Since former President Trump's election victory, short-sellers of Tesla (TSLA, Financial) have faced massive financial losses. Data from S3 Partners estimated that hedge funds shorting Tesla lost at least $5.2 billion from the election to the recent weekend. Hazeltree's data, which tracks over 500 hedge funds, indicated a decline in the number of short positions against Tesla, coinciding with Elon Musk's support for Trump in mid-July.
Elon Musk, the world's richest person, has emerged as a significant supporter of Trump, injecting substantial funds into his campaign, making Musk one of the top donors for the 2024 election. Musk’s political involvement has potentially positioned him for a role of influence under Trump's prospective administration, who is keen on rewarding his backers.
Per Lekander, CEO of Clean Energy Transition, briefly shorted Tesla before the election but managed to lessen his position, incurring minimal losses. Since the election, Tesla shares have surged nearly 30%, adding over $200 billion to its market value, prompting hedge funds to reverse their strategies.
Hazeltree noted that as of early November, only 7% of hedge funds were net short on Tesla, compared to 17% in July. Despite challenges in the electric vehicle sector, Tesla’s stock has been perilous for short-sellers, outperforming with an approximate 30% increase in 2024 compared to a 12% industry decline as per KraneShares Electric Vehicles and Future Mobility Index ETF.
Renewable energy stocks have seen downturns on fears of Trump dismantling clean energy incentives, though Lekander warns that in over a year, Tesla might also feel the pinch of Trump's anti-climate policies. He anticipates that many subsidies aiding Tesla could be rolled back under the Trump administration.
Musk has actively lobbied for a role in Trump's government to minimize governmental inefficiencies. Trump suggested establishing a "Cost Reduction Secretary" role for Musk. Edward Lees of BNP Paribas Asset Management sees Musk as a link between technology and Washington, though he remains vague about his current Tesla stake.
Following the election, Musk's net worth skyrocketed by $50 billion, attributed to Tesla's stock surge. He has heavily invested in Trump and Republican campaigns, amounting to over $130 million. Lekander estimates that Trump's influence accounts for about a third of the current $300-plus Tesla share price.
