Gene Munster, founder and managing partner of Loup Ventures, considers a short bet on Tesla (NASDAQ: TSLA) a very risky bet, as EVs will have a strong growth trajectory over the next decade.
Gene Munster was interviewed by CNBC and said that betting short against Tesla is very risky. Despite the fact that the value of the company's shares fell by 18% over the past month, over the past year, their value has grown by 260%. His reaction came after news broke that Scion Asset Management has a short position in Tesla worth more than $530 million.
According to the 13F filing with the SEC, the fund managed by investor Michael Burry has purchased puts against 800,100 Tesla shares, which have a notional equivalent value of $534 million. This marks not only Burry's largest position, but it also nearly equates to 40% of his total portfolio in nominal terms. However, the price of the puts in the money remains unknown, or how much Burry's hedge fund paid for the positions.
According to Gene Munster, Tesla is riding a secular theme. EVs will experience a strong growth trajectory over the next decade, which is an ‘undeniable truth.’ Munster said that he worked as a sell-side analyst for a long time and had many incorrect calls.
“When you are shorting a theme, it gets really dangerous,” he said. “The most frequent mistake I made as an analyst was making a recommendation based on valuation when there was a secular theme.”
The analyst also said that if Tesla can gain a 20% global market share, the company could become much larger. While Tesla's current valuation is $563 billion, it has the potential to become a $2 trillion company. Munster believes Tesla's business model is more like that of a tech company, and if they succeed with their hardware and software services, then there is good reason to believe long-term investors will be rewarded.
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