‘The Big Short’ investor Michael Burry says Elon Musk might want to sell Tesla shares to cover personal debt – and compares the market to the Dutch tulip bubble

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Michael Burry.
  • Michael Burry has suggested that Elon Musk might want to sell Tesla shares to cover his personal debts.
  • The “Big Short” investor noted that the CEO of Tesla had pledged 88 million shares as collateral for the loan.
  • Burry also subtly compared the current market to the Dutch tulip bubble.

Michael Burry took to Twitter this week to suggest why Elon Musk was suddenly interested in selling Tesla shares and to sound the alarm bells about dangerous speculation in financial markets.

Musk’s debts

“As for what @elonmusk MUST sell due to the proposed unrealized gains tax, or for #solveworldhunger, or… its shares as of June 30,” the investor tweeted.

Musk recently offered to sell $ 6 billion worth of Tesla shares if the bosses of the United Nations could explain to him how the sum would solve world hunger. Tesla CEO also launched a Twitter poll asking if he should sell 10% of his holdings, citing pressure from US lawmakers pushing for a “billionaire tax” that would target unrealized capital gains of the ultra-rich .

Burry’s tweet implied it might just be an apology. The renowned investor of “The Big Short” and head of Scion Asset Management published a link in August to a Securities and Exchange Commission file indicating that Musk had pledged about 88 million shares, or 36% of his. full participation, as collateral for personal loans. to June 30.

Musk had 41% of his shares pledged as security for his debts at the end of December, and 48% as of June 30 of last year, according to previous statements.

Burry appeared to suggest that Musk was not considering a stock sale in order to feed millions of people, in response to a legislative proposal, or because he could face a $ 10 billion tax bill when he exercises a series of stock options that expire in August 2022.

Instead, Burry’s theory is that Musk needs the money to pay off the loans he took out using his Tesla shares. The practice came under scrutiny this summer after a ProPublica investigation detailed how some of the world’s richest people have borrowed against their stocks to minimize their tax burden.

Bubble fear

In addition to tweeting about Musk, Burry marked his return to Twitter with a new header image. His choice of “Satire of Tulip Mania”, a painting by Jan Brueghel the Younger which ridiculed the Dutch tulip bubble in the 1600s, was undoubtedly a warning about the current market mania.

The painting depicts tulip speculators as silly monkeys and shows them weighing bulbs, counting money, taking inventory and going into debt, arguing and even dying over flowers.

Burry described the immense hype around memes and cryptocurrency stocks and the frantic buying of Tesla shares and other assets as clear signs of rampant speculation.

In addition, Burry has diagnosed a historic stock market bubble in recent months and predicts a devastating crash. His fund also held bearish put options on Tesla and Cathie Wood’s Ark Invest shares at the end of June. In this context, his choice of Twitter image suggests he sees history repeating itself.

Musk and Tesla did not immediately respond to a request for comment from Insider.



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