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The Tesla rally is turning into a rout—for short sellers. Bearish investors are losing billions on bearish bets as stock in the electric vehicle pioneer hits new all time highs, bets that once looked like they’d pay off.

Tesla (ticker: TSLA) is always a controversial stock. That’s easy to measure in a number of ways. Wall Street analyst price targets range from about $190 a share to $530. The $340 spread is about 85% of the current stock price, almost double the average bull-bear spread for stock in the Dow Jones Industrial Average.

Then there is the short interest—the amount of stock bearish investors have borrowed and sold betting on price declines. Tesla short interest is about 20% of the total shares available for trading. That’s about 10 times the average short interest for stock in the Dow. There are a lot of Tesla bears in the market.

“Tesla short sellers were in the best of times and up $5.16 billion in net-of-financing mark-to-market profits as Tesla lost 46% of its value from January 1st to June 3rd 2019,” wrote short selling analytics provider S3 in a Friday research report. “But since June 3rd, Tesla shorts were facing the worst of times and are down $7.60 billion in mark-to-market losses.”

It been painful to be a short seller and now short covering—when bearish investors take losses and buy back borrowed stock—might fuel the Tesla rally. But short selling sending shares soaring is a symptom, not the cause of the rally. So what did it?

There are product launches like Cybertruck. There are also analyst reports comparing Tesla battery technology favorably to peers. Battery range, life and charge time are key variable for EV makers. And Daimler (DAI.Germany) also delayed the launch of a competing all-electric sport-utility vehicle this week.

Those, however, are secondary factors. Ultimately what catalyzed the rally is profit. Better than expected third quarter earnings sent share higher. Wall Street loves new products, but what it loves even more is money.

Tesla shares are now up more than 22% year to date, about equal to the Dow. What is different is how it got those gains. First it had to tumble, then it had to rally about 68% over the past three months. In other words, a rout turned into a rally. But for all that work, Tesla still hasn’t caught up to the S&P 500’s 29% gain.

That’s cold comfort for the short sellers.

Write to Al Root at allen.root@dowjones.com