Tesla’s Rally Creates $1 Billion Headache for Its Army of Shorts

The 10% surge in Tesla Inc. shares Thursday after the electric-vehicle maker reported strong earnings is creating one notable group of losers: The pile of traders betting against the stock.

Tesla is the most shorted stock in the world, with almost 3% of its float held in short-selling positions. S3 Partners estimates that these investors are taking in more than $1 billion in mark-to-market losses just on Thursday’s surge. That drives their losses this month to $2.67 billion, according to S3.