People don’t see the full idea behind Michael Burry’s TSLA short. Every single article is about how he tweeted at papa Musk and how he thinks that the company is the worst thing since he dropped his glass eye into his cat’s litter box.
He doesn’t think that Tesla will implode. He doesn’t think it’s a failing company. He just sees the reality, which is that all of their profits/revenues are way in the future.
Let’s just say you win a time-delayed lottery and get $1,000,000 in 15 years. Not bad! Now let’s say you won the same lottery in Venezuela in 2005. It’s not even worth cashing the ticket.
It’s the same deal with companies. Growth companies, however promising, have most of their expected profits in the future. Those profits have to be discounted by the interest rate to be turned into todays dollars. In other words, it doesn’t matter how much money Tesla is going to make in the future if interest rates surge today. Well… it does matter… it’s just worth a lot less.
So how does this relate to the Burry bet? You just have to scroll down a few lines on his 13F filing.
Burry has almost as many GOOG/FB calls as he does TSLA puts. Around ~$330MM of them. Why does this matter? These are big tech companies that are actually printing out metric shit-tons of profit today.
Interest rates stay the same but big tech goes up? Break even. Big tech goes down? Break even. Interest rates rise? Burry makes more money in a year than all of your wives boyfriends combined.
TL;DR:
The Burry TSLA short isn’t a bet against Tesla, it’s a bet on interest rates rising (AKA inflation).