Investors who were betting against Tesla have had a rough few days, Bloomberg writes:
Hedge funds that had short positions against Tesla between election day and Friday’s close took an on-paper hit of at least $5.2 billion, according to Bloomberg calculations based on data compiled by S3 Partners.
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Since the Nov. 5 election, Tesla shares have gained close to 30%, representing well over $200 billion in additional market value. By Friday, the company’s valuation exceeded $1 trillion. Against that backdrop, hedge funds that had previously built short bets have since rushed to reverse course.
With Elon Musk having months ago tied his fortunes to Donald Trump, the hedgies’ bold strategy did not pay off. In the days since the Republicans’ win, rampant buying of Tesla call options has triggered a classic “gamma squeeze”, according to analysts, with brokers on the other side of the trade forced to buy yet more of the underlying shares to cover their positions.
