Michael Burry bets half a billion dollars worth of Tesla stock on sale - Kakiforex.com - Financial Market Media No. 1 in the World Michael Burry bets half a billion dollars worth of Tesla stock on sale Michael Burry bets half a billion dollars worth of Tesla stock on sale
InstaForex

May 20, 2021

Michael Burry bets half a billion dollars worth of Tesla stock on sale

 Tesla remains the most paradoxical and unusual company listed on the US stock market. The company's shares rose more than 8 times during 2020, despite the fact that no comparable increases in sales of electric cars or other changes within the company occurred during this period. It is true that the company increased production, opened new factories, and increased sales. However, a 10-20% increase in sales should not lead to an 8x increase in the share price! Stocks rose in price in the style of bitcoin—it is because they were bought by an investor. These were bought for the same reasons as Bitcoin. The US government poured trillions of dollars into its own economy, so all the excess money was deposited in the cryptocurrency and stock markets. However, any fairy tale sooner or later comes to an end. Elon Musk has recently caused the ire of the whole world due to uncontrolled statements regarding bitcoin and other cryptocurrencies. He is called a market manipulator, and many investors refuse from buying Tesla shares, believing that they are highly overvalued. In addition, Tesla refused to sell electric cars for bitcoins, although just a couple of months ago it made the opposite decision. Such instability and short-sightedness in decision-making also puts pressure on the company's shares.


For example, one of the most famous investors in the world, Michael Burry, who previously predicted the crisis of 2008, believes that the growth of the capitalization of Tesla will not last long. In his opinion, the shares are already highly overvalued, and are completely not comparable to the shares of other automakers that also produce electric cars. He disclosed that he has put options on 800,000 Tesla shares worth more than $500 million. Put options are a type of derivative that allows you to earn money by lowering the value of an asset. Burry notes that Tesla will make less profit in the future by selling environmental regulatory credits, as other automakers ramp up production of environmentally friendly cars.


In technical terms, Tesla shares have dropped by $200 over the past 5 weeks and are now trading around the level of $577 per share. It is noteworthy that bitcoin has also fallen in price over the past 5 weeks, having lost about 35% of its value. Thus, there is clearly a correlation between Tesla shares and the Bitcoin price. This correlation runs through Elon Musk, who may be dear to his statements regarding Bitcoin and recent decisions at the company level. The immediate target for the fall of shares is the level of $544.42. All the lines of the Ichimoku indicator are directed downward at this time, so there are no questions about the trend now.