Elon Musk’s battle with short sellers has raged on for over 11 years. It began in 2013 when Andrew Left, founder of Citron Research, became one of the first prominent short sellers to attack $Tesla Motors(TSLA)$.
Since then, numerous opponents—from retail investors crashing into Model 3 cars to former world’s richest man Bill Gates—have joined the short-selling camp.
Today, betting against Tesla requires serious courage.
In a surprising move, Deutsche Bank, which had maintained a neutral rating on Tesla for a long time, upgraded Tesla to a "buy" on September 10, making it their top pick in the auto industry.
On the bullish side, well-known Tesla supporter Cathie Wood stated that the autonomous taxi market could generate $4 to $5 trillion in revenue for Tesla over the next 5 to 10 years.
Skeptics’ Concerns: Tesla’s Risks
On the other hand, critics argue that Tesla’s so-called "market-leading position" in autonomous driving reflects a willingness to put untested, potentially dangerous products on the road, rather than a true technological advantage. Tesla also faces risks like production shortages, product defects, and recalls.
The occasional victories in stock movements haven’t silenced the short sellers circling Tesla, and the doubts surrounding Tesla's Full Self-Driving (FSD) technology persist.
In 2022, Tesla’s stock dropped by over 65% for the year. Data from financial firm S3 Partners revealed that the decline helped short sellers pocket approximately $17 in profits, making Tesla the most profitable short target that year. Jim Chanos, founder of Kynikos Associates and known as "Dr. Doom" on Wall Street, remarked in July 2022 that the retail market of Tesla's FSD could be close to zero.
Bill Gates’ $500 Million Bet Against Tesla
The most prominent member of Tesla’s short-seller camp isn’t from Wall Street. In April 2022, Musk revealed on social media that former world’s richest man Bill Gates held a $500 million short position in Tesla.
Musk was furious, and even an apology from Gates wouldn’t appease him. Gates’ rationale for shorting Tesla was that the electric vehicle market would soon face an oversupply, leading to price declines. At one point, Gates reportedly lost $1.5 billion because of this bet, according to Elon Musk’s biography.
Yet, Musk remains confident that Tesla will eventually crush the short sellers with innovations like autonomous driving. During Tesla’s shareholder meeting in June this year, Musk claimed that Robotaxi could boost the company’s market value by $500 billion to $10 trillion. Coupled with the Optimus robot, he predicted Tesla’s total market cap would surpass that of $Apple(AAPL)$ by ten times, reaching over $30 trillion.
In July, Musk took to social media once again, declaring that once Tesla solved autonomous driving and mass-produced the Optimus robot, any short-seller—including Gates—would be "wiped out."
The Battle Continues
Jay Woods, chief global strategist at Freedom Capital Markets, noted that while Tesla holds promise, Musk’s history of over-promising makes his commitments harder to trust. This war between Musk and the short sellers shows no sign of ending anytime soon.
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