Tesla's tumbling stock has made short sellers $1.9 billion in less than a month

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  • Tesla’s stock has come under serious pressure in recent days, dropping 8.2% on Tuesday as analysts questioned Model 3 production targets and the National Transportation Safety Board announced a second investigation into a self-driving car death involving a Tesla vehicle.
  • This decline has been lucrative for Tesla short sellers, who have made almost $US2 billion in March alone.
  • Follow Tesla in real time here.

Elon Musk‘s least favourite group of people is enjoying a revenge of sorts.

That would be short sellers, or investors betting on Tesla‘s stock price to fall. They raked in a whopping $US749 million on Tuesday alone, as the company’s shares plummeted 8.2%, after analysts questioned the company’s ability to hit production targets for its Model 3 sedan.

(Note: JPMorgan has identified the perfect Tesla trade to protect against Model 3 “production hell,” which you can read about here.)

Tuesday’s decline brought the mark-to-market profit for short sellers to $US1.86 billion for the month of March, and their year-to-date haul up to $US835 million, according to data compiled by financial analytics firm S3 Partners.

Tesla’s stock also felt pressure from the US National Transportation Safety Board’s announcement that it’s conducting a second investigation into a crash involving one of the company’s vehicle. Further, Waymo’s newly revealed electric car partnership with Jaguar also put a damper on Tesla trading.

It served as a triple whammy of sorts for Tesla, which fell another 3.5% on Wednesday following a downgrade from rating agency Moody’s. It also means more profits for short sellers, assuming they didn’t close positions during Tuesday’s selloff.

These developments are sure to irk Musk, Tesla’s chief executive officer, who has forged a combative relationship over time with those betting against his company’s shares. In a Rolling Stone profile from 2017, Musk called Tesla short sellers “jerks who want us to die” and described their behaviour as “hurtful.”

It echoed a tweet Musk fired off on June 8 in which he said the group of investors “want us to die so bad they can taste it.” In early April, after a period of considerable stock strength, the CEO even went as far as to taunt Tesla’s detractors, tweeting, “Stormy weather in Shortville.”

Unfortunately for Musk, his company’s share loss on Tuesday makes Tesla the most profitable short in the US market, according to S3 – something that’s sure to entice other investors to enter the trade.

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