The Big Short’s Michael Burry reveals a $ 530 million stake against Tesla

Michael Burry attends the New York premiere of “The Big Short” on November 23, 2015 at the Ziegfeld Theater in New York City.

Jim Spellman | WireImage | Getty Images

Famed investor Michael Burry announced a short position on Tesla worth more than half a billion in a filing for approval on Monday.

Burry, one of the first investors to benefit from the subprime mortgage crisis, was long playing for 800,100 Tesla shares or $ 534 million by the end of the first quarter, according to the filing with the US Securities and Exchange Commission.

Investors benefit from puts when the underlying security falls in price. As of March 31, Burry had 8,001 put contracts of unknown value, exercise price, or expiry as per filing.

Tesla’s shares fell more than 4% on Monday, increasing losses to more than 20% since the start of the month.

Burry, whose company is Scion Asset Management, made fame for betting against mortgage securities prior to the 2008 crisis. Burry has been featured in Michael Lewis’ book “The Big Short” and the subsequent Oscar winner of the same name.

Tesla had a tumultuous year in 2021, when sales in China fell in April and parts became scarce, hampering production in both the US and China.

Burry previously mentioned in a tweet he later deleted that Tesla’s reliance on regulatory credit to generate profits is a red flag.

With more automakers making their own battery electric vehicles, allegedly fewer need to purchase environmental credits from Tesla that they did to comply with environmental regulations.

In addition to his “Big Short”, Burry recently committed murder from a long GameStop position when the Reddit favorite made Wall Street history with its massive short squeeze.

In the first quarter of 2021, Tesla reported revenue of $ 518 million in regulatory loans, which the company generally receives from Elon Musk from government programs to support renewable energy. These were sold to other automakers, particularly FCA (now Stellantis), when they needed credit to offset their own carbon footprint.

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

Tesla has historically raised around $ 1.6 billion in regulatory energy loans, mostly zero-emission vehicle loans. This has helped Tesla report more than four consecutive quarters of profitability and qualify Elon Musk’s automaker for inclusion in the S&P 500 index.

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

Meanwhile, Elon Musk’s electric vehicle company is under regulatory scrutiny in China and the United States as high-profile vehicle accidents result in negative publicity and investigations by vehicle safety authorities in both countries.

Many believe CEO Elon Musk’s tweets about Bitcoin and Dogecoin also contributed to the volatility of Tesla stock. Musk has tens of millions of followers on Twitter.

A proponent of cryptocurrency in general, Musk announced last week that Tesla would indefinitely suspend accepting Bitcoin as a payment for cars, and said he was concerned about the “rapidly increasing use of fossil fuels in Bitcoin mining and mining.” Transactions “. Tesla announced earlier this year that it had purchased $ 1.5 billion worth of Bitcoin.

Tesla stock is down nearly 20% in 2021, after rising a whopping 740% in 2020.

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Correction: Michael Burry is long against 800,100 Tesla shares according to a report with the SEC. In an earlier version, the number of put contracts Burry bought was incorrectly stated.

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