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.

“Tesla short sellers were actively trimming their exposure ahead of the earnings release, covering 2.09 million shares, worth $1.55 billion, over the last 30 days,” S3’s managing director of predictive analytics Ihor Dusaniwsky wrote in a note. Short sellers could continue to get squeezed out of their positions due to such “large and sudden losses,” he wrote.

Eoin Treacy's view

Tesla is very dependent on the recent uptick in Chinese sales persisting. That’s not something anyone has had to worry about for a long time, but it is a subject everyone will be familiar with over the coming year. Meanwhile the correction in copper and other battery metals is a positive.

The share rebounded impressively to hit a new 3-month highs and to test the region of the 200-day MA. A clear downward dynamic will be required to question current scope for additional higher to lateral ranging.

The crypto market took the announcement of Tesla’s selling of bitcoin in its stride with bitcoin steady at the upper side of the short-term range.