Technology stocks in the U.S. have seen a spike in short-selling since the start of the year, according to financial research firm Markit, which highlighted Tesla as one blue-chip stock that has seen a surge in investors betting against it.
Short-selling is an investment tactic where a speculator borrows a financial instrument, such as a stock, and sells it in the hope of buying it back later at a lower price, thereby making a profit. Markit measures this short interest by calculating the amount of shares that are out on loan.
Its research shows that short interest in the Nasdaq Composite has risen by 10 percent year-to-date, to 2.9 percent of shares outstanding, with investors expecting some of the biggest names in the sector to fall.
"On the larger (capitalized) Nasdaq 100, Tesla has seen short interest surge by a third in the last month to 15 percent of shares outstanding," Simon Colvin, a research analyst at Markit, told CNBC via email. Tesla is now the most shorted company on the Nasdaq 100, he added, after being the fourth most shorted stock a month ago.
U.S-based electric carmaker Tesla became a Wall Street darling in the past year, surging 344 percent in 2013 as the company announced plans to expand its battery manufacturing capabilities and as its flagship vehicle, the Model S, garnered strong reviews.
Tesla shares reached an all-time high of $254 in early March, according to data from Thomson Reuters, before slipping 20 percent to trade at $204 at the close on Friday. Analysts have yet to fall out of love with Tesla, with the average analyst recommendation for its stock being a "buy" and its current price target standing at $226.
Tesla's fall comes as the wider technology sector is hit by a selloff in momentum stocks which saw the Nasdaq Composite fall below 4,000 points for the first time since early February. Momentum stocks are fast-rising stocks which can unexpectedly reverse when investors fear they have overshot and a bubble is brewing.
The Nasdaq Composite index was down 3.1 percent last week, its worst weekly hit since June 2012, and recorded its longest weekly losing streak since late 2012. Telecommunication services, software and semiconductor companies have seen much greater demand to borrow than the rest of the index, according to Markit.
Colvin added that Plug Power, Livedeal and Synaptics were currently topping the list as the most heavily shorted tech companies on the wider Nasdaq Composite index. Other than Tesla, Applied Materials and Seagate have all seen above average short interest on the Nasdaq 100, he said.