But this position did not stop financiers from betting against him and Tesla. The latest: Scott Burg, chief investment officer, Deer Park Road Management, Steamboat Springs, Colo.
According to a recent filing by the Securities and Exchange Commission, Burg acquired put options on 4,786,400 Tesla shares on June 30. The value of these derivatives was $3.3 billion as of June 30.
A put option gives the holder the right, but not the obligation, to sell shares of an underlying asset at a specified price on or before a specified date. When an investor acquires a put option, they are bearish about the future performance of the underlying stock.
Tesla shares ended the second quarter at $673.42; at last check they are trading around $863. Tesla shares are up 28% since the end of the second quarter. This means that Burg’s bet hasn’t paid out, at least not yet.
The financier recently deleted his Twitter account after being contacted by Bloomberg News about the latest bet. The gamble isn’t surprising, though, as Burg has been predicting the demise of Tesla and Musk for many years.
“Now Tesla will be squashed like an insect,” the financier
predicted on December 22, 2020.
Prior to deleting his account, Burg regularly posted on Twitter using the hashtag #TSLAQ. This symbol is used on social media by the most extreme critics of Musk and Tesla. They are convinced that the electric vehicle manufacturer will go bankrupt. (The “Q” through 2016 was placed at the end of a Nasdaq stock symbol, according to Investopedia, to indicate that the company had filed under bankruptcy laws.)
“Do you know what a death spiral is? Coming up,” Burg tweeted on May 20, according to data kept on the platform by Tesla fans. That day, Tesla shares were down more than 6%.
Tesla has been a disaster for short sellers
Deer Park Road Management specializes in emergency loans. In early August, Deer Park founder and CEO Michael Craig-Scheckman and Burg, who is a managing partner and chief investment officer, held a conference call to discuss credit cycle rotation and ailing credit opportunities, according to
a message from the company’s official Twitter account.
Burg’s bet is surprising because Tesla dominates the EV market and almost all automakers want to develop electric models. The company is also at the forefront of autonomous vehicles and has an extremely busy roadmap for the next two years, most notably with the launch of the highly anticipated Cybertruck, a futuristic pickup/truck.
The financier is not the first to make a huge gamble against Tesla. Hedgefund heavyweight David Einhorn of Greenlight Capital has paid a serious price. Musk literally had shorts delivered to Einhorn in 2018, when Tesla was on the brink of financial ruin.
“I want to thank @elonmusk for the shorts,” Einhorn posted on Twitter in August 2018 with a photo of the shorts. “He’s a man of his word! They came up with some manufacturing flaws. #tesla.”
“Put them on and post a selfie,” Musk noted.