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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

#221

Post by Dah00n »

cduzz wrote: post #104
agloeregrets wrote: post #60

Earlier quoted context omitted.

> I think they will be very successful and become a big, dominant car maker. I'm not sure really. They keep throwing the entire company at insanely poorly leveraged bets with unfulfilled promises. (Cybertruck is on track to be delivered at a longer timeframe than any car tesla has ever made, they haven't even built the factory or unveiled the final design, same for Semi and Roadster, the new Model S was supposed to b…

They bet the company on the OG roadster, S, and 3. They don't need to now. The 3 and Y are quite successful and quite profitable. The Truck, Semi, Roadster, Leaf Blower, and such are all distractions that aren't worth building until they've managed to establish much larger battery volumes and aren't selling every Y and 3 they make months before they make them. What's their run rate? They've got a ton of cash and viab…

>The 3 and Y are quite successful and quite profitable.

I'm not sure I would define the sales as successful. Tesla would still be in the red if it wasn't for bitcoins and emission certificates they sell to other manufacturers (and this income will be gone in a few years). VW has barely started switching to EVs (ID.3 launched in July 2020) and yet they sold half as many EVs in 2020 as Tesla did, so maybe in that light it is kinda successful but at the same time VW sold almost ten million passenger cars. I predict that Tesla will be run over as a car company in a few years but will maybe become successful in investments.

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

#222

Post by greycol »

alex_young wrote: post #82
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,…

> If you have an actual short position, your potential losses are unlimited. Isn’t this a bit like saying that the potential upside of holding any stock is unlimited?

As a sister to my comment I'll also add you can effectively (though not legally) short more stock than you can buy. This is because to short you pay for a stock at the current market price with the promise to sell it back at the same price to the lender at a future date. If you then immediately sell the stock you can use that money to immediately pay to borrow another stock.

This means with the cash it takes to buy 1 share you can short as many shares as someone will lend which can multiply your loss to more than you have.

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

#223

Post by kickopotomus »

anyfoo wrote: post #172
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…

> Climate change and the EV transition are going to be tough. That has to be depressing their valuations some. Does it have to be? I can imagine that going from 100 years[1] of internal combustion engines to an entirely different type of drive train is going to be jarring, to say the least. But neither are EV completely new at this point, nor is a car just its drive train. Surely other comparable transitions have bee…

> But neither are EV completely new at this point, nor is a car just its drive train.

Exactly this. The EV drivetrain is also simpler than an ICE because a transmission is not needed[1]. I think the hardest part about vehicle manufacturing, which is the issue Tesla seems to run into repeatedly, is dependable mass production.

The major auto conglomerates have a lot of experience with cranking out massive volumes of quality vehicles. I don't think that re-tooling their production lines is going to be a problem. The primary issue with switching to EVs, which Tesla should capitalize on, will continue to be energy storage. Sourcing large quantities of batteries is tricky. Tesla had the right idea to just vertically integrate cell production and likely has a lot to gain by being the premier battery producer for the industry.

As an aside, hopefully the switch to EVs will help fund research for the next breakthrough in battery tech.

[1]: Application-dependent but most 2-axle consumer electric vehicles should not need a transmission

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

#224

Post by jbigelow76 »

The article starts out with bullet points, the third bullet point is this:

"Burry previously mentioned in a tweet, that Tesla’s reliance on regulatory credits to generate profits is also an impediment to the company’s long-term prospects"

When the Tesla stock price is tied ostensibly to some ephemeral aspect of Elon Musk, who gets his lulz from wreaking havoc on cryptocoin markets, does that kind of analysis really matter? I guess it doesn't until maybe, possibly, eventually it does?

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

#225

Post by OJFord »

wwweston wrote: post #122
paxys wrote: post #10

The only new reveal is the dollar figure. Burry has been very openly (and vocally) short on Tesla for a while now. He has been Tweeting a bunch about it since September last year. Tesla shares are up ~75% since those original Tweets. "The market can remain irrational longer than you can remain solvent" applies to both amateur traders and the most seasoned investor/genius alike.

