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Michael Burry of ‘The Big Short’ reveals a $530M bet against Tesla

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Re: Michael Burry of ‘The Big Short’ reveals a $530M bet against Tesla

#181

Post by thaumasiotes »

cl0ckt0wer wrote: post #166
treis wrote: post #132

Earlier quoted context omitted.

>Ford's market cap is $45B, but because it has $120B in debt which means it is worth $120B to it's bondholders and $45B to stockholders for a total enterprise value of $160B. I believe that's a bit misleading because it includes Ford's lending arm. They borrow money and lend it out at higher rates. So lots of Ford debt is lent back out to consumers at profit.

I thought money that was owed to you was counted as an asset, not a debt?

If I borrow $300,000 at 2% interest and lend it to you at 5% interest, I have an asset based on my loan to you and a liability based on my debt to whoever loaned me the same amount.

They don't net out -- if you default, my asset will disappear without taking the liability with it. But it might be strange to say that I'm worth $300,000 based on my debt, when the whole concept of that debt is that it's theoretically guaranteed by, and related to, that asset. This combined situation does not suggest that I'm personally worth $300,000; I'm earning the difference in interest, and my debt to my creditor is based mostly off of your net worth, not my net worth.

Re: Michael Burry of ‘The Big Short’ reveals a $530M bet against Tesla

#183

Post by damon_c »

ac29 wrote: post #144
LeifCarrotson wrote: post #115

Earlier quoted context omitted.

No, and this distinction is critical to understanding the risk that short sellers take. To use a slightly anomalous stock which hasn't split as an easy example, if you had shorted $BRK in 1980 when the price was $300, the potential upside was just 100%: In your best outcome, they go bankrupt and the most you earn is $300. Unfortunately for you, Berkshire Hathaway shares are now worth $430,000, so your $300 or 100% up…

The point is, you can't lose an "unlimited" amount on a short, unless the underlying stock goes up by an "unlimited" amount.

Is there a max limit on how much a stock can go up?

Re: Michael Burry of ‘The Big Short’ reveals a $530M bet against Tesla

#184

Post by boringg »

ralph84 wrote: post #46
boringg wrote: post #28

Earlier quoted context omitted.

Actually, this will likely be unpopular here, short sellers do have an important role in the economy. In the case of GME and more recently short sellers have been making money on crushing viable businesses (which they should not be allowed) but historically they expose fraudulent companies. I don't like companies getting pushed out of business by big short sellers or making money but just publishing bad research unde…

Policing fraud is the role of the government. Restitution for fraud should go to the defrauded, not speculators.

Don't disagree with this - however when the government fails its responsibilities someone else will have to step in.

Re: Michael Burry of ‘The Big Short’ reveals a $530M bet against Tesla

#185

Post by Robotbeat »

karolist wrote: post #97
kikokikokiko wrote: post #58

Earlier quoted context omitted.

Take a look at the "Common Sense Skeptic" youtube channel. Tesla's purchase of Solar City is a scandal on itself, it was never a play on entering the solar roof business. It was just a bail out using Tesla's shareholders money to save Musks and his business partners (which were Musks cousins btw) investments. This channel also destroys all the hype surrounding Starship, it's a joy to watch.

Everyone should watch this video, more so people who refer to other car companies as "legacy automakers". Another good channel to remove the veil is Thunderf00t.

Thunderf00t’s criticisms ring pretty hollow, TBH.

Criticism of Musk is one thing. The whole “remove the veil” sorta “red-pill” type language, criticism that Musk has never done anything useful or noteworthy other than scamming falls apart for anyone who has been paying attention for more than a couple years. Electric cars pre-Tesla were a joke. Tesla had enormous influence. And SpaceX (which was founded by Musk, who runs it as chief engineer) launched more mass to orbit last year than the rest of the world combined, a remarkable turnaround from the failure of US companies to be commercially competitive.

There are things worth being skeptical of. “Full self-driving,” for instance or even, sure, the Solar City deal (although arguable). Perma-skeptics like Thunderf00t, though, never acknowledge this kind of stuff.

Re: Michael Burry of ‘The Big Short’ reveals a $530M bet against Tesla

#186

Post by mypalmike »

Kiro wrote: post #170
incrudible wrote: post #61

Earlier quoted context omitted.

> I won't short them tough, in the end I'm just a dog on the internet and have no clue how stonks work. To be clear, Michael Burry didn't short Tesla, he bought put options, which gives him the right but not the obligation to sell Tesla stock for a certain price, on a certain date. If the bet works against him, his options expire worthless. This puts an upper limit on his losses. If you have an actual short position,…

Why can't you have a limit on short positions and just withdraw when it reaches it?

You can of course. There's a risk the the stock will move quickly through your limit and you stop out somewhere beyond it. This is unbounded in a sense but not generally problematic on a highly traded stock like Tesla.

Re: Michael Burry of ‘The Big Short’ reveals a $530M bet against Tesla

#187

Post by nbardy »

There is so many people claiming a bubble on Tesla comparing it to a car company and pointing to fundamentals. Tesla is a high growth technology company. Their valuation is all about what they could become.

The most talented young people all want to work for Tesla. They have made tons of progress and they have the culture and plans to continue to innovate. None of the old car companies can attract the talent the way Tesla does. They only need to capture the market on one of their big bets to be a runaway tech stock like FAANG.

They've got electric cars, batteries(Powerwall), Solar roofs, cross country supercharger stations, and full self driving. Any one of these things could fuel a company by itself.

Re: Michael Burry of ‘The Big Short’ reveals a $530M bet against Tesla

#188

Post by Seanambers »

victor106 wrote: post #176
bryanlarsen wrote: post #118

Earlier quoted context omitted.

The statement "Tesla market value is the same as everybody else put together" means either Tesla is expensive or everybody else is cheap or the statement is inaccurate. It's a little bit of all three. All other car companies are primarily debt financed rather than equity financed. Ford's market cap is $45B, but because it has $120B in debt which means it is worth $120B to it's bondholders and $45B to stockholders for…

> Tesla also has a really good profit margin. Their net profit margin is barely 2%.[1] I would not call it good by any stretch. By contrast Apple has a 25% net margin[2]. That is what I call good. [1] https://www.macrotrends.net/stocks/charts/TSLA/tesla/profit-... [2] https://www.macrotrends.net/stocks/charts/AAPL/apple/profit-...

No, that is extraordinary. Are you really comparing a software and IT company with a car manufacturer?

Re: Michael Burry of ‘The Big Short’ reveals a $530M bet against Tesla

#190

Post by rubiquity »

atatatat wrote: post #41
awb wrote: post #12

It sounds like the short thesis is centered around Tesla’s revenue coming in large part from regulatory credits. If you take out credits and crypto, they look like most other car manufacturers, struggling to make a profit. > As more automakers produce battery electric vehicles of their own, ostensibly fewer will need to purchase environmental regulatory credits from Tesla, which they have done in order to become comp…

> It sounds like the short thesis is centered around Tesla’s revenue coming in large part from regulatory credits. Hopefully not (for Burry), because where are those going?

Tesla sells its regulatory credits to other auto makers. Other auto makers are becoming more environmentally friendly and are weening off buying credits from Tesla.
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