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Tesla short sellers are feeling the burn after its earnings report

Data: S3 partners; Chart: Lazaro Gamio/Axios

Tesla's stock price rallied nearly 18% on Thursday after a stronger-than-expected earnings report, putting a big dent in the profits of short sellers.

Why it matters: Many short sellers pulled out of the trade after the stock fell to $178.97 a share in June, counting $5.16 billion in mark-to-market profits because of the stock's decline, according to data from S3 Partners. But those who continued to short Tesla have paid dearly, and are now in the red, year-to-date.

What happened: Tesla's stock has been a tale of two halves. In the first half of the year, short-sellers had nearly recouped the entirety of their losses from the 2016-2018 period when Tesla was one of the market's hottest companies.

  • But since June 3, shares have rallied by more than 60%, as CEO Elon Musk has managed to produce solid numbers and beef up production in China.
  • Short sellers lost close to $1.5 billion on Thursday alone, wiping out almost 70% of their year-to-date profits, S3's managing director of predictive analytics Ihor Dusaniwsky said in a note.

Where it stands: Thursday wasn't quite the "short burn of the century" Musk threatened on Twitter was "comin soon" in May 2018, but it was pretty bad.