Could Tesla be The Big Short 2.0?
In a series of Tweets that started early Monday morning, Michael Burry, M.D. - of "The Big Short" fame - appears to have a healthy and growing skepticism of Tesla brewing.
Burry started Tweeting about Tesla in the hours leading up to the company's "Battery Day", which we now know was nothing short of a farce and was responsible for driving Tesla stock lower by 12% in Tuesday's after hours session.
On Monday, Burry pointed out how absurd Tesla's valuation was when compared to the rest of the industry. He posted a screenshot of the company's valuation versus its peers and pointed out that it trades for 18x sales when the rest of the global auto industry trades for about 0.35x sales.
#Tesla #BatteryDay Edition @elonmusk -Bloomberg data: Global Autos ex-TSLA $2.3Trillion sales,$100Billion EBIT, $807Billion MarketCap. $TSLA $25Billion sales, no EBIT, $438Billion MarketCap. TSLA RegCredit revenues a #meltingicecube. Global Autos@0.35x sales,TSLA @18X. #bubbles pic.twitter.com/YoM8z4H4lb— Michael Burry, M.D. (@michaeljburry) September 22, 2020
He followed that up Monday afternoon by posting several charts from an FT piece that show the company's sale of regulatory credits was necessary for profitability.
He also pointed out the company's flat revenues and Tesla's "inferior lithium iron phosphate tech" while appending the Tweet with the hashtag #bubbles.
$TSLA: @FT #BigRead - sales of green regulatory credits necessary for "profitability." Flat revs as tax credits wane/ deliveries stagnate. Inferior lithium iron phosphate tech behind #millionmilebattery means lower energy density/reduced range. #bubbles https://t.co/Z5XlzzEsJj pic.twitter.com/8wH1o6PJrM— Michael Burry, M.D. (@michaeljburry) September 22, 2020
Since those Tweets, "Battery Day" largely failed to impress and Tesla stock is about 25% off of its recent highs. Tesla has mangled short sellers that have gotten in its way over the last 18 months and the stock has had some of the highest - albeit mysterious - returns on Wall Street. But, to quote Burry in The Big Short:
"Well, based on prevailing sentiment, the market, the banks and popular culture, yes, it's a foolish investment. But, everyone's wrong."