Since the Republican presidential candidate, Donald Trump, won the election, Tesla’s stock price has risen nearly 30%, with a market value soaring over $200 billion. Against this backdrop, the hedge fund that persists in shorting Tesla has suffered losses of $5 billion. The special relationship between Musk and Trump has brought enormous damage to the short-selling institutions.
During the campaign period, Tesla CEO Elon Musk actively campaigned for Trump. Trump promised that after taking office, Musk would lead a new organization called the “Efficiency Committee.” According to Bloomberg, based on data from S3 Partners, it has been calculated that hedge funds holding short positions in Tesla have suffered losses of at least $5.2 billion from election day until last Friday’s close.
According to data provided by Hazeltree, which tracks the holdings of more than 500 hedge funds, over the past four months, many hedge funds have unwound their short positions in Tesla. The timing of this position adjustment coincides with Musk’s endorsement of Trump, which began on July 13th.
Per Lekander, CEO of hedge fund management company Clean Energy Transition, revealed that he had a small short position in Tesla before the election, but he has reduced his position significantly. This means that his ultimate loss will be “relatively small,” but 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. In this context, hedge funds that were previously shorting Tesla quickly changed their stance.
According to weekly data provided by Hazeltree, as of November 6th, only 7% of hedge funds had a net short position in Tesla, a significant decrease from the 17% in early July. However, only 8% of hedge funds had a net long position in 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, among the hedge funds tracked by Hazeltree, nearly one-fifth had established short positions in Tesla, but they ultimately suffered significant losses as Tesla’s sales data triggered a surge in stock prices.
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 projected to fall by about 9% in 2023. In contrast, Tesla has risen by about 30% in 2024 and continues to grow after doubling its stock price last year.
