Betting against one of the best-performing stocks of 2017 continues to hurt investors. Palo Alto-based Tesla, Inc (TSLA) is set to make its third consecutive winning week, but skeptics continue to double down on their bearish view. According to S3 Partners, a financial analytics firm, Tesla is now the largest-shorted stock in the U.S. equity market with short interest of $10.4 billion, but these bears are losing their shirts.

On Thursday, Tesla made its debut on the Fortune 500 list, ranking at number 383, and the good news continued Friday as its stock reached an all-time high, making short sellers sink deeper into their seats, much to the delight of CEO Elon Musk.

Year to date, the California-based electric car maker's stock is more than 65 percent, eclipsing the much talked about tech sector, which has been led by the FANG stocks. (See also: Why Tesla's Short Sellers Should Be Scared.)

For the week ending June 2, investors betting against Tesla have combined mark-to-market losses of $442 million, and for the second week running, it was the worst performing stock for short investors. Year to date, these losses have surpassed a whopping $5 billion.

Upgrades Hurting Shorts

The dagger for shorts last week was the news of another upgrade for Elon Musk's company on the back of the anticipated release of the Model 3, the mass-market electric car with which Tesla hopes to reach a wider audience. "From an automotive perspective, they're doing something no one else is able to do in the industry right now," James Albertine, senior analyst at Consumer Edge Research, told CNBC. (See also: Tesla Touches Record High.)

The upgrade comes a week after Schaffer's Research increased its price target for the electric car maker to $368 per share, saying that "a successful Model 3 launch will be an inflection point for the stock." Schaffer's added that it sees a case for Tesla stock hitting $500 per share.

The Bottom Line

Investors' infatuation with betting against Tesla continues, and the results aren't changing. Tesla shares rose 4.6 percent for the week of May 29 to June 2, continuing to drain money from short sellers' pockets. Additionally, things aren't looking any better for the current week. With its share price making a record it has now added a further 10.2 percent. (See also: What We Learned From Tesla's Shareholder Meeting.)

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