Tesla short sellers make $16 billion as Elon Musk loses $200 billion

Hedge funds betting against Tesla have pocketed $16.2 billion in just three months as the electric car company’s stock has collapsed by half.

Elon Musk, who was once worth over $320 billion, has seen his fortune plunge by $200 billion, setting a new world record for the largest personal wealth loss in history.

Since December 17, 2024, Tesla’s market value has plummeted by more than $700 billion, wiping out billions for investors. Short sellers, who profit when stock prices drop, have taken full advantage.

S3 Partners reported that traders holding short positions against Tesla have seen massive paper profits as the stock continues to sink. In just the first few days of the crash, Elon lost $100 billion, and that number has now doubled.

Tesla stock collapses as sales drop and political backlash grows

Tesla’s stock price took a hit after Elon became increasingly vocal in European politics, openly supporting far-right groups. His involvement in politics, combined with sweeping budget cuts in federal government spending as head of the Department of Government Efficiency, has driven away customers.

Car sales in Europe have dropped significantly, and the backlash is growing. Per Lekander, managing partner at the $1.5 billion hedge fund Clean Energy Transition, has been shorting Tesla for years.

He believes the company’s brand is in free fall. “Tesla had a very strong brand value, and Elon has managed to totally destroy it,” he said. “He’s on the wrong side of his buyership. It’s not people with cowboy boots who buy Teslas.”

Even JPMorgan, one of the biggest names on Wall Street, has lost faith. The bank lowered its Tesla stock price target from $135 to $120, stating: “We struggle to think of anything analogous in the history of the automotive industry, in which a brand has lost so much value so quickly.” As of Monday, Tesla shares were trading at $238.01.

Short sellers finally see profits after years of losses

For years, shorting Tesla was a nightmare. Hedge funds betting against the company lost $64.5 billion on paper since Tesla’s IPO in 2010.

Many firms were forced to abandon their short positions after the stock skyrocketed 1,500% between 2019 and mid-2021. In 2020, there were 300 million shorted Tesla shares, making it one of the most shorted stocks in the U.S. at the time.

Now, short sellers are finally making money. The number of shorted Tesla shares has jumped 16.3% in the past month, reaching 71.5 million shares, or 2.6% of Tesla’s total shares. The company’s recent post-election gains have also been wiped out.

Investors had initially believed Tesla would benefit from Elon’s close ties to Donald Trump, but the new administration’s economic policies—including aggressive trade tariffs—have rattled the market.

Tesla’s fourth-quarter earnings in January 2025 disappointed investors. The company then issued a warning in a letter to a U.S. trade representative, stating that Trump’s trade war could increase vehicle production costs in the United States. This uncertainty has fueled more selling pressure.

Elon Musk sets world record for biggest wealth drop ever

Elon’s financial losses are historic. The Guinness World Records confirmed that his $200 billion drop in net worth is the largest personal wealth loss ever recorded. In 2021, he was worth $320 billion. By early 2023, that number had plunged to $138 billion, a $182 billion loss. Now, the losses have grown even further.

Before Elon, the biggest recorded personal wealth drop belonged to Masayoshi Son, CEO of SoftBank, who lost $58.6 billion in 2000. Elon has tripled that record.

At one point, Elon also lost his title as the richest person in the world. Bernard Arnault, CEO of LVMH, temporarily overtook him with a net worth of $190 billion. However, Elon has since climbed back to the top.

As of March 5, 2025, Forbes lists Elon’s wealth at $351.6 billion. He is followed by Mark Zuckerberg at $226.7 billion, Jeff Bezos at $223.5 billion, Larry Ellison at $199.2 billion, and Bernard Arnault at $180.6 billion.

Despite this, Tesla’s volatility means that Elon’s wealth is constantly fluctuating. The company’s stock remains unpredictable, and some investors argue that Tesla has become more of a meme stock than a serious investment.

Marc Cohodes, a well-known short seller, called Tesla one of the biggest “glorified memecoins” on the market. “When they went up, everyone buying thought they were smart. Now they’re falling, they’re causing huge damage.”

Some hedge funds are still betting on Tesla’s future. Bridgewater Associates opened a long position on the stock in late 2024, while ClearBridge, DE Shaw, and Norges Bank increased their stakes.

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