of increased financing costs on demand for electric vehicles encouraged short sellers to bet against EV companies including Tesla, Lucid Group Inc. and Fisker Inc.

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