Hedge funds betting against Tesla have chalked up paper losses of more than $5bn since Donald Trump’s election victory, as shares in the EV maker surged following the endorsement of Trump by the firm’s CEO Elon Musk, according to a report by Bloomberg.
Calculations by Bloomberg, based on data from S3 Partners, show that hedge funds incurred losses of at least $5.2 billion between Election Day and Friday, November 8.
Many hedge funds had already reduced their Tesla short positions in recent months, anticipating potential market shifts after Musk publicly endorsed Trump in July. The Tesla CEO’s alignment with Trump’s campaign has led to expectations that Musk, as a high-profile supporter, may gain political influence if Trump follows through on rewarding his loyal backers.
Per Lekander, CEO of Clean Energy Transition, noted that while he had a “small short in Tesla” ahead of the election, he managed to reduce the position, ultimately limiting losses. Still, he acknowledged that “some money” was lost.
Tesla’s shares have surged nearly 30% since Trump’s win, adding over $200bn in market value, and propelling Tesla’s total valuation beyond $1tn by Friday. Hedge funds previously betting against the stock have scrambled to adjust their positions. As of 6 November, only 7% of hedge funds were net short on Tesla, compared to 17% in early July, according to data from Hazeltree. Yet only 8% are net long, signalling cautious sentiment among investors.
Tesla’s stock has been volatile for short-sellers, even as challenges persist in the broader electric vehicle (EV) sector. Despite industry headwinds—such as trade tensions and weaker consumer demand—Tesla is up approximately 30% in 2024, in stark contrast to a 12% drop in the KraneShares Electric Vehicles and Future Mobility Index ETF this year.
Meanwhile, the election has affected green energy stocks, with wind and solar shares declining as investors anticipate Trump’s pledge to cut clean-energy subsidies. Although Musk’s alliance with Trump could yield influence, Lekander predicts Trump’s policies could ultimately harm Tesla’s core auto business by removing critical EV subsidies within the next 12 to 18 months.
Musk has reportedly lobbied for a potential role in Trump’s administration, focusing on reducing what he calls “bureaucracy and waste.” Trump has hinted at Musk’s possible appointment as “Secretary of Cost Cutting,” signalling an unprecedented link between the tech sector and Washington.
