>> The big short story of Tesla could come to an end if CEO Elon Musk manages to take the electric car company private, as he's declared he wants to. Shortselling a company is a bet against it. You borrow and sell shares at a certain price, and when the stock falls you buy them back at a cheaper price and return them.
Short sellers pocket the difference. But when the stock goes up, you have to buy high to return the shares and you lose. And Elon Musk, he hates short sellers, hated them almost instantly since Tesla went public in 2010. Short sellers have targeted Tesla believing it's way over valued making Tesla one the most shorted companies on the market.
Reuter's David Randall has been watching the gamble.>> He had very bold statements. In fact, he's up with very specific timelines that he did not meet. And short sellers came in and said, hey, this isn't happening as you said it would, but the stock continued to go up.
So short sellers continued to essentially double down saying, you know, this stock has to come back down to where its fundamentals are.>> Despite never turning a profit, Tesla shares have soared over 900% in five years and short sellers have taken hits in the billions of dollars. And if Tesla goes private at 420 dollars a share the losses will be even bigger.
It's icing on the cake for Musk, who's been open about his disdain for the short sellers and has taken to Twitter to tout them.>> More recently, he's said that he was gonna send David Einhorn, a famous short seller, a bunch of short shorts. He's also said it was gonna be stormy weather in Shortsville.
He said that shorts were gonna get burned soon.>> David Einhorn's Greenlight capital fund is down 19% because of Tesla but short sellers could still have their moment. In his tweet on Tuesday Musk said, funding secured, but is it?>> That seems the big open question. If he does not have financing, then there's gonna be tons of lawsuits because short sellers can say I have all these losses because of you.
And they will go to court.>> And on Wednesday, The Wall Street Journal reported that the US Securities and Exchange Commission was looking into the tweets and whether Musk's statement was truthful. But if Musk lines up the financing to take the company private, it could spell the end of this antagonistic relationship, with Musk coming out the winner.