United States of America eSeries: The big Tesla short 🚗

The big Tesla short 🚗

Posted by :

Someone get Adam McKay and Christian Bale on the phone, I've got an idea for a sequel ... Let's get into it.

By Allison Morrow

👀 A BIG TESLA SHORT

Michael Burry, the investor who famously predicted (and profited from) the subprime lending crisis, just revealed the latest big name he's betting against: Tesla.

THE NEWS

In a regulatory filing, Burry's firm, Scion Asset Management, disclosed that it held bearish put options on more than 800,000 Tesla shares. (Put options give investors the right to sell a stock at a specified price and are a sign that an investor thinks the stock will go down.)

In other words, it's a $534 million bet that Tesla's stock price will drop.

THAT NAME SOUNDS FAMILIAR

The filing didn't say why Burry thinks Tesla is overvalued, but he is the kind of prophetic investor you pay attention to, especially when he's got half a billion bucks riding on the downfall of the world's most valuable automaker.

Burry, who was played by Christian Bale in the film "The Big Short," built his reputation on being something of a visionary – he was the first to spot the housing bubble forming all the way back in 2005, two years before it burst. (He ultimately made a cool $100 million in personal profit when the housing market collapsed). He also bet against the dot-com bubble in the late 1990s.

THE MUSK FACTOR

Tesla is still riding high after its stock rose more than 700% in 2020. But the EV maker has taken a hit recently, plunging nearly 25% in the past month — in no small part because of concerns about CEO Elon Musk.

It's not hard to imagine why some investors worry that Musk — busy as he is tweeting dogecoin memes, hosting "Saturday Night Live" and casually running a private space exploration company on the side — might not be fully focused on Tesla's core business.

💰 NUMBER OF THE DAY

$25

Bank of America is raising its hourly minimum wage for US employees to $25 by 2025. "It costs us a few hundred million dollars a year ... but it's an investment," the bank's CEO Brian Moynihan told CNN's Poppy Harlow on Tuesday.

🍿 AND THEY'RE OFF

If you think of the media industry as one big game of musical chairs, news of WarnerMedia's merger with Discovery is a shrieking record scratch — time to pair up or get out of the game.

So it wasn't a huge surprise when reports emerged late Monday that Amazon is in talks to buy MGM. That's exactly the kind of tie-up you can expect to see more of in the next several months: a big tech company that needs content and a classic Hollywood studio with a deep library.

(CNN hasn't confirmed the talks, which were first reported by The Information.)

STREAMING WARS INTENSIFY

Speculation about an MGM deal has been swirling for months, with Apple and Comcast among its potential suitors. Part of the studio's appeal is the breadth of its titles — it's home to films like "Legally Blonde," "James Bond," "The Addams Family" and "Rocky," as well as TV shows like "The Handmaid's Tale" and "Fargo," to name just a few.

MGM is also one the few remaining standalone studios that hasn't been absorbed by a bigger company (WarnerBros is part of WarnerMedia, Paramount belongs to ViacomCBS, Fox is owned by Disney, and so on…) And Amazon, well, it's got a big platform and lots of users but a relatively small stable of hit titles.

Match made in media heaven? We'll find out soon.

💸 QUOTE OF THE DAY

The idea that wealthy people will stop investing if they have to pay these slightly higher tax rates on their returns is absurd. Rich people are going to invest their wealth no matter the tax rate because there is literally nothing else they can productively do with it.

Take it from a millionaire: Rich people are going to be fine, and raising the capital gains tax won't hurt the economy.

Morris Pearl, writing for CNN Business, argues that it's "time we put to bed the myth that wealthy investors deserve tax breaks because they are job creators who single-handedly support the entire US economy." Everyone, even wealthy investors, benefits when everyone has money to spend.

WHAT ELSE IS GOING ON?

🛢️ The International Energy Agency, which was founded by rich industrial nations after oil shocks in the 1970s to promote secure and affordable energy supplies, is (surprisingly) warning that the world needs to stop drilling for oil and gas to prevent a climate catastrophe.

🔌 Every new Lamborghini will have an electric motor by the end of 2024.

😷 Target, CVS, Home Depot and other stores are dropping face mask requirements.

🏠 Home Depot smashed earnings expectations for the first quarter as lumber prices rose and Americans continued to pour money into their homes.