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

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

#211

Post by m101 » Mon, May 17, 2021, 9:38 PM UTC

keltex wrote: post #94

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,…

Actually we have no idea if he is short TSLA. The fact that he has purchased TSLA put options is from the SEC Form 13F which he's required to file quarterly. Short positions (for some reason) are not on the 13F. So he could be long TSLA and have purchased put options as a hedge or any number of other strategies.

Only mentions puts:

https://www.sec.gov/Archives/edgar/data/1649339/000156761921...

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

#212

Post by Dah00n » Mon, May 17, 2021, 9:39 PM UTC

Xenoamorphous wrote: post #129

Hamuko wrote: post #85

Earlier quoted context omitted.

Ferrari is way more exclusive than Tesla. I would rather imagine Tesla becoming a Jaguar - kinda exclusive but not that rare.

Indeed. Probably Tesla made more cars last year than Ferrari in all its history. Porsche is perhaps a better comparison.

Not really comparable but Porsche sold approximately half as many cars last year as Tesla. Shows how small Tesla actually is (approx. 500.000 cars). Ferrari sold ~10.000.

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

#213

Post by yepthatsreality » Mon, May 17, 2021, 9:40 PM UTC

6gvONxR4sf7o wrote: post #161

elliekelly wrote: post #106

Earlier quoted context omitted.

When you buy a “put” you are entering into a contract that gives you the right, but not the obligation, to sell X number of shares of Acme Class A common stock for $Y/share on (or sometimes within) a specific date. So let’s say Acme Class A is currently trading at $50/share. If you think, for whatever reason, Acme Class A common stock will be trading at $1 next week you might want to buy a put that lets you sell 100,…

Great explanation, thanks. Do you happen to know far out these contract dates tend to be? Is it standardized, or a thing you negotiate (at normal levels and at giant $0.5B levels like in the article)?

You can sign up for a stock trading app. Make 0 trades and find out all this information.

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

#214

Post by roland35 » Mon, May 17, 2021, 9:41 PM UTC

MrPowers wrote: post #174

Tesla can grow and sell tons of cars and the stock price might still fall. Cisco Systems is a great example of a fantastically profitable business with a stock price that's still below peak. It's an incredibly successful company that makes more than $10 billion in profit every year. The stock price is still below the March 2000 peak. If Tesla "only" made $20 billion in profit a year, the market would probably conside…

I was curious and looked it up- Cisco is indeed still off of its peak stock price $52 vs $77 in 3/2000... But if you reinvested their dividends you would be a little closer! Just don't adjust for inflation!

$10k invested on 1/2000 would have peaked at $14k in March, and now would be worth $9.5k

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

#215

Post by nunez » Mon, May 17, 2021, 9:42 PM UTC

adflux wrote: post #204

TechBro8615 wrote: post #200

Earlier quoted context omitted.

> Tesla is achieving vertical integration to a degree no other mainstream auto OEM has achieved This is crucial. It’s also why Tesla vs automakers reminds me of Apple iPhone vs existing cell phones. Sure making an electric car is “not that hard,” but because the carmakers didn’t take Tesla seriously for 10+ years, they now have a lot of catching up to do.

... isn't iPhone production outsourced? That's the opposite of vertical integration

Outsourced using in-house designs, and, in Tesla's case, in-house assembly lines and factories.

Even the SPEAKERS inside of the Model 3 and Y are designed by Tesla (and manufactured by a vendor).

That's the big difference. It's also the reason why legacy manufacturers will struggle to effectively respond to Tesla. It takes a LOT of money and egos to upend generations of culture (and accept hundreds of millions in losses in the process)

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

#216

Post by bob1029 » Mon, May 17, 2021, 9:43 PM UTC

MrPowers wrote: post #174

Tesla can grow and sell tons of cars and the stock price might still fall. Cisco Systems is a great example of a fantastically profitable business with a stock price that's still below peak. It's an incredibly successful company that makes more than $10 billion in profit every year. The stock price is still below the March 2000 peak. If Tesla "only" made $20 billion in profit a year, the market would probably conside…

>Hard to assess Burry's position without knowing the expiration date and strike price of his puts.

Even if you knew the exact pieces of paper that he held today, that would tell you nothing about his overall plan. Very few options strategies involve a one-time purchase of contracts in hopes that the dates & prices on those will hold until conclusion. For something this big, you would continue to acquire (and sell) contracts at a range of strike prices & expiration dates until the overall play is concluded.

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

#217

Post by malshe » Mon, May 17, 2021, 9:44 PM UTC

cosmojg wrote: post #77

This guy has been wrong a lot recently. Admittedly, he was right once and in a big way. However, remember that success is mostly luck, and this is orders of magnitude truer for success in public markets. Outside of entertainment, it isn't worth the time to follow celebrity investors.

What major trades he got wrong recently?

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

#218

Post by anyfoo » Mon, May 17, 2021, 9:45 PM UTC

socialist_coder wrote: post #147

6gvONxR4sf7o wrote: post #65

Earlier quoted context omitted.

Can someone ELI5 how this works to those of us who only buy and sell things? I've looked up the definitions, but I'm curious about the purposes and practical risk/reward scenarios of this particular sort of bet.

A 5 year cannot understand puts/calls =\

Just like "ask me anything" does not necessarily mean anything, it's an expression at this point.

The ELI5 subreddit describes it in its rules as such:

"Rule 4: Explain for Laypeople

As mentioned in the mission statement, ELI5 is not meant for literal 5-year-olds. Your explanation should be appropriate for laypeople. That is, people who are not professionals in that area. For example, a question about rocket science should be understandable by people who are not rocket scientists."

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

#219

Post by aaronblohowiak » Mon, May 17, 2021, 9:45 PM UTC

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?

the limit is a trigger for sale, not a guaranteed price. for small volumes (retail) transactions, it usually doesnt matter, but if you are talking hundreds of millions of dollars worth of shares, your activity aloe will move the price.

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

#220

Post by TeMPOraL » Mon, May 17, 2021, 9:47 PM UTC

elliekelly wrote: post #106

6gvONxR4sf7o wrote: post #65

Earlier quoted context omitted.

Can someone ELI5 how this works to those of us who only buy and sell things? I've looked up the definitions, but I'm curious about the purposes and practical risk/reward scenarios of this particular sort of bet.

When you buy a “put” you are entering into a contract that gives you the right, but not the obligation, to sell X number of shares of Acme Class A common stock for $Y/share on (or sometimes within) a specific date. So let’s say Acme Class A is currently trading at $50/share. If you think, for whatever reason, Acme Class A common stock will be trading at $1 next week you might want to buy a put that lets you sell 100,…

So, if I understand it correctly, buying "puts" can be a cheap way to generate publicity around some stocks? That is, I could cheaply buy puts for half a billion dollars' worth of TSLA that are so ridiculous it's obvious I won't be exercising them, and this would give me a "500M bet against Tesla" headline?