From the dramatic decline in Tesla’s sales to the rapid spread of the #TeslaTakedown protests, it’s no secret that plenty of people despise Elon Musk. However, there are also investors willing to bet billions of dollars against the market success of the Musk-helmed electric automaker. Those short sellers won big on Monday amid Musk’s current feud with President Donald Trump. According to USA Today, a 7.5% drop in Tesla’s shares generated $1.4 billion in profits for those holding short positions. I hope they had a glass of champagne with their breakfast.
The price drop seemingly coincided with Musk’s X post on Saturday that he had formed the America Party, a move provoked by the inclusion of ridiculous tax cuts in the “Big, Beautiful Bill.” Before the House of Representatives passed the megabill, Musk threatened to primary every legislator who voted for it. The cuts would result in a $4.5 trillion decrease in federal revenue through 2045.Â
Musk bankrolled Trump’s election campaign and took an active role at the White House to gut various departments with the stated goal of reducing the federal government. However, reducing spending is useless if the revenue brought in is also reduced. Unsurprisingly, Musk has remained silent about other aspects of the bill, such as the 265% increase to scale up Immigration and Customs Enforcement into the largest federal law enforcement agency.
Wall Street isn’t confident in Tesla’s long-term future
Musk and his America PAC have made no comments about the America Party beyond the brief post on social media. Even without any potential candidates or a logo, the market has apparently decided that going toe-to-toe with the tariff-maker-in-chief is a bad idea for Tesla. This isn’t the first time that experienced traders have profited from the volatile nature of Musk and Trump’s political relationship. According to USA Today, the spat between the two that played out in public on X and Truth Social last month made even more money for short sellers. The correlating plummet of Tesla’s stock price on June 5 generated over $4 billion in profit.
Wall Street has long voted no confidence in Tesla’s long-term future. Two years ago, Tesla was the most shorted automotive stock by an order of magnitude. The company had $22 billion in shares borrowed and resold by short sellers. Rivian was a distant second, with $2 billion in shares taken by short sellers. The decisions made in the Oval Office to jeopardize the profitability of EVs going forward haven’t helped the situation.
