According to Michael Burry, Tesla stock is a bubble bound to collapse.
Elon Musk is now the richest man in the world, and buying Tesla stock might just be the best decision you’ll make today. Read that again, and you’d still be convinced, right? Well, not everyone apparently shares your views, and one of those is Michael Burry himself.
To refresh your memory, Michael Burry is the same person who predicted the collapse of the US housing market in 2007. He bet against the subprime mortgaging system and made $100 million for himself and over $700 million for his clients!
So what’s he got against Tesla? Well, nothing in particular, really. But a man with his portfolio wouldn’t operate merely on a hunch. Michael Burry believes that Tesla’s share price can only go down in the near future, according to a post shared on Twitter on December 1st. Interestingly Tesla has since gained 48.3% in stock value.
Michael Burry is shorting Tesla stock shares since the start of last month. Michael Burry is acting like a typical bear on the stock market with his current action, believing that a particular stock will fall and continue to decline in the long term. On the other hand, several Tesla sellers have recently given up their position and have now upgraded Tesla’s stock. For example, RBC has now upgraded Tesla’s stock from Underperform to Sector Perform with a price target from $339 to $700. Additionally, even Evercore ISI upgraded Tesla’s stock from Underperform to In Line, with the price target now set at $659.
Tesla stocks grew nearly 740% in 2020 and 10 days into 2021 have shown a growth of 16%. Such impressive growth has mostly contributed to Elon Musk‘s enormous net worth but that does not mean he actually has $209 billion at his disposal. Most of his money is actually parked in shares. In fact, even if Musk sold 1% out of the 20% he currently owns in Tesla, share prices would go down swiftly.
Currently, Tesla stocks trade at $880, but many people would lose the money invested in case it falls. In fact, shares like these are more volatile as they grow drastically in a short period. However, one aberration, one small mistake, another weird Tweet from Musk, and things could go south quicker than one would be able to react.
