Why the Man Who Predicted the Housing Market Crisis Went ‘Short’ On Tesla

It’s always a predicament betting against Elon Musk

Image: Business Insider

In short Elon Musk can be compared to a ‘real-life Tony Stark’: “Genius, Billionaire, Playboy, Philanthropist”.

Image taken from Dr. Burry’s Twitter account on December 2nd, 2020
Image: Flowbank

This is essentially what short-sellers benefit from!

In simple terms, when you are selling short a particular stock you are betting against the stock price going up. The simplest way to profit is to sell the shares at a high price to repurchase them later at a lower price, and the “short-seller” pockets the difference. The one thing which needs to be kept in mind is that the shares that were sold short, are in most cases borrowed from someone else. Thus it is essential to buy the shares back later so that the short position can be closed.

Step 1: Build a luxury electric sports car that could make some money.

Step 2: Use the revenue from selling the sports car to create a more affordable luxury sedan.

Step 3: Once the luxury sedan takes off, use proceeds from this sale to market and sell a truly affordable electric car that the masses could afford.

Elon Musk was about to bet the entire company on this little dream.

“Even Musk had conceded that the company’s fully automated factory vision, the “alien dreadnought,” wasn’t working. Workers ripped out conveyor belts inside the Fremont plant. Employees began carrying car parts to their workstations by hand or forklift and stacking boxes in messy piles. At one point, Musk halted production for an entire week to make repairs. On some level, Musk seemed to recognize that he was undermining Tesla. “Excessive automation at Tesla was a mistake,” Musk tweeted. “To be precise, my mistake.” He once told a colleague: “We just have to stop punching ourselves in the head.” ”



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