Who Is Michael Burry? 'The Big Short' Investor Bets Millions Against Tesla

Wall Street guru Micheal Burry has made headlines this week after it was revealed that he has placed what is essentially a huge bet against the future of Tesla's stock price.

The bet was outlined in a regulatory filing by Burry's investment company Scion Asset Management, published Monday, according to financial analyst Jack Farley.

In a filing released today, it was revealed Michael Burry shorted Tesla big time, owning >800,000 put contracts worth $534.4 million.https://t.co/mkHSg9n9aS https://t.co/Oh6WMTbJlv pic.twitter.com/H7IoERZrO4

— Jack Farley (@JackFarley96) May 17, 2021

It shows that the company owns something called put options on 800,100 shares in Tesla, worth over $534 million. The Securities and Exchange Commission (SEC) says it has "not necessarily reviewed the information in this filing and has not determined if it is accurate and complete".

A put option is a contract that gives the owner the right to sell a stock or other security asset at a predetermined price within a certain amount of time.

The owners of these contracts can profit from them if the share that they have a put option against decreases in price because, due to the predetermined agreement, they can then sell that share at a higher price than it would ordinarily get on the market.

As such, a put option can be seen as a bet that a certain asset price will go down, according to The Street.

Burry received worldwide attention after he accurately predicted the collapse of the U.S. housing market which led to the global financial crisis of 2007-2008.

Born in California in 1971, Burry studied economics at UCLA and also went on to complete a medical degree at Vanderbilt.

He eventually left medicine to become a full-time investor, setting up the hedge fund Scion Capital in 2000.

Within years Burry famously spotted a bubble in the housing market that others did not, and created a way to bet against—or short—the housing market accordingly.

The bet was unfashionable at the time and did not go down well with the investors whose money he had been entrusted to handle.

However, Burry made $100 million for himself and $700 million for his investors when his bet against the housing market paid off, Business Insider reports.

The story was recounted in Michael Lewis' book The Big Short, which was adapted to a Hollywood film starring Christian Bale, Steve Carell and Ryan Gosling in 2015.

Burry has previously voiced his opinion that Tesla's stock price would go down even back in late 2020, when the value of the electric carmaker was increasing.

He said in a tweet to Elon Musk that he was "short $TSLA" in December, and a few months earlier had flagged the fact that Tesla's sale of regulatory credits was "necessary for 'profitability'," according to ZeroHedge.

All of Burry's tweets have since been deleted and his account deactivated.

Regulatory credits are essentially financial incentives provided by governments to carmakers to encourage them to make environmentally-friendly cars. If a carmaker meets their environmental targets, they can sell excess regulatory credits to other carmakers who are struggling to meet theirs.

Tesla's share price was valued at $576 at close on Monday, down -2.19 percent at the time. It's down from a 52-week high of $900.

Michael Burry
Michael Burry attends a screening of "The Big Short" in New York, November 23, 2015. The investor become well-known after the housing market crash in 2007 and 2008. Astrid Stawiarz/Getty