Musk tweeted on 7 August that he had ‘secured’ funding to take the company private, but so far no offer has been made 
 
 Investors betting on a fall in Tesla’s share price have made $1.09bn since 7 August, when Tesla founder Elon Musk tweeted he had “secured” funding to take the troubled company private. 
 
 The electric car company’s shares soared 11% to $379 after Musk’s so-called “Tesla tweet” that he had “funding secured” to buy out investors at $420 share. But that tweet – now the subject of legal action and a regulatory inquiry – so far has not led to an offer and Tesla’s stock has fallen 19% to $308 share. 
 
 Tesla shares soar after Elon Musk floats plan to take company private Read more 
 
 Musk has frequently clashed with Tesla’s short sellers – investors who bet on a company’s share price collapsing. The battle between Musk and short sellers has become increasing vituperative and personal. He has accused them of being saboteurs who “want the company to die”. As recently as mid-June, Musk predicted via Twitter that investors “have about three weeks before their short position explodes”. 
 
 Arrayed against him are investors who have been willing to lose around $5bn since 2016 on their strong belief that Tesla cannot deliver on it promises. 
 
 “What bothers me is not so much the personal stuff and the personal attacks. I’m used to that. It’s the willingness to say things that I think he knows are a stretch, to be polite,” investor Jim Chanos, founder of Kynikos Associates, who has been betting against Tesla for years, said in July. 
 
 
 
 “I don’t think you get to tell people you’re going to make 20,000 Model 3s a week when you know that’s not going to be the case,” Chanos added, referring to the problems hampering production of the mass-market Model 3. 
 
 According to S3, a financial technology and analytics firm, 33.4m Tesla shares worth $11.2bn worth, or more than a quarter of the company’s free float, are out on loan to investors betting that its share price will fall. 
 
 To those investors, Tesla’s market capitalization, projected revenues and production capacity just don’t add up. 
 
 “This has been one of the largest shorts in the US for several years,” says Ihor Dusaniwsky, managing director of predictive analytics as S3 Partners. “It’s become a battle of wills. The big players on the short side have a conviction that the stock is going to tumble to bankruptcy.” 
 
 During the markets’ initial acceptance that Musk would be able to raise around $70bn to take Tesla private, the rise in stock added $6.4bn to Tesla’s market cap. That cost short sellers like Chanos around $1.3bn and triggered lawsuits. 
 
 But stock in the company has fallen on reports that Securities and Exchange Commission officials are intensifying a probe into Tesla’s public statements and Tesla’s board made it clear it had scant knowledge of a Saudi Arabian pledge investment that Musk claimed to have received in a blog post last week and which he claimed “was just a matter of getting the process moving”. 
 
 Elon Musk's tweets investigated for possibly breaking law: reports Read more 
 
 On Friday, after the New York Times published an interview with Musk that sparked concerns over his health, Tesla’s stock dropped 9%, bringing Tesla down 19% from their pre-tweet level. 
 
 On Monday, JP Morgan cut its December price target for Tesla back down to $195 per share. Analyst Ryan Brinkman explained to clients in a Monday note that their interpretation of events “leads us to believe that funding was not secured for a going private transaction, nor was there any formal proposal”. 
 
 Needham analyst Rajvindra Gill said the real valuation of Tesla shares is “closer to $200”, or 30% lower than the $292 share price at the market’s opening on Monday, and 40% lower than on 6 August, the day before Musk’s now-infamous tweet. 
 
 According to S3, that would bring short sellers up $3bn for the year but still down historically. 
 
 “The big short sellers are strong and they’re not looking at their quarter-to-quarter returns. They have the pedigree to keep a position and not be forced out of it,” said Dusaniwsky. “They’re sure they’re right and don’t want to be proven wrong so they’re going to stay in as long as it takes.” 
 
 In a letter to investors last week, UK hedge fund manager Crispin Odey, compared Musk’s recent behaviour to that of Donald Crowhurst, an amateur sailor who in 1968 set off on a solo voyage around the world but never returned. 
 
 “Shorts like Tesla have been difficult to hold on to,” Odey wrote in the investors letter, according to Bloomberg. “However, Tesla feels like it is entering the final stage of its life.” 
 
 ||||| If Elon Musk’s plan in announcing he was thinking of taking Tesla private was to get revenge against short sellers, it’s not exactly working out. 
 
 Investors betting against the electric car company have actually made money since Musk’s now-infamous tweet — $1.2 billion, in fact. Most of that amount came the day after his emotional interview with the New York Times published, which drove Tesla’s stock down about 9 percent. 
 
 Short sellers are investors who essentially bet against a company and make money when a stock’s price falls. Tesla is among the most shorted stocks in the history of the stock market — there were more than $13 billion worth of shares sold short at its August peak, according to Bloomberg — and it’s something that has incensed Musk for years. He claims that the high number of Tesla shorts gives people “incentive to attack the company” even when they’re wrong. 
 
