• Tesla short sellers lost $7.8 billion after a 38% post-election rally in the electric vehicle maker’s shares.
• Tesla was a popular “Trump trade” and is seen as the beneficiary of a second Trump term.
• Tesla is the third largest short sale in the stock market, with $25.6 billion in short interest.

Investors bet against Tesla have lost $7.8 billion since Donald Trump’s election victory last week.

That’s according to data from S3 Partners, which told Business Insider in an email Monday that Tesla short sellers were reeling from the electric vehicle maker’s 38% surge after the election.

Tesla shares jumped another 8% on Monday, hitting an intraday high of $358.64, its highest level since April 2022.

S3 Partners Managing Director Ihor Dusaniwsky said the pain may not be over for Tesla short sellers.

“We expect continued short covering of TSLA shares due to the rally-induced squeeze that will force the exit of many of the 2.4 million shares we saw shorted during the last month,” Dusaniwsky said.

Short covering a stock acts as buying pressure and often drives up a stock’s price because bearish investors must buy back shares to close their short position once they throw in the towel.

According to Dusaniwsky, since the election, short sellers have purchased 1.22 million Tesla shares worth nearly $400 million to close out their bearish positions.

In total, nearly 3% of Tesla shares are sold short, with current short interest of $25.6 billion, according to S3 Partners.

This makes Tesla the third largest short behind only Apple And Nvidiawhich have $29.7 billion and $38.5 billion in short interest, respectively.

The rise in Tesla shares can be attributed to CEO Elon Musk’s close ties to Donald Trump, with the stock rallying ahead of the election as one of the assets boosted in the so-called Trump trade. Musk was a major donor to Trump’s campaign in his final months, donating more than $100 million to efforts to re-elect him.

Investors are betting on Musk’s friendship with Trump This will bode well for deregulation efforts this could accelerate Tesla’s self-driving products. Trump’s likely reduction in electric vehicle tax credits is also believed to hurt Tesla’s smaller competitors.

Tesla stock’s latest rally boosted Musk’s net worth passed 300 billion dollars.