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Tesla 2020: The greatest short squeeze in modern stock market history
How the world's most shorted stock rallied 740% in one year, burning tens of billions for short sellers
M
MarketPedia Editorial
10 min read·December 10, 2024
In 2020, Tesla rallied 740%, becoming the fifth-largest company in the world. Short sellers lost over $38 billion. The Tesla case redefined the risks of short selling.
Wall Street's most hated stock
For years, Tesla had been the most shorted stock in the American market. Short sellers had solid arguments: production was behind schedule, margins were negative, and Musk was unpredictable.
2020: Everything changes
At the beginning of 2020, Tesla was worth approximately $85. By the end of the year, it was worth $705—a 740% gain. It became the fifth-largest company by market capitalization in the world.
Lessons
- Short selling stocks with high interest carries unlimited risk: the price can rise indefinitely.
- Sentiment and narratives can dominate fundamentals for years.
- Inclusion in indices creates predictable structural demand.
# Tesla# Musk# Short Squeeze# 2020# EV# NASDAQ