Tesla share price dips, Burry reveals $500m short on the automaker
The electric automaker’s stock continues to fall and Big Short investor Michael Burry reveals sizeable bet against the company.
Tesla Share Price ↓
Not all regulatory filings are boring.
Michael Burry, of Big Short fame, on Monday revealed that his firm – Scion Asset Management – had a $534 million short on Tesla (ticker: TSLA).
Quarterly report filings with the Securities Exchange Commission (SEC) showed that Burry’s firm held puts on 800,100 shares of Tesla, with the total notional value of those options contracts standing at $534 million – at the close of the quarter.
It should be noted that the filings don’t show how much Burry paid for these puts nor their expiration date – merely the total notional value of the options contracts at the time of the filing. An investor generally makes money on put options when the price of a security falls in value.
Looking at some of Burry’s other sizeable positions revealed in the SEC filing, his firm has/ had significant long exposure to both Facebook (ticker: FB) and Alphabet (ticker: GOOG) – through the use of call options.
Nothing New Here
Burry has been critical of Tesla for sometime now. In December 2020, he compared the electric automaker to Radio Corporation of America (RCA) – an infamous technology stock of the 1930s which saw its share price rise spectacularly in value before crashing in an equally spectacular fashion.
And in two now deleted tweets, also back in December, Burry revealed that he had initiated a short position on Tesla, and, in a tweet aimed directly at Tesla CEO Elon Musk, said:
‘Some free advice for a good guy … Seriously, issue 25-50% of your shares at the current ridiculous price. That’s not dilution. You’d be cementing permanence and untold optionality.’
Burry also added, quite ominously:
‘100 year flood coming, and for similar reasons? $TSLA could be the next RCA! Having created NBC and RCA, Sarnoff "could rightly boast that he had introduced both radio and television as mass media."’
To be sure, since January the Tesla share price has fallen steeply, dropping 20.96% year-to-date and last trading at $576 per share, well off its 52-week high of $900.40 per share.
In other news, California’s Department of Motor Vehicles (DMV) revealed it had launched a review into Tesla's claims around its Full Self Driving (FSD) capabilities.
Tesla’s FSD capabilities have made headlines over the last year, with a variety of videos appearing online of Tesla drivers misusing the self-driving system. This is despite Tesla clearly stating on its website that its Full Self Driving system does not actually make a car fully autonomous.
‘All Tesla cars require active driver supervision and are not autonomous.’
Trade stocks like Tesla long and short with IG today
Create an IG account or log in to your existing account to get started now
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.