Short sellers are taking positions against electric vehicle and solar stocks, which have experienced a decline in their value recently. A report from Hazeltree, a treasury and liquidity management platform, indicates that luxury electric vehicle startups like Rivian (RIVN) and Lucid (LCID), as well as EV giant Tesla (TSLA), were among the top 10 most shorted stocks in the large and mid-cap sectors in October.
The report also assigns a “crowdedness” score, representing the securities that a high percentage of funds are shorting. Interestingly, ExxonMobil (XOM), an oil giant, emerged as the most crowded large-cap stock in October, replacing Tesla after four consecutive months as the top shorted security.
In the small-cap sector, renewable energy companies Sunrun (RUN) and Sunnova Energy (NOVA) were among the top 10 most crowded securities, with a high percentage of funds shorting these stocks.
The decline in the value of solar, wind, and electric vehicle stocks is attributed to industry headwinds and a higher interest rate environment. Short selling involves borrowing a stock and selling it on the open market with the intention of buying it back later at a lower price when the security is repurchased, which is known as covering the short or closing out the position.
Notable declines in these stocks include Rivian's 35% drop since mid-July, Lucid's 49% decline over the same period, and Sunrun and Sunnova's drops of more than 50% since mid-July.
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