Investing.com – A large number of hedge funds that bet against Tesla Inc (NASDAQ:) could now face potential losses, after a surprise surge in the electric car maker’s shares.
About 18% of more than 500 hedge funds were short Tesla at the end of June, the highest percentage in more than a year, according to Hazeltree, a data provider. That was a big increase from less than 15% at the end of March.
This turn of events comes on the heels of Tesla’s recent auto sales results, which revealed that second-quarter deliveries beat analysts’ average estimates, despite a decline in sales.
The news has excited investors, sending Tesla shares to a six-month high and sending Tesla’s stock price up about 40% since the start of June.
The electric vehicle industry, which is crucial to achieving net-zero emissions globally by 2050, faces a number of challenges. These include tariff wars, consumer resistance to EVs seen as “woke” transportation, and political uncertainty. Former US President Donald Trump, a big fan of the Tesla Cybertruck, has expressed his intention to repeal regulations supporting battery-powered vehicles if he returns to office.
Despite these challenges, Tesla has its share of internal turmoil to manage. Earlier this year, CEO Elon Musk warned employees of impending job cuts, with sales jobs particularly hard hit. Additionally, production of the Cybertruck, Tesla’s latest consumer model, has been slow to pick up.
Meanwhile, traditional automakers are under pressure from shareholders to cut back on capital spending on electric vehicles. For example, luxury EV makers such as Polestar Automotive Holding Uk Plc A (NASDAQ:) and Fisker (OTC:) Inc. (BE:) has seen significant value losses as it files for Chapter 11 bankruptcy protection.