The Large Brief’s Michael Burry reveals a $ 530 million stake in opposition to 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

Famous 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, has long puts on 800,100 Tesla shares, or $ 534 million, by the end of the first quarter, according to 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, bringing losses to nearly 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 was 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.

As automakers grow their own battery electric vehicles, allegedly fewer have to purchase environmental credits from Tesla than they did to comply with environmental regulations.

Alongside his “Big Short”, Burry recently killed 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 $ 518 million in revenue from 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 net income of $ 270 million was made possible by the sale of regulatory loans of $ 401 million to other automakers.

Tesla has historically raised around $ 1.6 billion in regulatory energy loans, mostly zero-emission vehicle loans. This allowed the company to show more than four consecutive quarters of profitability and qualify the automaker for inclusion in the S&P 500 index.

Tesla is currently delaying the production and shipping of its updated versions of its high-end sedan and SUV, the 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, Musk’s electric vehicle company is under regulatory scrutiny in China and the United States, with high-profile vehicle accidents leading to negative publicity and investigations by vehicle safety authorities in both countries.

Many believe that CEO 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.” for transactions “. Tesla announced earlier this year that it had purchased $ 1.5 billion worth of Bitcoin.

Tesla shares are 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.