Michael Burry predicted the 2008 mortgage disaster and is now betting $ 534 million on Tesla’s crash

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Elon Musk’s recent Tesla losses could be a sign that the investor’s prediction that inspired the movie ‘The Big Short’ could come true.

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May
19, 2021

4 min read

This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process.

Surely you place Michael Burry as the eccentric investor played by Christian Bale in the movie ‘The Big Short’ (2015). He predicted the 2008 mortgage crisis and is now so sure of Tesla’s falling stock that he made a bearish bet against Elon Musk’s company .

A report filed with the Securities and Exchange Commission (SEC) on Monday shows that Scion Asset Management , the investment management company run by Burry, held put options for 800,100 Tesla shares, worth $ 534 million last year. March 31st.

Put options , also known as a ‘ put option’ , give their owner the right to sell an asset at a predetermined price. This allows you to generate profits in case of a fall of said asset in the market below the price determined by the option.

The report does not specify when Michael Burry acquired the options, but in December 2020 he admitted that he bet against Tesla and advised Musk to issue more shares, as in his opinion the price was “ridiculous .”

Image: Michael Burry via Twitter.

Additionally, Burry left hints of his pessimism about Tesla last February.

“My last big bet is getting bigger and bigger. Only today Tesla increased its capitalization by 60,000 million dollars, which is equivalent to one GM, two Hershey’s, three Etsy, four Domino’s, 10 Vornadoes. Enjoy it while it lasts , ”Burry warned on Twitter that month.

However, in mid-March the famous investor decided to delete his Twitter account after being investigated.

“Tweeting and being in the news lately has apparently made the United States Securities and Exchange Commission (SEC) visit us ,” and he finished off the message with the hashtag #nomoretwitts, meaning ‘no more tweets’.

Is Michael Burry’s Tesla Prediction Coming True?

In 2020, the price of Tesla shares   It skyrocketed more than eight times, hitting an all-time high of $ 883 on January 26, 2021. Since then, the electric car company’s shares have been falling.

This Wednesday, May 19, Tesla shares are trading at $ 563 per unit, which represents an approximate 36% drop in their price in less than 4 months.

Image via Yahoo Finance.

To date, Elon Musk’s company reports a market capitalization of $ 542.798 million , according to data from Yahoo Finance . Meanwhile, the founding mogul of SpaceX and Starlink stopped being the second richest person in the world and fell to third place on the Bloomberg Millionaires Index , surpassed by Bernard Arnault , president of LVMH.

Tesla’s downward streak could be a sign that Burry once again anticipated the behavior of the stock market and made the right bet again.

Who is and what did Michael Burry do?

A neurologist by profession and founder of the Scion Capital fund, Burry rose to fame for predicting the bursting of the 2008 housing bubble, which caused a severe financial crisis from 2007 to 2010.

But they well say that ‘a troubled river, fishermen gain’. During the subprime crisis, the investor personally made about $ 100 million and generated more than $ 700 million in profits for his clients.

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