Gene Munster comments on Michael Burry’s $530M bet against Tesla stock

By: Ajay Pal Singh
Ajay Pal Singh
Ajay worked at Tata Motors in project planning before discovering his passion for stocks. Today, he lives in Canada… read more.
on May 18, 2021
  • Michael Burry's family office revealed a $534 million worth of long put options on Tesla.
  • Gene Munster calls a short bet on Tesla as very risky.
  • Munster sees Tesla becoming a $2 trillion company over the next 5 years.

Gene Munster, Loup Ventures founder and managing partner, called a short bet on Tesla Inc. (NASDAQ: TSLA) a very risky bet, in an interview on CNBC

Shares of Tesla are down 18% over the past one month but up by about 260% over the past year. Its shares opened at $568 today morning and climbed 1.5% at the time of writing.

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Michael Burry’s position on Tesla

Scion Asset Management, the family office run by the “Big Short” investor Michael Burry, disclosed in a regulatory filing on Monday that it has put options on 800,100 shares of Tesla Inc. as of the end of first quarter and were worth $534 million. 

Investors profit from puts when the underlying securities fall in prices.

Gene Munster’s take on the Short Bet

According to Gene Munster, Tesla is riding a secular theme. Electric vehicles have a strong growth trajectory ahead over the next decade and he considers it an ‘undeniable truth.’

Munster said he has been a sell side analyst for a long time and had many incorrect calls.

“When you are shorting a theme, it gets really dangerous,” he said. “The most frequent mistake I made as an analyst was making a recommendation based on valuation when there was a secular theme.”

Tesla in five years

Munster added that if Tesla was able to get to a global market share of 20%, it could become a much bigger company. It could potentially be a $2 trillion company. Tesla’s current valuation is around $566 billion. 

He said that Tesla’s business model is more like a  tech company’s model. The substance of the valuation case is that if they are successful with their hardware and software services, there’s a strong case that long-term investors will be rewarded.

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