Hedge funds shorting Tesla lose billions after Trump win

Since Trump's election win, hedge funds betting against Tesla have lost over $5.2 billion. Many reversed their positions as Tesla's value surged, fueled by Elon Musk's public support for Trump. Musk, one of Trump's biggest donors, could gain political influence as Trump plans to reward loyalists. Meanwhile, Tesla has defied the broader electric vehicle sector's downturn, marking a sharp contrast to the faltering green energy industry..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..The seventh BizNews Conference, BNC#7, is to be held in Hermanus from March 11 to 13, 2025. The 2025 BizNews Conference is designed to provide an excellent opportunity for members of the BizNews community to interact directly with the keynote speakers, old (and new) friends from previous BNC events – and to interact with members of the BizNews team. Register for BNC#7 here..By Ishika Mookerjee .___STEADY_PAYWALL___.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..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..Read more: 🔒 FT: Elon Musk has parked his Tesla on the White House lawn.Since the Nov. 5 election, Tesla shares have gained close to 30%, representing well over $200 billion in additional market value. By Friday, the company's valuation exceeded $1 trillion. Against that backdrop, hedge funds that had previously built short bets 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..Tesla's performance also stands out in contrast to other stocks in the green sector. As markets digested the news of Trump's victory, renewables stocks spanning wind to solar started to tank, amid fears Trump will live up to his promise to slash clean-energy incentives. .Lekander says that in a little over a year from now, he expects even Tesla will feel the sting of Trump's anti-climate policies..Read more: Results Wrap: Tesla; EOH; Famous Brands – navigating recovery and growth amid market shifts.Notwithstanding the connection between the president-elect and Musk, "Trump's win is very negative for Tesla as an auto company," Lekander said. In about 12 to 18 months, the Trump administration will "eliminate a lot of the subsidies which Tesla really has been winning on.".Musk has lobbied for a role in Trump's administration that would allow him to cut what he characterizes as government bureaucracy and waste. Trump quickly latched onto the idea, publicly playing with the notion of a job as "Secretary of Cost Cutting" for the Tesla CEO..Musk's "position of influence now is sort of a bridge between, arguably, the tech community and Washington," said Edward Lees, portfolio manager at BNP Paribas Asset Management. .Lees says he's "held Tesla at various points," without elaborating on current positions..Musk, who publicly threw his support behind Trump after the then-presidential candidate survived an assassination attempt in July, has seen his own fortune soar in connection with the election outcome. In the days following the election, Tesla's stock-price surge added $50 billion to his net worth, according to the Bloomberg Billionaires Index. That's after Musk, who oversees an empire of six companies including X and Space X, spent more than $130 million on Trump and down-ballot Republicans in competitive House races..Lekander says he reckons that the Trump effect accounts for roughly a third of Tesla's current share price of more than $300. "So now Tesla's stock is more of a punting exercise on how much can Trump help Elon," he said..Read also:.🔒 Tesla soars $80bn on record profits and bold 2025 forecastsTesla's Robotaxi launch: Stock plummets after vague Cybercab revealTesla unveils $30k Cybercab Robotaxi, targets 2026 production.© 2024 Bloomberg L.P.

Hedge funds shorting Tesla lose billions after Trump win

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