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Short Sellers Pull Back From BYD Ahead of Likely Record Quarter

(Bloomberg)

(Bloomberg) -- Short sellers are backing off from BYD Co. shares, with the Chinese electric vehicle maker tipped to report higher quarterly revenue than Tesla Inc. for the first time ever.

Short interest as a percentage of free float in BYD’s Hong Kong-listed shares dropped to 0.9% as of Friday from a high of 7.7% earlier this year, according to S&P Global Inc. data. Bearish bets are now near the lowest level since July 2022. In the options world, the cost of hedging against declines in the shares also slipped.

The Shenzhen-based company is expected to post record quarterly sales of as much as 204.8 billion yuan ($28.7 billion) on Wednesday, with more than 1.1 million passenger new energy vehicles sold in the three months through September. Market watchers say its sales outside China will be key for further gains in its Hong Kong-listed stock, which has surged more than 70% from a February low. 

“We expect investors to gradually shift focus to whether BYD’s premium brands and overseas sales could recover and drive further volume and margin upside in 4Q,” write Morgan Stanley analysts including Tim Hsiao in a note.

©2024 Bloomberg L.P.