Tesla short sellers mint $4 billion profit as shares nosedive

The deep plunge in Tesla Inc.’s stock on Thursday is turning into a major payday for its short sellers.Shares of Elon Musk’s electric-vehicle maker fell as much as 15% Thursday, their worst intraday drop in more than a year, after second-quarter profit missed expectations and reignited concerns about the company’s artificial intelligence and robotics ambitions.The selloff has left investors betting against the stock poised to make about $4.12 billion in one-day mark-to-market profits, according Ihor Dusaniwsky, managing director at S3 Partners.

About 3% of Tesla’s shares are sold short, S3 data show.“As Tesla continues to pursue ambitious AI goals via an exceedingly aggressive capex timeline, we weigh severe caution on the speed of its AI progress ramp — and the significantly high bar already embedded in the stock’s valuation,” BNP Paribas analyst James Picariello wrote in a note.

He reiterated his sell-equivalent rating and $280 price target on the stock.132591401Trading at 151 times estimated earnings over the next 12 months, Tesla is the most expensive member of the Magnificent Seven and its worst performer this year.

Following Thursday’s decline, the shares are down nearly 30% in 2026, leaving short sellers with paper gains of about $8.92 billion year-to-date.Tesla faces a different AI debate than its mega-cap technology peers.

While investors have criticized companies for pouring cash into AI projects with uncertain payoffs, some Tesla investors worry the company isn’t spending enough to bring robotaxis and humanoid robots to market.

Softer-than-expected automotive margins have also raised fresh questions about whether its core business can sustain Tesla’s future hopes — and its planned outlays.Tesla has the highest short interest among the Magnificent Seven, according to S3 Partners data.

The second-most shorted stock in the group, Meta Platforms Inc., has just 1.6% of its float sold short.Not everyone is turning bearish.

Tesla is the most-bought stock among retail traders Thursday, with $42 million in net buys, according Viraj Patel at Vanda Research.

Morningstar analyst Seth Goldstein said Tesla shares are now undervalued and that he still sees strong growth in the company’s future.“For long-term investors, we view the pullback as a good opportunity,” Goldstein, who has a fair value target of $450 on the stock, wrote in a note. ...