- Tesla short-sellers lost $7.8 billion after a 38% post-election surge in shares of the EV maker.
- Tesla was a popular "Trump trade" and is seen as a beneficiary of a second Trump term.
- Tesla is the third largest short in the stock market, with $25.6 billion in short interest.
Investors betting against Tesla have lost $7.8 billion since Donald Trump's election win last week.
That's according to data from S3 Partners, which told Business Insider in an email that on Monday that Tesla short-sellers are reeling from the electric vehicle maker's 38% post-election surge.
Shares of Tesla jumped another 8% on Monday, hitting an intra-day high of $358.64, its highest level since April 2022.
S3 Partners' managing director, Ihor Dusaniwsky, said the pain might not be over for Tesla short-sellers.
"We expect continued short covering in TSLA stock due to the rally induced short squeeze which will force out many of the 2.4 million shares we saw shorted over the last month," Dusaniwsky said.
Short covering in a stock acts as buying pressure and often pushes the price of a stock higher, as the bearish investors have to buy shares back to close out their short position once they throw in the towel.
According to Dusaniwsky, since the election, short-sellers have bought 1.22 million Tesla shares worth nearly $400 million to close out their bearish positions.
Altogether, almost 3% of Tesla shares are sold short, with current short interest at $25.6 billion, according to S3 Partners.
That makes Tesla the third largest short behind only Apple and Nvidia, which have $29.7 billion and $38.5 billion in short interest, respectively.
The surge in Tesla stock can be attributed to CEO Elon Musk's close ties with Donald Trump, with the shares rallying ahead of the election as one the assets boosted in the so-called Trump trade. Musk was a huge financial backer of Trump's campaign in its final few months, donating over $100 million to efforts to reelect him.
Investors are betting that Musk's friendliness with Trump will bode well for deregulation efforts that could fast-track Tesla's autonomous driving products. It's also believed that Trump's likely rollback of EV tax credits would hurt Tesla's smaller competitors.
Tesla stock's latest rally has boosted Musk's net worth past $300 billion.