Investor's Corner
Tesla shorts on edge following $1.1 billion loss
Tesla (NASDAQ:TSLA) short-sellers are down $1.1 billion in mark-to-market losses after TSLA stock rose 9.7% on Wednesday. The surge in the electric car and energy company’s shares comes on the heels of a successful 2018 Annual Shareholder Meeting, where CEO Elon Musk expressed an optimistic outlook in the Model 3’s production and Tesla Energy’s budding energy storage business.
Tesla is currently the most-shorted U.S. equity and the most-shorted stock worldwide in the Automobile Manufacturing Sector, with 37.7 million shares shorted and $11 billion in short interest as of Wednesday, according to a recent report from S3 Partners. Over the first five months of 2018, Tesla shorts saw substantial returns, up $572 million or 5.53% in mark-to-market profits. Since May 22, however, Tesla short-sellers are down $1.7 billion in mark-to-market losses as the company’s shares rose by 16.6%, turning a profitable year into the third straight year of Tesla short-selling losses. Wednesday’s 9.7% rally generated $1.1 billion in mark-to-market losses for $11 billion of TSLA short interest.
Overall, the financial technology firm expects Tesla’s short interest to decline as some short-sellers cut their positions after incurring $1.1 billion in mark-to-market losses. Considering the conviction that has been exhibited by dedicated Tesla shorts over the years, however, analysts at S3 Partners expect that a significant number of short-sellers will still hold on to their positions.
Tesla’s long-term investors are now looking to the company’s stock reaching $350 per share as the company achieves its target of producing 5,000 Model 3 per week by the end of Q2 2018 — a milestone that Musk dubbed during the recently-held Annual Shareholder Meeting as “likely” to happen.
Wednesday’s 9.7% rally stands as Tesla’s biggest percentage gain since November 4, 2015. The stock closed at $319.50, marking the best close of the company’s shares since March 16 this year and making it the best performer on the Nasdaq 100 during Wednesday’s trading.
Apart from Musk’s optimism regarding the production numbers of the Model 3, a critical factor that appears to have resonated among Tesla’s shareholders was the company’s growing energy business. Earlier this week, Tesla CTO JB Straubel stated that the company has managed to deploy 1 GWh of energy storage worldwide to date. During the 2018 Annual Shareholder Meeting, Elon Musk noted that in less than a year, Tesla would be able to do another Gigawatt project, followed by even more growth in the years to come.
“In less than a year from now, we will do another Gigawatt (project). The rate of stationary storage deployment is going to grow exponentially. For many years to come, each incremental year will be about as much as all the preceding years, which is a crazy, crazy growth rate,” Musk said during the Annual Shareholder Meeting.
Elon Musk predicted a “short burn” after the company’s now-infamous Q1 2018 earnings call. In a series of updates on Twitter, Musk reiterated his expectation that Tesla would start seeing profits sometime in Q3 or Q4 2018, while stating that the “short burn of the century” would be coming soon. During that time, Musk noted that the deliveries of the Boring Company’s “Not-a-Flamethrowers” would come just in time. Interestingly, a handover party for the first 1,000 Not-a-Flamethrowers is set for this coming Saturday, June 9, at Los Angeles, just a few days after Tesla shorts took a $1.1 billion blow.
As of writing, Tesla stock is trading down 0.32% at $318.49 per share on Thursday’s pre-market trading.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
There are a lot of Tesla bulls out there who have astronomical expectations for the company, especially as its arm of reach has gone well past automotive and energy and entered artificial intelligence and robotics.
However, some of the most bullish Tesla investors believe the company could become worth $100 trillion, and CEO Elon Musk does not believe that number is completely out of the question, even if it sounds almost ridiculous.
To put that number into perspective, the top ten most valuable companies in the world — NVIDIA, Apple, Alphabet, Microsoft, Amazon, TSMC, Meta, Saudi Aramco, Broadcom, and Tesla — are worth roughly $26 trillion.
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Cathie Wood of ARK Invest believes the number is reasonable considering Tesla’s long-reaching industry ambitions:
“…in the world of AI, what do you have to have to win? You have to have proprietary data, and think about all the proprietary data he has, different kinds of proprietary data. Tesla, the language of the road; Neuralink, multiomics data; nobody else has that data. X, nobody else has that data either. I could see $100 trillion. I think it’s going to happen because of convergence. I think Tesla is the leading candidate [for $100 trillion] for the reason I just said.”
Musk said late last year that all of his companies seem to be “heading toward convergence,” and it’s started to come to fruition. Tesla invested in xAI, as revealed in its Q4 Earnings Shareholder Deck, and SpaceX recently acquired xAI, marking the first step in the potential for a massive umbrella of companies under Musk’s watch.
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Now that it is happening, it seems Musk is even more enthusiastic about a massive valuation that would swell to nearly four-times the value of the top ten most valuable companies in the world currently, as he said on X, the idea of a $100 trillion valuation is “not impossible.”
