Tesla's soaring stock price has taught short-sellers another lesson.

Due to Tesla's third-quarter financial report released on Wednesday, which greatly exceeded expectations, the extremely strong profit increase shocked the market. On Thursday, Tesla's stock price rose by 22% in a single day, setting the largest single-day increase since 2013, with a market value increase of $150 billion. Short-sellers also experienced a rapid evaporation of wealth.

According to a report from S3 Partners, short-sellers suffered a market value loss of about $3.5 billion in this market, wiping out their $1.7 billion profit so far this year, and resulting in a current paper loss of $1.8 billion.

Tesla's performance not only caught short-sellers off guard, but even surprised analysts. Before the financial report was released, the market generally expected Tesla's stock price to continue to decline due to the continued downturn in electric vehicle demand, with analysts on average estimating a 10% decrease in its quarterly profit. However, Tesla's financial report gave a positive signal, with the company's profit achieving a year-on-year increase of 9%, far exceeding expectations.

Chief Executive Officer Musk even revealed to investors, "The company expects a 20-30% increase in car sales next year."

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From the perspective of option positions, investors were not prepared for a significant increase. Option trading implies that traders expected the stock to rise by about 6% after the financial report was released. The analysis believes that considering Tesla's stock price has risen by at least 9% after the release of the previous seven quarterly financial reports, this number is already low.

Now, some investors have regained confidence. The analysis points out that these investors believe the worst period of electric vehicle demand slowdown may have ended, and the company is steadily advancing in the development of fully autonomous vehicles, so they are buying back the stock one after another.

On Thursday, the premium of the three-month call option was higher than the put option for the first time, and several analysts also raised their target price for Tesla. S3's data shows that only about 2.9% of Tesla's free-floating shares are currently shorted, hovering near the company's so-called "historical low."

Despite Tesla's stock price surge being exceptionally strong, market observers including Matthew Unterman from S3 Partners and Stuart Kaiser, a U.S. equity trading strategist at Citigroup, believe that there is little evidence that this surge is driven by the so-called "short squeeze." Kaiser said:

"Tesla's short position is low, and Thursday's stock price trend was driven by unexpectedly strong performance, rather than positive short covering in the context of an undervalued stock."