(Reuters) - Shares of Nikola Corp (O:NKLA) on Wednesday reversed course to trade up as much as 6% from premarket losses, resulting in $24 million in mark-to-market losses for those betting against the stock, according to financial analytics firm S3 Partners.
While shares shorted on the electric automaker had been decreasing over the last month, shorting picked up pace since a report by Hindenburg last week, S3 Partners said.
In its scathing report, the short-seller alleged Nikola of misleading investors and partners. But the electric carmaker has denied the charge and accused Hindenburg of manipulating the stock.
Shares shorted on Nikola decreased by 362,000 units worth $12 million last month, according to S3. But over the last week, there were 2.2 million of new short sales.
"Short sellers are burning through the last of the stock borrows over the last week with 2.2 million of new short sales, worth $74 million," said Ihor Dusaniwsky, managing director of Predictive Analytics at S3.
A short sale involves borrowing of shares by an investor who then sells them expecting to buy back at a lower price to pay back the loan.
S3 said stock borrowing fees on existing shorts were 11.33%, but for new shorts, they were trending as high as 50%.
Short interest on Nikola currently stood at $387 million, or 8.69% of its outstanding shares, S3 said.