Since the Republican presidential candidate Donald Trump won the election, Tesla’s stock price has risen nearly 30%, and its market value has surged over $200 billion. Against this backdrop, hedge funds that persist in shorting Tesla have lost $5 billion, largely due to the special relationship between Musk and Trump, which has caused significant damage to the short-selling institutions.
During the campaign, Tesla CEO Musk strongly supported Trump and received a promise from him to lead a new organization called the “Efficiency Committee” after taking office. According to Bloomberg, based on data from S3 Partners, hedge funds holding short positions in Tesla have suffered paper losses of at least $5.2 billion from election day until last Friday.
According to data from Hazeltree, which tracks the positions of over 500 hedge funds, many hedge funds have closed their short positions on Tesla in the past four months. This position adjustment coincides with Musk’s endorsement of Trump, which began on July 13.
Per Lekander, CEO of hedge fund management company Clean Energy Transition, revealed that he had a small short position on Tesla before the election, but he has significantly reduced his position, which means his eventual losses will be “relatively small,” although he admitted “we lost some money.”
Since the US presidential election on November 5th, Tesla’s stock price has risen nearly 30%, and its market value has soared over $200 billion. Against this backdrop, hedge funds that previously shorted Tesla quickly changed their positions.
According to weekly data provided by Hazeltree, as of November 6th, only 7% of hedge funds had a net short position on Tesla, a significant decrease from the 17% in early July. However, only 8% of hedge funds had a net long position on Tesla.
The report pointed out that even though other electric vehicle industries are facing headwinds due to trade tensions, weak consumer demand, and intensified competition, Tesla remains a difficult stock to short. In July of this year, nearly one-fifth of the hedge funds tracked by Hazeltree established short positions on Tesla, but they ultimately suffered significant losses as Tesla’s sales data caused its stock price to soar.
Meanwhile, according to the performance of the KraneShares Electric Vehicles and Future Mobility Index ETF, the electric vehicle sector has fallen over 12% this year and is expected to decline by around 9% in 2023. In contrast, Tesla has risen by about 30% in 2024, continuing its growth after doubling its stock price last year.
