Market Overview

Michael Burry Of 'The Big Short' Fame Confirms He's Shorting Tesla

Michael Burry Of 'The Big Short' Fame Confirms He's Shorting Tesla

Tesla Inc (NASDAQ: TSLA) shares dropped by 4% on Wednesday morning after Michael Burry, who was depicted by Christian Bale in 2015's "The Big Short," said he is shorting Tesla’s stock.

The Big Tesla Short: Burry is a former hedge fund manager who gained notoriety on Wall Street by predicting and profiting from the subprime mortgage crisis.

Back in September, Burry tweeted about Tesla’s lofty valuation and said the company relies on regulatory credit sales rather than auto sales to turn a profit.

On Tuesday, Burry confirmed on Twitter that he is also putting his money where his mouth is.

“So, @elonmusk, yes, I'm short $TSLA, but 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. If there are buyers, sell that #TeslaSouffle,” Burry tweeted Tuesday night.

Related Link: Tesla Short Sellers Have Taken A $4B Hit This Week

Musk’s Warnings: The souffle mention was a reference to a warning Musk issued this week to Tesla employees that Tesla’s stock price “will immediately get crushed like a soufflé under a sledgehammer” if Tesla doesn’t reach the profitability Wall Street has already priced into the stock.

Musk himself famously tweeted that “Tesla stock price is too high imo” back on May 1. Tesla’s stock price has roughly quadrupled in the seven months since that warning.

Benzinga’s Take: Tesla’s market cap has grown to be nearly the size of the entire legacy auto market despite the fact that Tesla represents only a small fraction of global auto sales, so it’s understandable why short sellers like Burry see an opportunity.

Burry is certainly not alone given that Tesla is the most-shorted stock in the world with total short interest of more than $22 billion, according to S3 Partners.

Photo courtesy of Tesla. 


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