The majority of hedge funds began reversing their short positions on Tesla after Elon Musk endorsed Trump on July 13. Hazeltree’s data, tracking over 500 hedge funds, shows a marked shift in strategy. Musk’s endorsement came immediately after an assassination attempt on Trump, causing a shakeup in investment strategies. By the day after the election, only 7% of hedge funds maintained net short positions on Tesla, a significant decrease from 17% in early July.
- Hedge funds have been reversing their short positions on Tesla, with short bets dropping from 17% in July to only 7% after the election, following Elon Musk’s endorsement of Donald Trump.
- Tesla’s market value has surged by over $200 billion, with shares rising 40% since Election Day, outpacing the general decline in the electric vehicle sector and driving a wave of hedge fund activity to cover shorts.
- Musk’s support for Trump, including campaign contributions and public endorsements, appears to have boosted investor confidence in Tesla, despite the potential for anti-EV policies from the Trump administration.
- Some analysts caution that Trump’s policies may cut subsidies and introduce challenges for EV companies like Tesla, though Musk’s political engagement may aim to influence policy on autonomous and electric vehicles.
Tesla’s market value increased by over $200 billion, with shares rising about 40% since Election Day. The company’s valuation exceeded $1 trillion, prompting hedge funds to rush to cover their short bets. Despite the overall electric vehicle sector losing more than 12% this year, Tesla’s stock has outperformed, attributed to Musk’s alignment with Trump.
Musk, now the richest person in the world, has shown strong support for Trump. His involvement in Trump’s campaign includes donations and public endorsements. The close relationship between Musk and Trump seems to have bolstered investor confidence in Tesla, even amid expectations of anti-EV policies from the Trump administration.
Analysts warn that Trump’s policies might negatively impact Tesla. Per Lekander, CEO of hedge fund manager Clean Energy Transition, predicts that subsidies benefiting Tesla could be eliminated within 12 to 18 months. Despite this, Musk has positioned himself to potentially influence government policy, advocating for a commission to improve government efficiency and reduce regulatory barriers for autonomous vehicles.
Tesla short sellers have faced substantial losses in the past, notably after a surprise profit in 2019. This recent surge in Tesla’s market value underscores the volatile and unpredictable nature of betting against the company.