(Bloomberg) — Tesla Inc.’s blowout earnings surprised everyone.

But it was the Bears who paid the price this week. The electric car maker’s results dealt a blow to short sellers – investors who make money by betting that a security will fall over a certain period of time – as they saw all their profits for the entire year wiped out in just one trading day.

Expectations for Wednesday’s after-hours report from the electric car giant were low, with the stock down about 14% for the year and both Wall Street and Main Street believing demand for electric cars would continue to struggle. Instead, Tesla delivered a positive report and CEO Elon Musk told investors the company would see as much as 30% growth in vehicle sales next year.

By late Thursday, Tesla had added $150 billion to its market value on a 22% stock gain — the biggest one-day jump since 2013. Stock sellers, on the other hand, took an estimated $3.5 billion mark-to-market loss , according to data from S3 Partners. Even worse, their $1.7 billion annual profit was erased, shorts are now down $1.8 billion for 2024.

“Tesla’s guidance was extraordinary,” said Steve Sosnick, chief strategist at Interactive Brokers. “At least yesterday, the market was willing to trust Elon Musk’s sales growth claims.”

Shorts weren’t the only ones caught off guard by the report. Analysts on average expected Tesla to report a 10 percent drop in quarterly profit. Instead, the company came in with a jump of 9% from the prior year period. And a key measure for Tesla — gross vehicle margin excluding regulatory credits — also beat expectations.

A look at options positioning reveals that investors were not prepared for a big hike. Options trading suggested traders expected the stock to move around 6% in either direction after the results. That’s a low number to begin with, given that Tesla stock had moved at least 9% after the previous seven quarterly reports.

Now, with at least some confidence restored that the worst of the decline in electric car demand may be over, and the company making steady progress on developing a fully self-driving car, investors are flocking back into the stock. Demand for call options increased as traders chased the rally. Three-month talks moved to a premium over bearish prices on Thursday for the first time since late August.

Wall Street is also becoming more optimistic. Several analysts raised their price targets on Tesla following the results and the rapid rise in the stock price. And bears are becoming increasingly rare. Just about 2.9% of Tesla’s free float is now held short, S3 data shows, hovering near what the company called “historic lows.”

While the rally in Tesla was unusually strong, market watchers, including S3 Partners’ Matthew Unterman and Citigroup’s U.S. equity trading strategist Stuart Kaiser, see few signs that the gains were due to a so-called short squeeze — where traders are forced to cover their bearish bets quickly, ending up reinforcing a asset’s upward momentum.

“Thursday’s move seems more driven by surprisingly strong results against the backdrop of an underowned stock rather than aggressive short covering,” Kaiser said, noting that short interest in the stock is low.

“There was pent-up demand for the stock to do well,” said Dave Mazza, CEO of Roundhill Financial. “There are dedicated followers, both retail and institutional, who were waiting for anything less than the worst news to pile up again.”

Disappointment following the company’s unveiling of self-driving vehicles earlier in October, and the selloff that followed, also kept sentiment on the stock subdued.

“Given the robotaxi debacle, its recent propensity to sell off after earnings, and the perception that the stock may have been poised for a crash if it occurred, I think many traders were taken offside and many investors found themselves under-owning the stock,” Interactive Brokers’ Sosnick said.

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