 Musk’s animus toward short sellers appears to be part of what prompted his surprise August 7 announcement via tweet that he was considering taking Tesla private. (In a pair of subsequent blog posts explaining the tweet, Musk laid out more of his rationale on privatizing, including his desire to avoid the harm he sees caused by shorts, and said he decided to make the Twitter announcement because the way to have “meaningful discussions with our largest shareholders was to be completely forthcoming with them about my desire to take the company private.”) Valued at $70 billion, it would be the largest corporate buyout ever. 
 
 Shareholders could either to sell at 420 or hold shares & go private — Elon Musk (@elonmusk) August 7, 2018 
 
 The day of the announcement, Tesla’s share price jumped by about 11 percent, ticking up from less than $350 a share at the start of the day to about $387 by the end of it. (Musk had said he wanted to take Tesla private at $420 a share.) But since then, Tesla’s share price has drifted back down. On Friday, it fell by nearly 9 percent to $305.50. 
 
 If Musk was motivated to make the privatization announcement to squeeze out short-sellers, it’s backfired. 
 
 Financial and technology analytics firm S3 Analytics in a report on Friday estimated Tesla shorts are up $1.2 billion since Musk’s August 7 tweet, and $1 billion of that came on Friday alone, the day after Musk’s Times interview. 
 
 In the interview, the South African-born entrepreneur described the “excruciating” past year of his life, including 120-hour workweeks and three to four days spent inside Tesla’s factories. “The worst is over from a Tesla operational standpoint,” he said. “But from a personal pain standpoint, the worst is yet to come.” 
 
 The Securities and Exchange Commission has reportedly issued subpoenas investigating whether Tesla did indeed have the “funding secured” for its privatization, as Musk’s tweet asserted, and is also looking into whether the move was intended to harm short sellers. Even before the tweet, the SEC was reportedly probing whether Tesla misled investors about its Model 3 production issues. 
 
 The Times also reported that Tesla’s board of directors is worried about Musk’s Ambien habit and that the company is trying to recruit a second-in-command to help Musk, who the publication said “alternated between laughter and tears” during the sit-down. 
 
 This could be a temporary blip, but it might not be. 
 
 A few days after his August 7 tweet, David Einhorn, the billionaire manager of fund Greenlight Capital, tweeted out a pair of shorts he believed Musk had sent him taunting him over his short position in Tesla. Apparel maker Chubbies was later revealed to be the actual sender, and Musk tweeted his approval of the move. 
 
 I want to thank @elonmusk for the shorts. He is a man of his word! They did come with some manufacturing defects. #tesla pic.twitter.com/qsYfO8cbkp — David Einhorn (@davidein) August 10, 2018 
 
 Awesome — Elon Musk (@elonmusk) August 10, 2018 
 
 While Tesla shorts may have made money on Friday, they haven’t always been on the winning side of the stock. Musk’s privatization announcement cost short sellers $1.3 billion, according to S3. Although they’ve since more than recouped that initial loss after a $2.5 billion swing back in their favor, the firm estimates that long-term shorts have lost $5 billion on their bet since 2016. 
 
 But they’re not backing down. 
 
 Robert Chapman, a manager at Chapman Capital, told Bloomberg he doubled his short position after Musk’s August 7 tweet. “The more one learns about this situation, the more this appears to be a fakeover vs. takeover,” he said. 
 
 Chris Brown, managing member at Aristides Capital, another Tesla shorter, was also emboldened. “It always ends poorly for companies when they’re trying to squeeze the shorts,” he told the publication. “The idea of a transaction itself is idiotic.” 
 
 Both interviews were before Tesla’s Friday stock drop. 
 
 Beyond the shorts, the reported SEC probes, and questions about going private, Tesla is also facing another and potentially more pressing issue: low cash reserves. 
 
 Bloomberg reported in April that there is a “genuine risk” that the electric car company could run out of cash in 2018. (The story literally has a ticker counting Tesla’s cash burn as you read.) Analysts at Goldman Sachs, Jefferies, and Moody’s have all argued that Tesla is in deep financial trouble, despite Musk’s assertions that everything is fine. Tesla would need money to go private. But it also might need money just to stay afloat. 
 
 As of June 30, Tesla has $2.2 billion in cash, which it says is “expected to grow” in the third quarter. 
 
 That’s part of what the shorts are focusing on — and what’s got them in Musk’s head. 
 
 He told the Times he was bracing for “at least a few months of extreme torture” from the shorts, “who are desperately pushing a narrative that will possibly result in Tesla’s destruction.” 
 
 “They’re not dumb guys, but they’re not supersmart,” he said. “They’re okay. They’re smartish.”
– The SEC is investigating Elon Musk's now-famous tweet about taking Tesla private, and one reason is to see whether he set out to punish investors who were betting against his company, reports Vox. If so, he did not succeed. Though Tesla's share price rose from $350 to $387 the day of his Aug. 7 tweet, it has since fallen below the initial mark. (It was around $321 on Tuesday afternoon.) Both Vox and the Guardian estimate that short sellers have made more than $1 billion since the tweet. The latter newspaper also notes that Musk has a history of battling with short sellers, a battle that has become increasingly "vituperative and personal." For example, he approved of a taunting tweet, a pair of shorts, sent to one fund manager.