Why Tesla CEO Elon Musk has warned short sellers
What's the story
Tesla's Senior Vice President, Xiaotong Zhu, has sold over 82% of his shares in the company. The stock sales occured between 2023 and 2024 at prices ranging from $174 to $323 per share, according to securities filings. This major sale by a top executive has raised questions about insider confidence in the company.
CEO's caution
Musk warns short sellers of potential losses
Tesla CEO Elon Musk has warned short sellers, saying they would be "obliterated" if they don't exit their short positions before Tesla achieves "autonomy at scale." The comment was a response to a list of current net short sellers of the electric vehicle (EV) manufacturer.
Trading strategy
Short selling explained
Short selling is a high-risk trading strategy where an investor profits from a decline in a stock's price. The process involves borrowing shares of a firm from a broker, selling them at the current market price, and then buying back the same number of shares later if the stock price drops. However, possible losses are unlimited if the stock price rises instead of falls.
Feuds
Musk's ongoing feud with Gates
Musk has a history of tackling short sellers, including Microsoft co-founder Bill Gates. Their feud stems from Gates's reported short positions against the Tesla stock. As per Walter Isaacson's 2023 biography of Musk, this short position has allegedly resulted in a $1.5 billion loss for Gates.