If you are thinking about betting against Alibaba’s stock, you might first consider simply illumination your money on fire.
Traders wagering on declines in the company’s shares have lost a grand total of $9. 8 billion in 2017, according to data provided by financial analytics firm S3 Partners. That makes Alibaba the worst-performing short in the globe this year, also it is not particularly close.
The next-most shorted company is Tesla, which has drained $4. 5 billion from the accounts of bearish speculators, less than half of the damage left in Alibaba’s wake.
The reason for the futility of short sellers is clear: Alibaba’s stock appears like a runaway train right this moment, up 87% in 2017 through Thursday, roughly eight times the MSCI All-Country World Index.
In fact, short sellers possess lost $2 billion this week alone following Alibaba’s blockbuster earnings report, which saw the company grow earnings by 62% year-over-year, and expand earnings 56%, S3 data show.
Possibly even more surprising than the sheer size of the loss incurred by Alibaba short sellers this year is how stubborn they’ve been about continuing to gamble against the company. Its stock price has been on a clear excursion for basically all of 2017, showing very few areas of weakness, yet all those bearish traders have carried on to double down.
This may be because investors are treating Alibaba as a proxy server for the entire stock market within Hong Kong and Tiongkok, affirms Ihor Dusaniwsky, handling director of predictive analytics at S3. That is a technique similar to one becoming utilized in the US market, which usually has seen traders brief the best-performing stocks within the S&P 500 being a broader market hedge. In fact, Hong Kong’s Hang Seng index is up 23% up to now in 2017.
“Short sellers are hoping that will if there is certainly stock marketplace correction in Hong Kong/China, Alibaba will bear the particular brunt of the drop, ” Dusaniwsky wrote within a client note. “The brief sellers that remain only at that poker table are waiting around to see if they will will be riding lower the river on the rowboat or a private yacht. “