Tesla's surging stock has cost short sellers $3 billion this month (TSLA)

Despite the surge in its stock price, Tesla remains the most shorted US equity.
Investors betting against Tesla have lost $3 billion in August alone.
Follow Tesla's stock price in real-time here.

The "short burn of the century" that Tesla CEO Elon Musk promised back in May may have finally happened.

Tesla's 27% surge this month, fueled by Musk's cryptic tweet Tuesday about taking the company private at $420 a share, has cost short sellers — the investors betting against Tesla's stock — at least $3 billion, according to data from the financial-analytics firm S3 Partners.

Still, it remains the most shorted equity in the US, easily outpacing other heavily bet-against equities like Apple, Amazon, and Alphabet by at least 50%. And as the stock price has climbed this year, so too have the bets against it.

"If the market believes that Elon Musk's financing is in place and the chances of a buyout is high, we should see short covering in size, driving Tesla's stock price higher in the short term as short sellers attempt to close out their positions at lower than the $420 takeout price," said Ihor Dusaniwsky, a managing director at S3 Partners.

Musk hasn't been quiet about his disdain for short sellers. "These guys want us to die so bad they can taste it," he said last year. And on a conference call in May, he interrupted questions by two analysts on an earnings conference call, complaining they represented a short-seller thesis.

Shares of Tesla are up 18% this year as a solid earnings report, reports of a $2 billion investment by Saudi Arabia's public investment fund, and Tuesday's proposed buyout sent the stock to near-record highs.

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