Hedge Funds Shorting Tesla Just Lost More Than $5 Billion

Since Donald Trump’s election win, the hedge funds clinging on to bets against Tesla Inc. have lost billions of dollars, as they feel the fallout of the special relationship between the president-elect and Elon Musk.

Hedge funds that had short positions against Tesla between election day and Friday’s close took an on-paper hit of at least $5.2 billion, according to Bloomberg calculations based on data compiled by S3 Partners.

They were among a shrinking group caught out, as many of their peers unwound bets against Tesla over the past four months, according to separate data provided by ...