The firm run by Michael Burry, the investor played by Christian Bale in 2015’s “The Big Short”, has taken a short position against Tesla.
According to Reuters, last Monday Scion Asset Management said in a regulatory filing that it had put options on 800,100 Tesla shares as of the end of Q1, 2021. The automaker’s share was valued at $667,93 at that time, putting the value of the firm’s position at around $534 million.
A short position is essentially a bet that share prices will fall and short-sellers are often seen as invested in a company’s failure. The position is very risky, though, because the potential for losses is almost limitless.
Read Also: California’s DMV Investigating Tesla Over Potentially Misleading Full-Self Driving Option
Tesla is increasingly being seen as overvalued, giving Scion Asset Management’s position credibility. Prices jumped more than 700 percent to a high of $883 per share in January. Since then they have slowly fallen, though, and on Monday, they were worth $576 each.
Last year, Burry predicted that Tesla’s sale of regulatory credits would dwindle in the coming year. That has come to pass as Stellantis announced earlier this month that it would no longer need to buy credits from Tesla, taking away one of the automaker’s sizeable sources of income.
The company is also beset on all sides by traditional automakers who are increasingly investing in electric vehicles. Although it still has a cache that is undeniable, investigations into its technology propelled by highly publicized accidents and Musk’s waffling with cryptocurrencies could all potentially damage the company.
This public short position could also harm investments’ view of Tesla. Michael Burry famously bet against the housing industry and predicted the collapse that put the entire economy into shock in 2008.
