After Donald Trump’s recent election win, hedge funds betting against Tesla have lost billions, as Tesla’s stock surged, thanks in part to the close connection between Trump and CEO Elon Musk.
Hedge funds that held short positions in Tesla lost at least $5.2 billion between election day and Friday, Bloomberg reported, citing data from S3 Partners, reports Fortune. Many hedge funds had already backed off from betting against Tesla over the past few months, especially after Musk publicly endorsed Trump in July.
Since then, Tesla’s shares have climbed almost 30%, adding over $200 billion to the company’s market value. Currently, only 7% of hedge funds are betting against Tesla, down from 17% in July. Tesla has become a trillion-dollar company again, with its market cap at $1.031 trillion.
Musk, a key Trump supporter and one of the 2024 election’s biggest donors, has reportedly spent over $130 million supporting Trump’s campaign. This has raised Musk’s political influence, with Trump even hinting at a role for Musk in his administration, possibly as “Secretary of Cost Cutting.”
Some hedge fund managers, like Per Lekander from Clean Energy Transition, say their losses on Tesla were limited because they reduced their short positions before the election. Lekander predicts that Trump’s presidency may eventually hurt Tesla if the administration cuts clean-energy subsidies, which he expects to happen within the next 12-18 months.
While Tesla continues to perform well, other green energy stocks have dropped as the market fears Trump might roll back support for renewables. Edward Lees of BNP Paribas Asset Management noted that Musk’s current political position could bridge the tech sector with Washington.
For Musk, who oversees a tech empire, Tesla’s stock rise added $50 billion to his fortune, according to Bloomberg. Lekander believes about a third of Tesla’s stock value now hinges on Trump’s potential to benefit Musk. “Tesla’s stock is more of a gamble on how much Trump can help Elon,” he said.
Tesla $TSLA absolutely ripping in overnight trading 📈 pic.twitter.com/vh6rhORP1P
— Barchart (@Barchart) November 11, 2024
As of writing, overnight trading for Tesla shares is up 3.79% to $333 per share. Get ready for some big movement on Monday morning.