Over the past month, the U.S. stock market has surged back toward record highs, and that rebound has been very painful for short sellers. Indeed, from April 8 to May 20, investors betting against stocks lost over $250 billion, according to data from S3 Partners. Interestingly, all of the “Magnificent Seven” stocks were among the top 20 names with the biggest short seller losses, with chipmaker Nvidia (NVDA) and EV manufacturer Tesla (TSLA) alone costing short sellers more than $19 billion combined during this time.
Confident Investing Starts Here:
- Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions
- Receive undervalued, market resilient stocks straight to you inbox with TipRanks' Smart Value Newsletter
Both companies had strong reasons for their gains. In fact, Nvidia’s stock jumped after trade restrictions eased, which improved its outlook ahead of its earnings report on May 28. At the same time, Tesla’s stock took off after CEO Elon Musk returned his attention to the company following his work with the Department of Government Efficiency. But it wasn’t just big tech that surged, as short sellers also lost billions on popular retail investor stocks. Indeed, Palantir (PLTR) rose by more than 55%, MicroStrategy (MSTR) jumped over 68%, and Hims & Hers (HIMS) more than doubled. For reference, the S&P 500 saw a gain of 17% over the same period.
It is worth noting that the broader market rally began on April 9 when President Trump delayed his planned tariffs by 90 days, which led to the S&P 500’s best day since 2008. Stocks then kept rising as more tariffs were lifted. Nevertheless, some experts believe that the rally was fueled more by investors closing out bearish bets (short-covering) rather than by strong business fundamentals. Viktor Hjort from BNP Paribas said the market rebounded at a time when there wasn’t much new data. Therefore, Hjort believes that real economic reports will play a bigger role in shaping what happens next in the market as we head into June.
Which Magnificent Seven Stock Is the Better Buy?
Turning to Wall Street, analysts think that NVDA stock has the most room to run out of the Magnificent Seven stocks. In fact, NVDA’s average price target of $164.51 per share implies more than 23% upside potential. On the other hand, analysts expect the least from TSLA stock, as its average price target of $277.78 equates to a loss of 18.8%.
Looking for a trading platform? Check out TipRanks' Best Online Brokers , and find the ideal broker for your trades.
Report an Issue