Tesla: Flamethrowers and Sexy Shorts

Tesla

Object secured: bought at 69,420 USD in 2020...

Fine, the decimal point may have wandered. The official price of Tesla's red satin “Short Shorts” was $69.420 – but given what they did to the people they were aimed at, 69,420 feels closer to the truth. They arrive in a black gift box with a gold Tesla “T”, and the back is embroidered, in gold, with the word S3XY. Subtle, it is not.

Why a car company sells hot pants. For most of the 2010s Tesla was one of the most heavily shorted stocks on Wall Street. The bear case was not stupid: years of losses, cash burn, “production hell” on the Model 3 and a chief executive with a Twitter habit. On 7 August 2018 Elon Musk tweeted that he was considering taking Tesla private at $420 a share – “funding secured”. It wasn't. The SEC sued, and the matter settled with a $20 million fine each for Musk and Tesla, and Musk stepping down as chairman, without admitting or denying the allegations. Court papers later revealed the price had been rounded up from $419 for comedic reasons. Corporate governance, millennial edition.

The flamethrower. If you are wondering about the other half of this post's title: in early 2018 Musk's tunnelling venture, The Boring Company, sold 20,000 handheld flamethrowers at around $500 apiece within days. When customs authorities objected to importing “flamethrowers”, it was simply renamed the “Not-a-Flamethrower”. Problem solved. Investors who thought this sort of thing would eventually catch up with the share price were about to learn a very expensive lesson.

2020: the squeeze. Tesla started delivering cars, and profits, while the market discovered that it no longer cared about either – it cared about the future. In early July 2020 Tesla overtook Toyota as the world's most valuable carmaker, and Musk celebrated by putting the Short Shorts on sale; demand briefly crashed the website. By year-end the stock was up about 730%, Tesla had joined the S&P 500, and short sellers had booked roughly $38 billion in mark-to-market losses on Tesla in a single year, according to S3 Partners. The shorts, it turned out, were the ones who needed the shorts.

The story did not end there, of course. Tesla went on to become one of the most valuable companies in the world, and in November 2025 its shareholders approved a pay package for Musk potentially worth up to $1 trillion. Whether this exhibit belongs in a museum of corporate failure or of short-seller failure remains the subject of lively debate in the curatorial department.

The lesson: being right about the fundamentals and being right about the stock are two different jobs – and the market can stay irrational for longer than you can stay solvent, especially when the CEO is selling merchandise to mock you.

Museum note: at $69.420 a pair, these were the most reliably profitable Tesla shorts ever traded – for Tesla. Got a souvenir of a famous short (successful or otherwise)? Get in touch via the contact page.

Further reading

• Wikipedia – Tesla, Inc. (ongoing)
• Al Jazeera – Who wears short shorts? Elon Musk pokes fun at Tesla’s naysayers (2020)
• BNN Bloomberg – Tesla short sellers lost US$38B in 2020 as stock surged (2020)
• NPR – Elon Musk settles with SEC, agrees to step down as Tesla chairman (2018)
• Wikipedia – The Boring Company (Not-a-Flamethrower) (ongoing)
• Tim Higgins – Power Play: Tesla, Elon Musk, and the Bet of the Century (2021)
• Edward Niedermeyer – Ludicrous: The Unvarnished Story of Tesla Motors (2019)