Tesla's Stock Plummets 40% Year-to-Date, Short Sellers Profit $115 Billion

Tesla's bearish investors have had a profitable year so far, with short sellers earning a total of $115 billion year-to-date. This figure is based on Tesla's closing price of $227.50 on Monday. The substantial profits for short sellers come amidst a series of negative developments for the electric vehicle manufacturer.

Tesla's stock price has been under significant pressure this year. In the first quarter, the stock plummeted by 36%, marking its worst quarterly performance since 2022. This downward trend continued into April, with the stock cumulatively declining by approximately 40% year-to-date. The primary drivers of this decline include concerns over the impact of comprehensive tariffs imposed by the U.S. President on key trading partners, which could increase the cost of critical components and materials for electric vehicle production. These components include manufacturing equipment, automotive glass, printed circuit boards, and batteries.

Additionally, Tesla CEO Elon Musk's role in the government and his political interventions have sparked discontent, affecting the company's sales. Musk is leading the government efficiency department in a major overhaul of the U.S. federal government, involving significant cuts to federal funding and large-scale layoffs of federal employees. His recent political statements targeting multiple countries, particularly European nations, and his support for European far-right political parties have sparked a "boycott Tesla" movement in the U.S. and Europe.

In the first quarter, Tesla's global delivery volume decreased by 13%, falling short of Wall Street's expectations. Furthermore, Tesla faces intense competition from Chinese automakers and is lagging behind in the autonomous ride-hailing market, which is currently dominated by Alphabet's Waymo. Tesla has promised to launch its first autonomous ride-hailing service in Austin, Texas, in June.

On Tuesday, after the market closed, Tesla released its first-quarter financial report. Due to the sharp decline in vehicle deliveries, the company's core financial indicators, including revenue and profit, fell significantly below expectations. Tesla's stock price rose by 4.6% during the day, driven by a broader market rally following U.S. Treasury Secretary Janet Yellen's statement that the current state of trade conflicts is unsustainable. Later, after Musk announced that he would focus more on the company's operations in the future, Tesla's stock price surged by over 5%.

Tesla is the tech giant with the largest decline in stock price this year, followed by NVIDIA, which has seen a year-to-date decline of approximately 28%. According to S3 Partners, NVIDIA is the second-largest source of profit for short sellers, generating $94 billion in returns. Based on the value of short positions, NVIDIA currently ranks first, with $24.6 billion in shorted stock. Apple ranks second with $22.2 billion in shorted stock, while Tesla ranks third with $17.6 billion in shorted stock.

It is worth noting that since Tesla's listing 15 years ago, short sellers have incurred significant losses for extended periods. Musk has consistently criticized short sellers' actions, describing them as illegal. Tesla has also sold a red short shorts product during periods of significant stock price increases to mock short sellers. The term "short" in financial English refers to short selling or bearish positions. The red color of the shorts may symbolize the "danger" or "loss" faced by short sellers.