Hedge funds vs. Tesla: short-sellers celebrate $16 billion triumph on the ruins of Musk’s brand
18 March 12:12
Hedge funds that bet on the fall of Tesla shares made a profit of $16.2 billion after Elon Musk ‘s company lost half of its market value over the past three months. These data are provided by the Financial Times based on information from S3 Partners, Komersant ukrainskyi reports.
Since the end of trading on December 17, which was exactly three months ago, Tesla’s market capitalization has decreased by more than $700 billion. This led to a reduction in Musk’s personal wealth by more than $100 billion. At the same time, traders who make money on falling stock prices have accumulated significant paper profits during this period.
The decline in Tesla car sales in Europe is partly attributed to Elon Musk’s public statements on European politics, including his support for far-right parties. Per Lekander, managing partner of the $1.5 billion Clean Energy Transition hedge fund, said:
“Tesla had a very high brand value, and Elon managed to completely destroy it. Musk was not on the side of his target audience. Tesla cars are not bought by people in cowboy boots.”
JPMorgan recently lowered its forecast price for Tesla shares by the end of the year from $135 to $120. In their report, the bank’s analysts noted:
“It’s hard to recall anything like this in the history of the automotive industry, when a brand lost so much value so quickly.”
As of Monday, Tesla shares closed at $238.01.
Investors were disappointed with the company’s financial results for the fourth quarter of 2024. Tesla has also warned the US government about the possible consequences of the Trump administration’s trade war, noting that retaliatory tariffs could increase the cost of car production in the US.
Tesla has traditionally been one of the most popular targets for short-sellers in the US stock market, with about 300 million of its shares in short positions in 2020. However, the rapid growth of more than 1500% in 2020-2021 wiped out most of the negative bets, although some investors continued to believe that the company’s valuation was out of touch with economic reality.
Dynamics of Tesla shares after the election
It is worth noting that despite the significant drop, Tesla shares are still 8% higher than on Election Day. However, this is significantly less than the rapid 91 percent growth seen before December 17.
After the election, investors expected that Musk’s generous donations to Trump’s campaign and the Republican Party – nearly $300 million – would bring significant benefits to the company, especially through possible relaxation of regulations in the field of self-driving technologies.
Despite the losses, Musk is still $83 billion richer than on Election Day. This is partly due to the increased valuation of his private companies, including SpaceX and xAI.
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Elon Musk is a visionary entrepreneur and a lover of Russia
Elon Musk is one of the most influential entrepreneurs of our time, the founder and CEO of many innovative companies such as Tesla, SpaceX, Neuralink, and Boring Company. He was born on June 28, 1971 in Pretoria, South Africa. After moving to the United States, he became a pioneer in the field of electric vehicles, space technology, and artificial intelligence. Musk is often in the spotlight for his ambitious goals, including the colonization of Mars, the development of renewable energy, and the creation of neurocomputer interfaces.
Musk is also known for his active stance on social media, where he often posts controversial statements. In 2022, he acquired the Twitter platform, which he later renamed X. Musk takes a libertarian stance on Internet regulation and freedom of speech, opposing government interference in the activities of tech giants.
Musk plays a prominent role in the context of the Russian-Ukrainian war. His company SpaceX provided the Armed Forces of Ukraine with access to Starlink satellite Internet for three years of full-scale war, which provided critical communications at the front. Recently, however, Ukraine has been actively looking for a replacement for this technology, as Musk’s public statements and position no longer inspire confidence. Recently, Elon Musk was accused of secret contacts with Putin, and he ridiculed Zelenskyy’s statement about Ukraine’s independence. Today, Musk is an active supporter of Trump’s pro-Kremlin policies. He calls Ukrainian President Volodymyr Zelenskyy a dictator and an extortionist from the United States and opposes any assistance to Ukraine in the war with Russia.
Trump’s trade wars
Donald Trump’s administration has imposed trade restrictions on three of the US’s largest trading partners – Canada, Mexico, and China.
These measures have caused concern among American companies that depend on metal imports from Canada and Mexico. They are expected to look for alternative sources of supply, in particular in the Middle East, India, Chile, and Peru, which could lead to higher prices for aluminum and copper in the United States.
In addition, Canadian consumers reacted to the imposition of duties by boycotting American goods, canceling trips to the United States and refusing to buy American alcohol.
Economists warn that such trade disputes could slow global economic growth and cause inflation. Stock markets in the Gulf countries earlier reacted with a decline due to fears of a possible trade conflict. The cryptocurrency market also collapsed earlier.
Elon Musk has suffered the most from Trump’s trade wars in the world. In total, his wealth has already decreased by $116 billion since the record high of $464 billion, which was recorded on December 17, when Tesla shares reached a historic high of $480 per share.
