But so far this year, that caution has come at a cost. Tesla’s share price is now down more than 40 percent since the end of December, equivalent to about $550 billion of lost market value.
Kerry Goh, chief executive at Kamet Capital Partners Pte, said his hedge fund hasn’t shorted Tesla since 2019. He views the current sell-off as “temporary” and warns that there’s “no predictable pattern” to shorting Tesla.
“Nobody knows how to play this trade,” said Goh, who oversees more than $1 billion from his base in Singapore.
Per Lekander, CEO of Clean Energy Transition LLP, said his firm has a moderate short position, “just to manage the risk.” It’s about “just keeping it at a level where if there is a massive rip, I wouldn’t lose too much,” he said.
Tesla’s stock soared after the Nov. 5 election as the company’s fortunes became increasingly linked to CEO Elon Musk’s central role in Trump’s inner circle. Trump himself has gone to unconventional lengths to bolster Musk’s image and business directly. Just last week, he pledged to buy a Tesla during an event on the White House lawn at which several Tesla models were showcased.
The episode, which briefly buoyed Tesla’s share price, feeds into a never-ending churn of Tesla headlines since the election. Many have focused on the electric vehicle maker’s woes in Europe. All have contributed to the stock’s volatility.
The Tesla shorts have learned that “when things start to go against you, you absolutely need to run for the hills,” Lekander said.
The London-based hedge fund manager, who runs a team that oversees about $2.7 billion, said he was short Tesla most of last year until it became clear that Musk’s relationship with Trump was about to change everything. He then closed out the short, before returning to the bet at the beginning of the year.
Others have voiced similar wariness. Muddy Waters Capital CEO Carson Block has said he wouldn’t bet against Musk despite the risk that he’s doing “irreparable damage” to the company.
That damage includes driving down sales in Europe as consumers in the region balk at Musk’s efforts to interfere in their elections. And the Tesla CEO’s antics as chief architect of the Department of Government Efficiency (DOGE) are now also angering many Americans, recent polling suggests.
In Germany alone, Tesla registrations plunged more than 70 percent during the first two months of the year after Musk endorsed the far-right Alternative for Germany party in the lead-up to the country’s Feb. 23 election. And Tesla’s deliveries from its Shanghai factory have fallen for the past five consecutive months, year-on-year data show.
Meanwhile, Trump’s tariffs are hurting Tesla’s ability to do business, with the EV maker warning it now faces higher manufacturing costs that risk making its vehicles less competitive in international markets.
Short sellers who stuck with their Tesla bets have made gains of close to $18 billion since a December high, according to Bloomberg calculations based on data compiled by S3 Partners. But those on-paper winnings feed into a very mixed picture when it comes to assessing Tesla’s fate.
According to a recent survey by Morgan Stanley, 85 percent of respondents think Musk’s political activities are having either a negative or an extremely negative impact on Tesla’s business. Despite such feedback, 45 percent of those surveyed expect the stock to rise, compared with just 36 percent who expect it to go down.
Morgan Stanley itself is advising investors to go overweight on Tesla, with analysts including Adam Jonas describing the current pullback as “a buying opportunity,” in a March 14 note. It’s a recommendation that matches the general mood.
On average, analysts tracking Tesla expect the stock to rise more than 50 percent over the next 12 months, according to price targets compiled by Bloomberg. That gap largely reflects Tesla’s volatile stock price in recent months. During its torrid post-election rally, shares soared more than 70 percent above Wall Street’s average price target.
Lekander said it would be unwise to take out a large Tesla bet before June, which is when the company expects to launch an unsupervised self-driving taxi service. It’s a “really, really important event” for investors, he said.
Fundamentally, Lekander said he thinks Tesla is “the biggest stock market bubble in world history.” In practice, however, “you have to be careful.”
