‘Big Short’ investor Michael Burry reveals he’s short Tesla, tells Elon Musk to issue more stock at its ‘ridiculous price’

  • Michael Burry, whose bet against the housing market was made famous by “The Big Short,” revealed in a late Tuesday tweet that he is short Tesla.
  • The hedge fund manager advised CEO Elon Musk to issue more shares while they sit at their “ridiculous” levels.
  • “That’s not dilution. You’d be cementing permanence and untold optionality,” he added.
  • Tesla dipped as much as 7.1% on Wednesday before paring losses and trading roughly 3% lower.
  • Watch Tesla trade live here.

Famed investor Michael Burry revealed that he’s short Tesla, and advised CEO Elon Musk to issue more shares while they sit at their “current ridiculous” levels.

Tesla shares have rallied more than 575% in the year to date, boosted by the company’s upcoming inclusion in the S&P 500 and fading profitability concerns. Some of Wall Street’s more bearish analysts have turned more optimistic toward the stock, and favor from waves of retail investors further supported Tesla’s lofty valuation.

Not every bear has been converted, though. Burry reiterated his pessimistic outlook for the company in a late Tuesday tweet, adding that Musk should take advantage of the sky-high stock price to raise more cash.

“So, @elonmusk, yes, I’m short $TSLA, but some free advice for a good guy … Seriously, issue 25-50% of your shares at the current ridiculous price. That’s not dilution,” Burry tweeted.

He continued: “You’d be cementing permanence and untold optionality. If there are buyers, sell that #TeslaSouffle.”

Read more: HSBC says buy these 31 global stocks that are exposed to the pandemic’s biggest tech disruptions and set to become growth engines of the future

The hashtag seems to reference a letter Musk sent to Tesla employees on Tuesday, in which he warned that the automaker’s stock could “get crushed like a souffle under a sledgehammer” if profit margins don’t improve.

The automaker fell as much as 7.4% Wednesday morning before paring losses and trading roughly 3% lower.

Burry rose to fame after the financial crisis for his then-unusual bet against the housing market. His trade was captured in Michael Lewis’ bestselling novel “The Big Short.” He was played by Christian Bale in the 2015 film adaptation.

The hedge fund manager included a spreadsheet in the tweet detailing Tesla’s financial performance against older automakers. The company touts an industry-high market capitalization but posts total profits and revenues far below those seen by Toyota, Volkswagen, and other major car companies.

Read more: Dennis Lynch has tripled his clients’ money since 2010. The star fund manager shares 5 bets he’s seizing on for 2021 and beyond — and explains how he avoids making costly investing mistakes.

Burry has espoused his bearish outlook online in the past. Ahead of Tesla’s Battery Day event, the investor highlighted Tesla’s thin margins and questioned the rationality of its industry-leading market cap. Though the automaker has steadily notched quarterly profits since the late-September event, its valuation has only swung higher.

Tesla traded at $566.25 per share as of 3:30 p.m. ET Wednesday. The company has 22 “buy” ratings, 42 “hold” ratings, and 19 “sell” ratings from analysts.

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