It’s not impossible
— Elon Musk (@elonmusk) February 6, 2026
Tesla is not just a car company. With its many projects, including the launch of Robotaxi, the progress of the Optimus robot, and its AI ambitions, it has the potential to continue gaining value at an accelerating rate.
Musk’s comments show his confidence in Tesla’s numerous projects, especially as some begin to mature and some head toward their initial stages.
Elon Musk
Tesla director pay lawsuit sees lawyer fees slashed by $100 million
The ruling leaves the case’s underlying settlement intact while significantly reducing what the plaintiffs’ attorneys will receive.
The Delaware Supreme Court has cut more than $100 million from a legal fee award tied to a shareholder lawsuit challenging compensation paid to Tesla directors between 2017 and 2020.
The ruling leaves the case’s underlying settlement intact while significantly reducing what the plaintiffs’ attorneys will receive.
Delaware Supreme Court trims legal fees
As noted in a Bloomberg Law report, the case targeted pay granted to Tesla directors, including CEO Elon Musk, Oracle founder Larry Ellison, Kimbal Musk, and Rupert Murdoch. The Delaware Chancery Court had awarded $176 million to the plaintiffs. Tesla’s board must also return stock options and forego years worth of pay.
As per Chief Justice Collins J. Seitz Jr. in an opinion for the Delaware Supreme Court’s full five-member panel, however, the decision of the Delaware Chancery Court to award $176 million to a pension fund’s law firm “erred by including in its financial benefit analysis the intrinsic value” of options being returned by Tesla’s board.
The justices then reduced the fee award from $176 million to $70.9 million. “As we measure it, $71 million reflects a reasonable fee for counsel’s efforts and does not result in a windfall,” Chief Justice Seitz wrote.
Other settlement terms still intact
The Supreme Court upheld the settlement itself, which requires Tesla’s board to return stock and options valued at up to $735 million and to forgo three years of additional compensation worth about $184 million.
Tesla argued during oral arguments that a fee award closer to $70 million would be appropriate. Interestingly enough, back in October, Justice Karen L. Valihura noted that the $176 award was $60 million more than the Delaware judiciary’s budget from the previous year. This was quite interesting as the case was “settled midstream.”
The lawsuit was brought by a pension fund on behalf of Tesla shareholders and focused exclusively on director pay during the 2017–2020 period. The case is separate from other high-profile compensation disputes involving Elon Musk.
Investor's Corner
Tesla (TSLA) Q4 and FY 2025 earnings call: The most important points
Executives, including CEO Elon Musk, discussed how the company is positioning itself for growth across vehicles, energy, AI, and robotics despite near-term pressures from tariffs, pricing, and macro conditions.
Tesla’s (NASDAQ:TSLA) Q4 and FY 2025 earnings call highlighted improving margins, record energy performance, expanding autonomy efforts, and a sharp acceleration in AI and robotics investments.
Executives, including CEO Elon Musk, discussed how the company is positioning itself for growth across vehicles, energy, AI, and robotics despite near-term pressures from tariffs, pricing, and macro conditions.
Key takeaways
Tesla reported sequential improvement in automotive gross margins excluding regulatory credits, rising from 15.4% to 17.9%, supported by favorable regional mix effects despite a 16% decline in deliveries. Total gross margin exceeded 20.1%, the highest level in more than two years, even with lower fixed-cost absorption and tariff impacts.
The energy business delivered standout results, with revenue reaching nearly $12.8 billion, up 26.6% year over year. Energy gross profit hit a new quarterly record, driven by strong global demand and high deployments of MegaPack and Powerwall across all regions, as noted in a report from The Motley Fool.
Tesla also stated that paid Full Self-Driving customers have climbed to nearly 1.1 million worldwide, with about 70% having purchased FSD outright. The company has now fully transitioned FSD to a subscription-based sales model, which should create a short-term margin headwind for automotive results.
Free cash flow totaled $1.4 billion for the quarter. Operating expenses rose by $500 million sequentially as well.
Production shifts, robotics, and AI investment
Musk further confirmed that Model S and Model X production is expected to wind down next quarter, and plans are underway to convert Fremont’s S/X line into an Optimus robot factory with a capacity of one million units.
Tesla’s Robotaxi fleet has surpassed 500 vehicles, operating across the Bay Area and Austin, with Musk noting a rapid monthly expansion pace. He also reiterated that CyberCab production is expected to begin in April, following a slow initial S-curve ramp before scaling beyond other vehicle programs.
Looking ahead, Tesla expects its capital expenditures to exceed $20 billion next year, thanks to the company’s operations across its six factories, the expansion of its fleet expansion, and the ramp of its AI compute. Additional investments in AI chips, compute infrastructure, and future in-house semiconductor manufacturing were discussed but are not included in the company’s current CapEx guidance.
More importantly, Tesla ended the year with a larger backlog than in recent years. This is supported by record deliveries in smaller international markets and stronger demand across APAC and EMEA. Energy backlog remains strong globally as well, though Tesla cautioned that margin pressure could emerge from competition, policy uncertainty, and tariffs.
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