(Bloomberg) — Since Donald Trump’s election win, the hedge funds clinging on to bets against Tesla Inc. have lost billions of dollars, as they feel the fallout of the special relationship between the president-elect and Elon Musk.
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Hedge funds that had short positions against Tesla between election day and Friday’s close took an on-paper hit of at least $5.2 billion, according to Bloomberg calculations based on data compiled by S3 Partners.
They were among a shrinking group caught out, as many of their peers unwound bets against Tesla over the past four months, according to separate data provided by Hazeltree tracking the positions of more than 500 hedge funds. That adjustment of positions coincided with Musk’s endorsement of Trump on July 13.
The Tesla chief executive officer has emerged as Trump’s biggest billionaire fan. Musk has used his position as the world’s richest person to turbocharge Trump’s campaign, making him one of the biggest donors of the 2024 election. Throwing his lot in with the president-elect now lines Musk up for a position of political influence, as Trump makes clear he’s planning to reward loyalists.
Per Lekander, CEO of hedge fund manager Clean Energy Transition, says he had “a small short in Tesla heading into the election.” He’d managed to whittle the position down “quite a lot,” meaning his losses ended up being “pretty small.”
“But we have lost some money,” he said.
Since the Nov. 5 election, Tesla shares have gained close to 30%, representing well over $200 billion in additional market value. Against that backdrop, hedge funds that had previously built short bets against the company have since rushed to reverse course.
As of Nov. 6, only 7% of hedge funds were net short Tesla, down from 17% in early July, according to weekly data provided by Hazeltree. That said, only 8% are net long the stock.
Tesla has proved a dangerous stock to short, even as the rest of the EV industry struggles with headwinds spanning trade tensions, flagging consumer demand and increasing competition. In July, almost one-fifth of hedge funds tracked by Hazeltree had built bets against Tesla, only to be badly wrong-footed after the company unveiled sales figures that triggered a steep rally.
The wider EV sector, meanwhile, has lost more than 12% this year, based on the performance of the KraneShares Electric Vehicles and Future Mobility Index ETF. That follows a roughly 9% decline in 2023. By contrast, Tesla is up roughly 30% in 2024, after more than doubling its value last year.