Since Donald Trump won the election, hedge funds continued to bet against Tesla Inc. lost billions of dollars as they sensed the demise of the special relationship between the president-elect and Elon Musk.
Hedge funds that held short positions in Tesla from election day to the end of Friday had paper losses of at least $5.2 billion, according to Bloomberg calculations. S3 Partner.
They are among a shrinking group, as many of their peers have canceled bets against Tesla over the past four months, according to separate data provided by hazel Tracks the positions of more than 500 hedge funds. That position adjustment coincided with Musk’s endorsement of Trump on July 13.
The Tesla CEO has emerged as Trump’s biggest billionaire fan. Musk used his position as the world’s richest person to boost Trump’s election campaign, making him one of the world’s richest people. biggest sponsor of the 2024 election. Winning his favor with the president-elect has now put Musk in a position of political influence, as Trump makes clear he is planning to reward loyalists wall.
Per Lekander, CEO of hedge fund manager Clean Energy Transition, said he had “a small loss in Tesla before the election.” He managed to reduce the position by “quite a bit,” meaning his losses were ultimately “quite small.”
“But we lost some money,” he said.
Since the November 5 election, Tesla shares have increased nearly 30%, representing more than $200 billion in added market value. Against this backdrop, hedge funds that had previously placed short bets on the company hastily reversed course.
According to weekly data provided by Hazeltree, as of November 6, only 7% of hedge funds were short Tesla, down from 17% at the beginning of July. That said, only 8% were long net of this stock.
Tesla has proven to be a dangerous stock to short, even as the rest of the electric vehicle industry struggles with lingering headwinds from trade tensions, weak consumer demand and competition. increasingly increasing. In July, nearly a fifth of hedge funds tracked by Hazeltree bet against Tesla, but the results were dismal. wrong foot after the company launched sales figures sparked a steep rally.
Meanwhile, the broader electric vehicle sector has lost more than 12% this year, based on the performance of the KraneShares Electric Vehicles and Future Mobility Index ETF. That follows a decline of about 9% in 2023. Tesla, by contrast, is up about 30% in 2024, after more than doubling its value last year.
Tesla’s performance also stands out compared to other stocks in the green sector. As markets digested news of Trump’s victory, stocks of renewable energy from wind to solar began to decline, amid fears Trump would follow through on his promise to cut clean energy incentives. .
Lekander said that in a little more than a year, he hopes even Tesla will feel the impact of Trump’s anti-climate policies.
Despite the connection between the president-elect and Musk, “Trump’s victory 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 that Tesla actually won.”
Musk has lobbied for a role in Trump’s administration that would allow him to cut what he sees as government bureaucracy and waste. Trump quickly seized on the idea, publicly toying with the notion of a job as “Cost Cutting Secretary” for the Tesla CEO.
“Musk’s position of influence now feels like a bridge between the tech community and Washington,” said Edward Lees, a portfolio manager at the company. BNP Paribas Asset management.
Lees said he “has held Tesla at various times” without specifying his current view.
Read more: Musk is about to find out what Trump gave him with $130 million
Musk, who publicly supported Trump after the then-presidential candidate survived an assassination attempt in July, has seen his own wealth soar thanks to the election results. In the days after the election, Tesla’s stock price skyrocketed added $50 billion to his net worthaccording to the Bloomberg Billionaires Index. That’s the name of Musk, who oversees an empire of six companies, including X and Space X, spend more more than $130 million for Trump and down-ballot Republicans in competitive House races.
Read more: Billionaires give more to Trump than Harris in the 2024 election
Lekander said he calculates that the Trump effect accounts for about a third of Tesla’s current stock price of more than $300. “So now Tesla stock looks like a betting exercise on how much Trump can help Elon,” he said.
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