2025 is proving to be a tough ride for Tesla shareholders. The electric vehicle company’s stock has fallen a staggering 44% since the beginning of the year, dropping to $227.50 as of Monday. While long-term investors are feeling the pain, short sellers—those who profit when a stock declines—are celebrating a windfall.
According to data from S3 Partners, Tesla short sellers have gained a remarkable $11.5 billion in mark-to-market profits so far this year. The company now ranks as the third most heavily shorted stock in the U.S., with $17.6 billion worth of its shares sold short. Only Nvidia and Apple rank higher, with $24.6 billion and $22.2 billion in short interest, respectively.
Betting Against Tesla Pays Off—For Now
Tesla’s rollercoaster stock history has always been a battleground for traders. Betting against the company has often been a high-risk, high-reward proposition. Many short sellers were burned badly in previous years, especially between 2019 and 2021 when the stock soared to record highs. But 2025 has flipped the script. Tesla’s recent decline has turned into a gold mine for its critics on Wall Street.
While the reasons for the stock’s decline range from intense competition in the EV space to broader market pressures, one thing is certain—those who called Tesla’s fall have reaped enormous rewards. This year marks one of the most profitable stretches for short sellers betting against the automaker.
Musk’s Love-Hate Relationship with Short Sellers
Tesla CEO Elon Musk has never hidden his disdain for short sellers. Over the years, he’s been vocal—often playfully hostile—toward those who bet against Tesla. In 2020, at the height of Tesla’s stock rally, Musk poked fun at his critics by launching limited edition red satin shorts on Tesla’s website. The stunt was meant to mock those who had lost billions trying to short the company.
Musk even took aim at hedge fund manager David Einhorn, a well-known Tesla short. When Einhorn disclosed that his Tesla short was one of his firm’s biggest losses, Musk sent him a pair of the infamous red shorts. Einhorn later tweeted, “I want to thank @elonmusk for the shorts. He is a man of his word!”
This back-and-forth is just one example of how Musk has turned Tesla’s market narrative into something deeply personal. He often frames short sellers as working against innovation and retail investors.
Legal Drama and Regulatory Scrutiny
The feud between Musk and short sellers hasn’t been limited to public jabs. It’s also spilled into the legal arena. In 2022, the U.S. Department of Justice began investigating two investors accused of market manipulation through short-selling Tesla stock. Musk praised the investigation at the time, saying he was “greatly encouraged” and accusing hedge funds of using sophisticated financial tools to exploit smaller investors.
More recently, a lawsuit brought by Aaron Greenspan, founder of PlainSite and a former Tesla short seller, alleged that Musk had manipulated the company’s stock price over the years using various tactics. Greenspan, a vocal critic of both Tesla and Musk, claimed that Musk’s public statements and influence were used to distort the company’s value.
The case was moved to federal court in 2024, escalating tensions further. Adding fuel to the fire, Musk’s social media platform X permanently banned both Greenspan and PlainSite in 2023, cutting off a vocal critic from his primary platform.
Tesla’s Woes Fuel a Bearish Surge
Tesla’s stock struggles in 2025 have emboldened a new wave of bearish investors. The company, once considered nearly untouchable in the electric vehicle space, is now facing growing skepticism. Analysts point to slowing sales growth, rising competition from both legacy automakers and newer EV startups, and questions about the sustainability of its market dominance.
Investor sentiment has clearly shifted, and short sellers are capitalizing on that doubt. Despite Musk’s longstanding battle with them, their presence around Tesla is growing, not shrinking. And for now, their bets are paying off.
