Investor Michael Burry Urges Tesla Shareholders To Unload

Michael Burry, the prescient investor of "The Big Short" fame, must be feeling vindicated about his downbeat Tesla call.

Photo Insert: Michael Burry was played by Christian Bale in the Hollywood film.

The stock price of Elon Musk's automaker has nosedived 67% from its peak in November 2021, slashing its market capitalization from above $1.2 trillion to below $440 billion as of Tuesday's close, Theron Mohamed recently reported for Insider.

Burry declared Tesla shares were in a bubble more than two years ago, and has repeatedly warned they would suffer a devastating crash. The Scion Asset Management chief first revealed he was betting against the electric-vehicle company in December 2020, describing its stock price as "ridiculous."

Tesla shares soared more than 700% in 2020 and surged in early 2021, a rise fueled by rock-bottom interest rates, zero-commission trading apps, and pandemic-era fiscal and monetary stimulus.

Other factors were a boom in people playing the stock market while stuck at home, and a social-media frenzy around certain stocks. "Well, my last Big Short got bigger and bigger and BIGGER too," Burry tweeted in January 2021, referring to his famous bet against the mid-2000s housing bubble. "Enjoy it while it lasts."

After bemoaning what he saw as reckless speculation during the GameStop saga, Burry said in February 2021 that a 90% plunge in Tesla's stock price wouldn't send shockwaves through the stock market.

Instead, it "would trigger the end of an era for a certain type of investing," he suggested. In a follow-up tweet, he compared the hype around Tesla to the excitement during the dot-com and housing bubbles.

The frenzy around Musk's company was "remarkably similar to 1999 and 2006," he said. In further tweets, Burry explained why he believed Tesla was hugely overvalued, compared with its rivals. He pointed to its meager sales and slim profits, and described its battery technology as "inferior."

Burry put his money where his mouth is by purchasing bearish put options against Tesla stock in the first quarter of 2021, and ramping up his bet in the second quarter. However, he exited the position during the next three months.

WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic