Dr. Michael Burry Reveals Massive Bet Against Tesla
Burry has disclosed a short position against Tesla Inc
Dr. Michael Burry, the genius behind the Big Short, has been very vocal about Tesla. This time, he has revealed a massive bet against the carmaker. Previously, he had cited the company’s ridiculous price and compared it to the housing bubble. He also encouraged people to sell the Teslasouffle.
Tesla
A filing to the US Securities and Exchange Commission has confirmed that Scion Asset Management, which is founded by Dr. Michael Burry, holds bearish put options on about 800,100 shares that are valued at USD 534 (About AUD 680) million as of March 31, 2021.
Tesla shares have declined by 4 per cent at the start of the week. As a result, the losses are about 20 per cent, and the decline is from the peak of 35 per cent. The put options of Scion Asset Management let them sell the shares at a specific “strike price” before a predetermined expiration date. In case the price falls lower than the strike price before the expiration of the put options, Burry and his company can sell them for a profit. At this point, everything from the expiry date to strike value and even the potential profit are not revealed.
Dr. Burry has done well in the recent past. It jumped onboard the GameStop short squeeze just a few months before the hysteria and made a tidy profit pre-cash. Tesla shares have also seen immense growth lately. They were trading about USD 95 About AUD 121.76) a share at the beginning of the last year. But at the beginning of this year, it rose to USD 880 (AUD 1127.86) per share. This is what helped Tesla boss Elon Musk be the richest man.
Burry has been sceptical of Tesla’s big boost for a while now. In February, he tweeted, “my last Big Short got bigger and Bigger and BIGGER.” He was obviously talking about the rise in market capitalisation of the company. He also wrote, “Enjoy it while it lasts,” and predicted that Tesla stocks might go down by 90 per cent this year.
It is yet to be seen whether Tesla will react to the latest happenings or not. The company had not shared anything at the time of publishing. The reaction might be slow due to the fact that Elon Musk seems busy talking about crypto these days. After all, his one-word tweet does have the power to send the cryptocurrency market tumbling.
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