Tesla’s $3.5 Billion Short-Seller Wipeout Marks Historic Win for Musk

Tesla’s (TSLA) stunning earnings report led to a historic rally in its stock, dealing a massive blow to short-sellers and boosting investor optimism around the electric vehicle giant. Shares of Tesla soared 22% on Thursday, marking the biggest single-day gain since 2013, after the company announced stronger-than-expected quarterly earnings and forecasted a 30% growth in vehicle sales for next year. This rapid surge erased short-sellers’ year-to-date profits and even pushed them into the red, with a $3.5 billion mark-to-market loss on the day, according to S3 Partners. Analysts had low expectations for Tesla’s report, bracing for a 10% drop in quarterly profits amid concerns about EV demand. However, the company posted a 9% year-over-year profit increase, and its automotive gross margin surpassed estimates. The upbeat guidance from CEO Elon Musk also fueled investor sentiment, signaling potential stability in EV demand. Market watchers noted that shorts were not the only ones blindsided; options trading suggested limited anticipation of such a strong rally, with implied moves of only around 6%. Market Overview:

• Tesla shares jumped 22% following its upbeat earnings report and guidance.
• Short-sellers took a $3.5 billion hit, erasing their profits for 2024.
• Options trading indicated limited expectation of a strong upward move in Tesla shares.

Key Points:

• Tesla’s quarterly profit grew 9%, defying Wall Street’s forecast of a decline.
• The company expects up to 30% vehicle sales growth in 2025.
• Several analysts have raised their price targets, signaling renewed optimism.

Looking Ahead:

• Investors will monitor Tesla’s next steps in self-driving technology and EV demand.
• Short interest is at historic lows, suggesting diminishing bearish bets on Tesla.
• The options market will likely adjust as traders seek to capture any future rallies.

Tesla’s rally has reinvigorated investors, leaving short-sellers scrambling to cover losses. The stock’s strong performance suggests that market confidence in Tesla’s growth story is far from over. With Musk’s commitment to robust sales expansion, more investors are once again looking to Tesla as a leader in the EV market, particularly as it continues developing self-driving technologies. As Wall Street analysts recalibrate their views on Tesla, the company faces mounting expectations to meet its ambitious targets. While volatility in Tesla shares is no stranger to the market, this recent surge may solidify a renewed faith in the automaker's future growth trajectory, especially as it regains favor among both retail and institutional investors.