Tesla's surging stock is crushing short sellers

Tell me if you've heard this before: Tesla short sellers are taking a bath as the company's stock climbs.

The company's shares were up 6.8% to $347.96 in pre-market trading, as of 7:57 a.m. ET. That increase translates to a mark-to-market loss of roughly $300 million following Wednesday's close, according to data compiled by the financial analytics firm S3 Partners.

I know, I know, this has become a weekly occurrence. Tesla's stock price continues to reach new heights while bearish speculators refuse to throw in the towel. And as this song and dance plays out time and time again, it's the resilience of the battered short sellers that stands out the most. After all, Tesla remains the most-shorted US company.

It's possible the stubborn short sellers feel they have no choice but to stay in their positions and try to recoup the $3.64 billion they lost in 2016 through the first half of 2017, a period that saw Tesla's stock rise 51%. And that's actually worked out for them since the start of July as they've made back more than $1.1 billion of that amid a 9.9% slide in Tesla shares, S3 data show.

Another explanation is that Tesla and other red-hot mega-cap tech stocks are being used as proxies for hedging the broader stock market, according to Ihor Dusaniwsky, the head of research at S3. The idea is that as huge, influential stocks like Tesla, Apple, Alphabet and Amazon go, so does the broader market.

As all this has gone on, CEO and founder Elon Musk has stayed coy about those shorting Tesla. He's said in recent months that Tesla's stock price is too high based on past and present, but also thinks it's low if you believe in the company's future. Musk has also had some fun with it, tweeting on June 8 that short sellers "want us to die so bad they can taste it."

Ultimately, while Tesla has been an outperformer over the longer term, it's also easily whipsawed, with billions of dollars of value created and wiped out at a moment's notice. So regardless of the rationale for the heavy shorting activity, and looking beyond Musk's public comments, one thing is certain: betting against Tesla is certainly not for the faint of heart.

Get the latest Tesla stock price here.