Alibaba stock surges, traders betting against witness $10 billion loss

China e-commerce giant Alibaba short sellers are now down by $9.8 billion this year, according to data provided by Ney York-based financial analytics firm S3 Partners.

This loss to Alibaba short sellers has been attributed to their stubbornness on continuing to bet double down against surging Alibaba.

Short sellers take a view on a stock that it will fall in price. They then borrow the shares and sell them immediately, hoping they can later scoop them up at a lower price, return them to the original lender and pocket the difference.

Speaking about the development, Ihor Dusaniwsky, S3’s head of research said, “Alibaba is not only the largest short in the Hong Kong/Chinese region but it is also the largest short worldwide, more than doubling Tesla’s short interest.” This makes Alibaba the worst-performing short in the world this year. The next-most shorted company is Tesla, which has drained $4.5 billion.

Despite this, S3 Analytics said short sellers in Hong Kong and China had dug in to their positions. The Alibaba shares almost saw the surge of 90%. Following the surge, Alibaba founder Jack Ma continue to add wealth in his kitty. This year Jack Ma's net worth has increased to about £29 billion.

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Besides Alibaba e-commerce business, Alibaba’s digital media, entertainment, streaming, and cloud computing divisions have all showed strong growth, the analyst added.

The primary driver behind Alibaba’s growth is the continued strength of China’s e-commerce market, consisting of revenues of US$7.4 billion and income of US$2 billion, a recent report said. The biggest surge of revenue comes from its cloud computing sector, a 96% growth to $359 million.