Tesla’s July decline has turned into Michael Burry’s most profitable bearish bet, one of five short positions he disclosed in late June. The stock plunged after a disappointing quarterly report, and Wall Street analysts are urging caution on buying the dip.
Michael Burry’s short position in Tesla has become his biggest winner among a batch of bearish bets placed last month. The electric-vehicle maker’s shares plunged 14.5% on Thursday after a disappointing quarterly report late Wednesday, extending the July decline to about 24% and leaving the stock at $319.69. Burry said in late June he shorted the stock at $416.22.
He revealed the wager in a Substack post on June 30, opening short positions in Caterpillar, Nvidia, the VanEck Semiconductor ETF, Applied Materials and Tesla after strong rallies in each. Of those, four of the five disclosed trades have moved in his favor, with Tesla the standout. Whether he still holds the position is unclear, since he trades actively and the disclosure reflects only what he had initiated at that time.
Wall Street cools on the dip
The selloff has revived the question of whether Tesla is cheap enough to buy. But a majority of analysts have not rated the stock a buy since Q1 2023, according to FactSet data. On the latest results — a revenue beat but an earnings miss, with free cash flow turning negative and margins narrowing — no investment banks upgraded or downgraded it, though a few trimmed their price targets.
Caution centers on stalled fundamentals. Oppenheimer’s Colin Rusch, who rates Tesla neutral, told CNBC that the company’s heavy technology spending had not yet produced results: “the results just aren’t there”.
Not every analyst has turned
Some remain constructive despite the drop. Truist’s William Stein kept a hold rating but cut his price target 14%, to $370 from $430. Piper Sandler’s Alexander Potter reiterated an overweight rating and a $500 target. And Cathy Wood’s Ark Investment Management bought Tesla shares on Thursday after the slide.
For all the disagreement, Tesla has delivered a negative return over the past four-plus years.
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