Tesla Triumph: Hedge Funds Burn as Musk Aligns with Trump and Defies Market Trends
1min read In the aftermath of Donald Trump's election victory, hedge funds betting against Tesla have experienced significant losses, with an estimated $5.2 billion evaporating in just a week. The unexpected rise in Tesla's stock price, up nearly 30% since the election, has prompted many funds to unwind their short positions, leading to a dramatic reduction in Tesla’s short interest from 17% in early July to just 7% by early November.
Elon Musk’s visible alignment with Trump has brought him not only financial gains but also an increase in political influence. As Tesla's stock soared, hedge funds that opposed Musk faced substantial financial hits. Musk’s support for Trump positions him as a key ally to the President-elect, ensuring his role as a major influencer in the political arena.
Interestingly, the electric vehicle sector as a whole has struggled, with the KraneShares Electric Vehicles and Future Mobility Index ETF down over 12% this year alone. However, Tesla's shares have emerged as a strong performer, rising approximately 30% this year, defying industry headwinds like trade tensions, weak consumer demand, and heightened competition.
This trend underscores Tesla’s resilience and its challenging nature for short sellers. Though at one point nearly a fifth of hedge funds tracked by Hazeltree held short positions in Tesla, the rapid ascent in the company’s stock price has caught many off guard, forcing them to cover these positions.
The contrast in performance between Tesla and other renewable energy stocks is stark, with investors anxious over Trump's potential policy shifts impacting clean energy incentives. Amidst the broader market uncertainty, Tesla stands out, underscoring its unique positioning and Musk’s ascent in both the corporate and political spectrums.