Hedge funds that have held onto their wagers against Tesla Inc. (TSLA) since Donald Trump’s election victory have lost billions of dollars as a result of the unique bond between Elon Musk and the president-elect.
According to Bloomberg calculations based on data provided by S3 Partners, hedge funds that had short positions against Tesla between election day and Friday’s closing suffered on-paper damage of at least $5.2 billion.

According to secondary data given by Hazeltree, which tracks the positions of over 500 hedge funds, they were one of a shrinking group caught off guard as many of their peers liquidated bets against Tesla over the past four months. That change in roles came at the same time as Musk’s endorsement of Trump on July 13.

The CEO of Tesla has become the biggest admirer of Trump among billionaires. Musk is one of the largest donors to the 2024 race since he has fueled Trump’s campaign with his wealth as the richest person in the world. Since Trump has made it apparent that he intends to reward loyalists, Musk’s decision to align with the president-elect now positions him for a position of political influence.

He had “a small short in Tesla heading into the election,” according to Per Lekander, CEO of hedge fund manager Clean Energy Transition. His losses were “pretty small” because he had been able to reduce the position “quite a lot.”

He said, “But we have lost some money.”

Tesla Stock

Tesla’s stock has increased by about 30% since the election on November 5. representing well over $200 billion in additional market value, the corporation was worth more than $1 trillion by Friday. In light of this, hedge funds that had previously placed short bets have hurried to change their strategy.

Weekly data from Hazeltree shows that as of Nov. 6, just 7% of hedge funds were net short Tesla, compared to 17% in early July. Only 8%, however, are net long in stock.

Even while the rest of the EV industry faces challenges like trade tensions, declining consumer demand, and heightened competition, Tesla has proven to be a risky company to short. Nearly one-fifth of the hedge funds that Hazeltree tracks had placed bets on Tesla in July, but they were severely misguided when the firm released sales data that set off a sharp increase.