Gene Munster, Loup Ventures founder and managing partner, called a short bet on Tesla Inc. (NASDAQ: TSLA) a very risky bet, in an interview on CNBC.
Shares of Tesla are down 18% over the past one month but up by about 260% over the past year. Its shares opened at $568 today morning and climbed 1.5% at the time of writing.
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Michael Burry’s position on Tesla
Scion Asset Management, the family office run by the “Big Short” investor Michael Burry, disclosed in a regulatory filing on Monday that it has put options on 800,100 shares of Tesla Inc. as of the end of first quarter and were worth $534 million.
Investors profit from puts when the underlying securities fall in prices.
Gene Munster’s take on the Short Bet
According to Gene Munster, Tesla is riding a secular theme. Electric vehicles have a strong growth trajectory ahead over the next decade and he considers it an ‘undeniable truth.’
Munster said he has been 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.”
Tesla in five years
Munster added that if Tesla was able to get to a global market share of 20%, it could become a much bigger company. It could potentially be a $2 trillion company. Tesla’s current valuation is around $566 billion.
He said that Tesla’s business model is more like a tech company’s model. The substance of the valuation case is that if they are successful with their hardware and software services, there’s a strong case that long-term investors will be rewarded.
