Tesla short sellers mint $4B profit as shares plunge on earnings miss
Tesla shares plunged as much as 15% intraday on Thursday — their worst one-day drop in more than a year — after a disappointing Q2 report, and Bloomberg estimates the slide handed short sellers roughly $4B in paper profits. Short interest had already climbed 33% since March to nearly 80 million shares heading into earnings.
Tesla's Q2 results, released after Wednesday's close, missed EPS consensus by a wide margin, and shares tumbled as much as 15% intraday the next trading day — the steepest single-day drop in more than a year. Bloomberg reported the rout handed Tesla short sellers an estimated $4B in paper gains.
Adjusted EPS came in at $0.33, well below the $0.50 consensus, as lower average selling prices, shrinking regulatory-credit revenue, and heavier AI spending squeezed margins — an extension of the earnings miss covered elsewhere in this briefing.
Bearish positioning had already been building before the drop. Tesla's short interest rose 33% since March to nearly 80 million shares, and the days-to-cover ratio — a gauge of how long it would take shorts to unwind — climbed to 1.75 days, its highest level since 2021.
For shareholders, two things are worth watching together: the fundamental hit from the earnings miss itself, and the risk that such a crowded short position could fuel a sharp short-covering rally if sentiment turns. That contrasts with Wall Street's major banks, which cut price targets but mostly kept Buy ratings intact — short-term traders, it seems, were positioned far more bearishly than the analysts.
Summaries are prepared by the Tesla Briefing editorial team and may not capture every nuance of the original reporting. You are solely responsible for your own investment decisions.