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

#251

Post by mxschumacher » Mon, May 17, 2021, 10:40 PM UTC

samatman wrote: post #201

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…

If Tesla carves out an Apple-sized share of a market where all new passenger autos are EVs, its valuation is reasonable. That's not an impossible outcome. I have no bets in this market, I'm strictly wait-and-see. It's worth pointing out that Apple's valuation before it carved out that "Apple-sized share" was much, much lower.

I'm having deep trouble trying to appreciate this argument, apple has deep network effects it has build an ecosystem, a platform. If I want to use iOS I have to buy Apple hardware, if I want to offer a mobile app I have to go through the app store. Nowhere does Tesla exhibit similiar properties, instead it competes in the hyper-competitive, high capex and low margin car business. Trying to beat Toyota at scale manufacturing is a very tall order

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

#252

Post by mxschumacher » Mon, May 17, 2021, 10:41 PM UTC

incrudible wrote: post #61

turbinerneiter wrote: post #15

Teslas price is just too high. I think they will be very successful and become a big, dominant car maker. But their price only makes sense if they end up being the only car maker left. That's not realistic. Building an electric car is not that hard, especially if Tesla already did all the hard lifting for you. For a while I was thinking that the battery play - becoming the number 1 battery supplier - will justify the…

> 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,…

There are many ways to short a stock, buying puts is one of them

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

#253

Post by 6gvONxR4sf7o » Mon, May 17, 2021, 10:58 PM UTC

yepthatsreality wrote: post #213

6gvONxR4sf7o wrote: post #161

Earlier quoted context omitted.

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.

I asked because I figured a trading app would give me a couple standard options (pun intended), but I'm curious about how this works for professionals. I figured it would be clear that I'm not asking whether you typically negotiate a $0.5B contract on robinhood.

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

#254

Post by MarkMc » Mon, May 17, 2021, 11:00 PM UTC

rubyn00bie wrote: post #98

turbinerneiter wrote: post #15

Teslas price is just too high. I think they will be very successful and become a big, dominant car maker. But their price only makes sense if they end up being the only car maker left. That's not realistic. Building an electric car is not that hard, especially if Tesla already did all the hard lifting for you. For a while I was thinking that the battery play - becoming the number 1 battery supplier - will justify the…

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…

> EVs are eventually going to cost way less to make than typical ICE (internal combustion engine) cars, and per unit that savings translates into a lot of fucking profit

Not in a competitive market which is where Tesla may be in 10 or 15 years, especially if everyone commutes by robo-taxi.

When Berkshire Hathaway was still a textile company the operating manager excitedly told Warren Buffett about a new loom machine being developed which was far more efficient. Buffett's responded that if the report was true he would likely close the business, because he cost savings would flow to the customer and the long-term return on the new capital investment would be low.

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

#255

Post by jmcqk6 » Mon, May 17, 2021, 11:12 PM UTC

tenpies wrote: post #72

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.

Oh you're completely missing the nuisance of what we just learned. Sure, he's been talking short since September, but the size of his position has grown considerably since then - almost certainly timing the S&P inclusion (sorry index investors, you quite literally paid the top price for a stock that has lost almost 45% since you bought it). He's almost certainly made a killing with his position and the beauty is we d…

>If he has the position from the filings - just today, when Tesla is down $22 - he has made over $16 million dollars in unrealized gains.

We don't have enough information to determine that. We would need to know strikes and expirations to even start to figure that out. AFAIK, we don't have either.

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

#256

Post by giobox » Mon, May 17, 2021, 11:14 PM UTC

anyfoo wrote: post #227

nunez wrote: post #215

Earlier quoted context omitted.

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 t…

While I’ve no doubt the speakers in your Porsche example sound great, the German car industry LOVES to upsell a customer to a speaker with a designer label on it - every single brand in the VW group does it, BMW, Mercedes…

I think the German manufacturers just understand their customers vanity, sadly, where being seen to have the brand matters. The label is practically more important than the sound beyond a certain point.

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

#257

Post by OneLessThing » Mon, May 17, 2021, 11:16 PM UTC

belval wrote: post #236

touisteur wrote: post #208

Earlier quoted context omitted.

Apple isn't a hardware company anymore?

If you look at their where their 25% profit margins come from then no, they aren't a hardware company. If Apple tried to make a car tomorrow they would not have 25% margins on it. From a market valuation standpoint, this is also why Apple valuation is 44 times higher than Ford's.

I looked into it[1], their net profit margins were 32% last quarter. 36% gross margins on hardware products (iPhone, Mac, etc) and 70% gross margins on services (AppleCare, Cloud Services, etc.). However services only comprise 19% of their sales, the other 81% of their sales are from hardware products (mostly iPhones). Their service sales seem to all stem from them making the hardware. For example the AppStore walled garden is protected by the hardware, AppleCare services their hardware, and Cloud services are integrated into their devices, etc. It may be possible in the future for apple to get high margin "service" sales from an Apple Car App Store, buying games and movies for your self driving car, for example. Regardless I'd definitely consider Apple a hardware company.

[1] https://www.apple.com/newsroom/pdfs/FY21_Q2_Consolidated_Fin...

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

#258

Post by [deleted] » Mon, May 17, 2021, 11:33 PM UTC

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…

[deleted]

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

#259

Post by cduzz » Mon, May 17, 2021, 11:44 PM UTC

agloeregrets wrote: post #158

cduzz wrote: post #104

Earlier quoted context omitted.

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…

They already are betting the company on a bunch of things. Their cash on hand is almost entirely debt. Additionally, they are merely meeting demand on Model 3 sales right now, don't forget that they spun down production rate on the 3/Y and are slowing China production as well. US charging networks are growing at a faster rate than Superchargers as well, so in roughly 2 years you are looking at a market where Electrif…

Their debt [1] doesn't seem outrageous especially when they recently converted some of their over-inflated stock into more cash-on-hand. That article says they've got $19b in cash-ish assets, 11.7B in debt 2 of which is going to be coming due soon.

Regarding 3rd party fast-charging networks; look at https://abetterrouteplanner.com/ and a/b test a tesla vs non-tesla going from where you might want to be to where you might want to go.

For the most part it is practical to use a tesla as a normal car including long-distance trips, the same isn't nearly as true for other EVs. Plus, a modern tesla can use 3rd party charging networks.

As far as truck / semi / etc goes -- I suspect tesla simply doesn't have the battery capacity to make those new products and the existing product line.

Tesla's a battery manufacturing concern looking for the highest profit-margin products to wrap around batteries. As they've expanded battery capacity they've expanded from unreliable sports car to luxobarge / weird SUV to BMW 3 / Audi A4 competitor and now have expanded to include competitors to the Q5.

Lastly, when looking at the market cap of Tesla vs some other car company, keep in mind that tesla includes a global dealership network while other car manufacturing companies outsource the dealership side of the business to others. What's the global value of ford + all ford dealerships vs Tesla?

[1] https://www.benzinga.com/news/21/02/19638445/teslas-debt-ove...

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

#260

Post by vasco » Tue, May 18, 2021, 12:05 AM UTC

throwaway481048 wrote: post #81

I am not a fan of public figures (seemingly) using their power to attempt to influence price movement in equities. The market action following someone like Elon Musk’s tweets about $GME, DOGE, and others, show high correlation with the sentiment in those tweets, at least from my armchair. Sure, Burry was correct in a similar scenario before. I don’t believe that means others should immediately believe/trust and follo…

This is a mandatory SEC filling.