In a whirlwind turn of events, Tesla shares (NASDAQ:TSLA) skyrocketed, gaining an astounding $150 billion in valuation within just three days. This surge was sparked by the release of its Q2 2024 vehicle delivery and production report, which notably exceeded Wall Street's expectations. Unsurprisingly, this left hedge funds, who had bet against the electric vehicle titan, frantically licking their financial wounds.
Hedge Funds Bet Big—And Lost Big
According to a detailed Bloomberg News analysis, data from Hazeltree shows that a significant 18% of over 500 hedge funds held short positions against Tesla at the end of Q2 2024. This marks the highest percentage in more than a year, up from 15% at the end of Q1 2024. However, Tesla's better-than-expected delivery and production figures sent the stock flying upward, delivering a crushing blow to these short sellers.
Massive Financial Fallout
Following Tesla's Q2 report release, TSLA shares surged by 17% over the next two trading days. This spike resulted in short sellers facing colossal losses amounting to an estimated $3.5 billion on a mark-to-market basis, as highlighted by a CNBC report. It's worth noting that since the beginning of June 2024, Tesla shares have surged by approximately 40%, compounding the financial damage for those betting against the electric vehicle giant.
Elon Musk's Ironic Commentary
Elon Musk, never one to shy away from social media, marked the hedge funds' losses with a succinct yet loaded crying face emoji on platform X. The tweet was as much a victory lap as it was a piece of performance art, subtly underlining Tesla's recurring ability to defy the skeptics.
😢
— Elon Musk (@elonmusk) July 7, 2024
The Short Sellers' Backdrop
The past few months have been tumultuous for Tesla, making it a ripe target for short-sellers. Early signals suggested trouble, with Q1 2024 vehicle deliveries falling below expectations and a significant round of job cuts, including the exit of key executives. Rumors even swirled about Musk’s potential departure if shareholders didn't ratify his 2018 CEO Performance Award, making the company appear vulnerable.
What's Next for Tesla?
The spotlight now shifts to Tesla's upcoming Q2 2024 earnings call, slated for Tuesday, July 23, 2024, at 4:30 p.m. CT (5:30 p.m. ET). Investors eagerly await Tesla's Q2 2024 Update Letter, which will be available on the company's Investor Relations website post-trading day on July 23. Expectations are high, as the earnings call promises to cover the quarterly results and other crucial topics that could again move markets in unexpected directions.
Tesla's relentless rise defies the naysayers once again, reinforcing Elon Musk's position atop the electric vehicle revolution. Whether this momentum continues will depend heavily on upcoming performance metrics and strategic maneuvers by the company's leadership.
Got a tip for us? Share your insights at simon@teslarati.com.Tesla's $150 Billion Surge: How Hedge Funds Were Burned Betting Against Musk's Behemoth
