‘The Big Short’ Michael Burry reveals $ 530 million bet against Tesla

Famed investor Michael Burry revealed in a regulatory filing on Monday a short position against Tesla worth more than $ 500 million.

Burry, one of the first investors to call in and profit from the subprime crisis, has long options against 800,100 Tesla shares or $ 534 million at the end of the first quarter, according to the filing with the Securities and Exchange Commission. from USA

Investors benefit from put options when the underlying securities fall in price. As of March 31, Burry had 8,001 sales contracts, with unknown value, exercise price or expiration, according to the filing.

Tesla shares fell more than 4% on Monday, bringing its losses for the month to date to nearly 20%.

Burry, whose firm is Scion Asset Management, rose to fame betting against mortgage securities before the 2008 crash. Burry was depicted in Michael Lewis’s book “The Big Short” and in the subsequent Oscar-winning film of the same name. .

Tesla has had a turbulent 2021 amid falling sales in China in April and parts shortages that have impeded production in both the United States and China.

Burry previously mentioned in a tweet, which he later deleted, that Tesla’s reliance on regulatory credits for profit is a red flag.

As more automakers produce their own battery electric vehicles, apparently fewer will need to purchase environmental regulatory credits from Tesla, which they have done to comply with environmental regulations.

In addition to his “Big Short,” Burry made a killing from a long position on GameStop recently, as the Reddit favorite made Wall Street history with his huge short squeeze.

In the first quarter of 2021, Tesla reported $ 518 million in regulatory loan sales, which Elon Musk’s company typically receives from government programs to support renewable energy. It has sold them to other automakers, notably FCA (now Stellantis) when they needed credits to offset their own carbon footprint.

In the fourth quarter of 2020, Tesla’s $ 270 million in net income was enabled by the sale of $ 401 million in regulatory credits to other automakers.

Tesla historically racked up about $ 1.6 billion in energy regulatory credits, primarily zero-emission vehicle credits, helping Tesla report more than four consecutive quarters of profitability, qualifying Elon Musk’s automaker for addition to the S&P 500 index.

Tesla is currently behind in the production and delivery of its updated versions of its high-end sedan and SUV, the Model S and X. And is behind in commercial production of its custom-designed “4680” battery cells for use in upcoming vehicles, including Cybertruck and Tesla Semi.

Meanwhile, Elon Musk’s electric vehicle business faces regulatory scrutiny in China and the US with high-profile vehicle crashes generating negative publicity and investigations by vehicle safety authorities in both nations.

Many believe that CEO Elon Musk’s tweets about bitcoin and dogecoin have also contributed to the volatility of Tesla shares. Musk has tens of millions of followers on Twitter.

Musk, a general cryptocurrency advocate, announced last week that Tesla would indefinitely suspend accepting bitcoin as payment for cars, saying he was concerned about the “increasing use of fossil fuels for Bitcoin mining and transactions.” Tesla revealed earlier this year that it bought $ 1.5 billion in bitcoin.

Tesla shares have fallen nearly 20% in 2021 after rising a whopping 740% in 2020.

Correction: Michael Burry has a long bet against 800,100 Tesla shares, according to a filing with the SEC. An earlier version misstated the number of sales contracts Burry purchased.