Hedge fund short sellers have made $16.2 billion as Tesla's stock has halved in value over the past three months. The stock dropped more than 5% in early trading today, with the $200 mark under pressure.  Since Tesla's peak on December 17, traders betting against the stock have accumulated paper profits. 

Over the same period, Tesla's market value has fallen by more than $700 billion, wiping out over $100 billion from Elon Musk's net worth.

The number of tesla shares sold short has increased by 16.3% in the past month, reaching 71.5 million shares, or 2.6% of Tesla's total stock.

Musk's Public Actions Contribute to Declining Sales

Tesla CEO Elon Musk's involvement in European politics, including his support for far-right parties, has contributed to declining car sales across Europe. Additionally, the severe cuts Musk has made to federal government spending as head of the so-called Department of Government Efficiency have sparked backlash.

Per Lekander, managing partner of Clean Energy Transition hedge fund, stated, Tesla had a very strong brand value, and Elon has managed to totally destroy it."  He added, "[Musk] is on the wrong side of his buyership.  It's not people with cowboy boots who buy Teslas."

JPMorgan Lowers Tesla's Target Price

Last week, JPMorgan lowered its Tesla target price for the year to $120 from $135, commenting, "We struggle to think of anything analogous in the history of the automotive industry, in which a brand has lost so much value so quickly."

Tesla's Long History as a Target for Short Sellers

Since its IPO in 2010, Tesla has been a prime target for short sellers, consistently ranking high on short-selling lists, with approximately 300 million shares shorted in spring 2020. However, Tesla's stock continued to spiral upwards, hitting short sellers with significant losses.  Even with the current significant paper profits, short sellers have still suffered $64.5 billion in losses.     

In 2020, during Tesla's peak, Musk even released a pair of shorts labeled "S3XY" (after Tesla's four top-selling models) to mock short sellers.