Possibly worth noting that Burry is not the only Big Short figure to openly opine that Tesla's pricing seems way out of whack compared to its fundamentals. Steve Eisman (aka Mark Baum in the movie) was publicly short Tesla for a bit. I think he ended up closing out and losing money at some point with a rueful "It's very hard to short a stock that's a cult." It's possible both of them are wrong and Tesla has fundament…

Infamously Musk himself tweeted 'Tesla stock price too high imo' at around (can't get accurate atm) $150; it's currently at $573.

(Not that anything Musk tweets should be taken as anything other than.. an indication that one or all of TSLA, Bitcoin, or Dogecoin is about to move rapidly in one or both directions..!)

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

#227

Post by anyfoo »

nunez wrote: post #215
adflux wrote: post #204

Earlier quoted context omitted.

... 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 los…

> Even the SPEAKERS inside of the Model 3 and Y are designed by Tesla

In this particular case, is this really a good thing? Porsche's high end option for example is getting the speakers, amplifiers, tuned filters etc. from Burmester. Since Burmester specializes on this kind of thing, and the sound system (not the head unit and interface) are pretty much entirely distinct from the rest of the car, except that it has to be tuned to the environment it will exist in, that intuitively feels better conducive to focus areas and quality all around.

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

#228

Post by antoniuschan99 »

skystarman wrote: post #124
rubyn00bie wrote: post #98

Earlier quoted context omitted.

I'm not one to typically paraphrase billionaires, or think they're too connected to reality... but something I heard Mark Cuban say the other day was kind of "oh, shit that's true" moment for me. It was something to the affect of (I can't find the clip at the moment), "Back in 2010 we never thought we'd see a company hit $1 trillion. We never thought Apple or Amazon (et. al) would be able to continue their growth yea…

Amazon and Apple are WAY WAY WAY different companies than Tesla. Apple has dominated high-end smartphones for over a decade. Amazon has dominated eCommerce for that time and longer. Tesla dominates EV, which is a tiny portion of all auto sales. There is about to be huge competition in the EV space from legacy auto manufacturers and a car is not the same as a phone. There are plenty of cars with a WAY better driving e…

Sounds like a two pronged question. Will EVs dominate auto sales? And will Tesla dominate the EV market.

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

#229

Post by rsj_hn »

TeMPOraL wrote: post #203
underwater wrote: post #199

Earlier quoted context omitted.

iPhones are not a commodity product. At the moment Teslas are. How will Tesla convince consumers that their car, with a high profit margin, is worth it over a mature EV vehicle from Ford, BMW, etc.

As of right now, the most mature EVs are Teslas. They've established themselves as the gold standard of EVs. If anything, their main hurdle is still convincing consumers to buy EVs instead of ICE cars.

I would say there are three main hurdles:

* Convincing the public to spend 50-70K on a car

* Convincing the public to buy an EV

* Convincing the public that Tesla can be trusted for long term repair costs/reliability

Right now Tesla is squarely in the luxury vehicle market, competing against Lexus/BMW/Mercedes, rather than against Mazda/Honda/Kia, and it's a new automaker, so we don't have good long term reliability or serviceability data, nor do we have good info on how long the batteries will last, or what costs someone buying a 10 year old model Y will face.

These questions will resolve themselves with time, but whether they will all resolve in Tesla's favor is another matter.

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

#230

Post by tasssko »

TechBro8615 wrote: post #200
nunez wrote: post #194

Earlier quoted context omitted.

There are other things to consider too: - Tesla is achieving vertical integration to a degree no other mainstream auto OEM has achieved. The only other example of vertical integration to the extreme that I can think of is Koeneigsegg, and they are _very_ niche. This only helps Tesla make cheaper cars faster while collecting more margin per car. - Tesla's FSD marketing is highly contentious, but they are the only auto…

> 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.

No chance with that comparison. Per unit economics are different, marginal utility is different. Total cost of ownership is different. Pandemic has wreaked havoc for automakers and... for WFH Tesla owners made the 1k monthly car payment look unnecessary while most iPhone users upgraded phones.
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