Since the results of the US election were announced and former US President Trump announced his victory, Elon Musk, the "gold medalist" and CEO of Tesla, has also win thoroughly.
As of the close of last Friday's US stock market, Tesla's stock price surged 8.19% in a single day, and its total market value has also regained its position above the $1 trillion mark. Meanwhile, Musk's net worth has also re entered the $300 billion mark after nearly three years. This has caused hedge funds that insist on shorting Tesla to lose billions of dollars.
According to data compiled by S3 Partners, the media has calculated that in just a few days from last week's election day to Friday's close, hedge funds short selling Tesla suffered at least $5.2 billion in paper losses.
It is worth mentioning that Tesla's performance and the entire US electric vehicle industry are not optimistic. Therefore. Analysts believe that Tesla's stock price can rebound simply because the company's Elon Musk heavily bet on Trump's presidential campaign.
Data shows that in this election cycle, Musk provided over $130 million in funding to Trump and other Republicans. In addition, Musk frequently campaigned for the Republican Party and attacked Democrats on his social media network X. Trump has repeatedly mentioned appointing Musk to lead the Government Efficiency Committee.
Some analysts suggest that Trump's promise to give Musk significant power is because the former has explicitly stated that he plans to reward loyal individuals.
Edward Lees, portfolio manager at BNP Paribas Asset Management, said that Musk's "current influence can be seen as a bridge between the tech industry and Washington
He stated that he has held Tesla shares at different times, but did not elaborate on his current position.
Hedge funds hastily 'turn around'
Since the official election on November 5th, Tesla's stock price has risen by nearly 30%, and its market value has increased by over $200 billion. In this context, hedge funds that previously shorted the company have since changed their direction.
According to weekly data provided by Hazeltree, which tracks the positions of over 500 hedge funds, as of November 6th, only 7% of hedge funds net short Tesla, down from 17% at the beginning of July.
Per Lekander, CEO of hedge fund management company Clean Energy Transition, stated that he "slightly shorted Tesla before the election. However, later he managed to reduce his position by "quite a lot", which meant that his losses were ultimately "quite small".
But we lost some money, "he said.
Lekander stated that he believes the Trump administration accounts for about one-third of Tesla's current stock price of over $300. He said, "So now Tesla's stock is more like a gamble, to see how much Trump can help Elon
Risk still exists
As the market digests news of Trump's victory, renewable energy stocks from wind to solar are starting to decline, and people are concerned that Trump will fulfill his promise to cut clean energy incentives.
Lekander said that in over a year, he expects even Tesla to feel the sting of Trump's anti climate policies.
He explained that despite the connection between President elect Trump and Musk, "Trump's victory is very negative for Tesla, the automotive company.
In approximately 12 to 18 months, the Trump administration will cancel many of the subsidies that Tesla truly won, "he added.