Billionaire Investor Bet Against Tesla During 4th Quarter

Billionaire investor Stanley Druckenmiller reportedly bet against Tesla during the 4th quarter, wagering that Elon Musk’s car company would see a share price fall in the coming months.

U.S. News reports that recent SEC filings have revealed that billionaire investor Stanley Druckenmiller bought put options on Tesla shares worth $99.8 million during the company’s fourth quarter. The put option were bought through Druckenmiller’s family investment fund and means that he essentially bet a significantly large sum of money that Tesla shares were going to drop. Tesla shares have fallen 6.61 percent since the start of the year.

Tesla cited a number of reasons for its less than stellar Q4 performance, such as a decline in revenue from the sale of regulatory credits, lowered prices across all Tesla vehicles and higher import duties on Chinese manufactured parts. The company did, however, report that its cash position had improved significantly by $1.45 billion despite having to spend hundreds of millions to repay convertible bonds this quarter. Tesla aims to increase its vehicle delivery rate by 45 to 65 percent in 2019, delivering 360,000 to 400,000 vehicles.

Jessica Caldwell, Edmunds’ executive director of industry analysis, does not see a bright future for Musk’s electric car company: “Things really aren’t going to get any better for Tesla in the US than they did at the end of 2018,” she told CNBC. “Turning a profit, creatively addressing production challenges and getting the Model 3 to the masses were huge milestones, but keeping up this momentum is going to be virtually impossible.”

Tesla also has a huge debt issue that must be resolved by the end of this month. The company must pay back approximately $920 million in debt due on March 1 from convertible bonds issued back in 2014. Tesla can avoid this massive bill by exchanging the debt for a mix of cash and stock but would only be able to do this if its stock price increased to $359.87 from its current price of $306.13.

Following the recent announcement of Tesla’s less-than-stellar fourth-quarter earnings report, the company’s CFO, Deepak Ahuja, resigned. Although this news was not shared by Tesla in its shareholders’ letter, combined with the news of Tesla’s poor earnings report, the market took Ahuja’s departure as bad news leading to another drop in the company’s stock price. March will truly be a time of reckoning for Tesla as the company attempts to pay back $920 million in debt.