Michael Burry. Astrid Stawiarz/Getty Images
Michael Burry, an investor in "The Big Short", said that Tesla stock could plummet 90% in value.
Burry pointed out that Tesla CEO Elon Musk stated last year that the stock price of the automaker was "too high".
As recently as June 30, the fund had bearish options against Tesla stock.
In a now-deleted Twitter on Tuesday, Michael Burry suggested that Tesla stock could plunge 90%. The "Big Short" investor drew a parallel between Amazon shares plummeting after the dot-com bubble burst and then soaring years later when the e-commerce giant transformed itself.
"Can $TSLA fall 80, 90%? Many high-flyers achieved this after 2000. Burry tweeted that $AMZN dropped 95% two decades ago, which changed the entire biz and helped it thrive much later."
Scion Asset Management boss Elon Musk said Tesla was overvalued last summer, when its stock traded at less than one-sixth of its current price (adjusted to Tesla's August 2020 five-for-one stock split).
Burry tweeted "May 1, 2020- $TSLA at $163/share and he wasn't kidding, said @elonmusk," linking to a Wall Street Journal article on the Tesla CEO's comments.
The stock of Tesla has fallen 16% in the last two trading days. This erases nearly $200 billion of its market capitalization. This sell-off occurred after Musk launched a Twitter poll asking for opinions on whether Tesla should sell 10% of its stock. The poll received 3.5 million votes and 58% of respondents voted in favor of a sale.
Burry suggested Monday that Musk might be interested in cashing out stock to pay off his personal debts. He stated that Musk had 88,000,000 Tesla shares (36% of his total stake) pledged as loan collateral by the time he was 30 June this year.
Scion's chief executive announced that he had shorted Tesla in the latter part of 2020. His fund also held bearish options on Tesla stock as recently June 30, this year. CNBC was informed by Burry in October that he wasn't longer betting against Musk's firm and that the put options were a trade and not a long-term position.
Over the past year, this contrarian investor took several shots at Tesla. In December 2020, its stock price was below $600, which he described as "ridiculous". This is a fraction of the $1,024 closing Tuesday this week.
Burry, who predicted that Tesla stock would crash like the mid 2000s housing bubble in January of this year, told shareholders to "enjoy them while they last."
He also stated in February that if automaker's stock falls below $100 there would be no major fallout and it would end reckless, zealous speculation on overhyped stocks.
Burry suggested that Tesla's stock could drop 90% to $100 per share. It's worth noting that the stock traded at this level (on split-adjusted bases) as recently April 2020.
Insider reached out to Scion and Tesla for comment but they didn't respond immediately.
Continue reading: A Michael Burry subreddit founder explains why 'The Big Short Investor' is so appealing - and shares the stocks he tweets about.
