The past month has been a volatile one for Tesla, which has seen its shares plummet by nearly 20% despite posting record first quarter profits (all thanks to its sale of regulatory credits and bitcoin). It also appears that the price of Tesla has been strongly correlated with CEO Elon Musk’s mood of the day towards bitcoin and dogecoin, which are relayed to his tens of millions of followers via twitter.
Now, however, it appears that Tesla’s eccentric behaviour in the stock market has substantiated the bearish view of famed investor Michael Burry, who made millions of dollars when he bet against mortgage securities leading up to the 2008 financial crisis. Burry was portrayed in Michael Lewis’ book “The Big Short,” which was later made into a movie of the same name starring Christian Bale.
According to a 13F regulatory filing with the SEC, Burry has shorted Tesla to the tune of over half a billion. The famed investor has purchased puts against 800,100 Tesla shares, which have a notional equivalent value of just over $530 million. This marks not only Burry’s largest position, but it also nearly equates to 40% of his total portfolio in nominal terms. However, the price of the puts in the money remains unknown, or how much Burry’s hedge fund paid for the positions.
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Burry’s bearish view on Tesla has come to light previously, when in a since-deleted tweet he pointed out that the EV maker’s strong reliance on regulatory credits to generate profit is worrisome. With an increasing number of automakers building their own electric vehicles, fewer of them will need to purchase environmental regulatory credits from Tesla. In the first quarter of 2021, Tesla reported it had sold $518 million worth of regulatory credits and $271 million in bitcoin, but aside from that, the EV maker was unable to generate profit from the sale of its electric vehicles.
However, putting Burry’s massive bearish bet against Tesla aside, what is perhaps even more significant is Burry’s compelling bet on a spike in inflation. Recall, back in February, Burry warned that a surge in Weimar hyperinflation is slated for the us economy, and now he is anticipating Treasury yields to go soaring.
Information for this briefing was found via the SEC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
