Why famed short-seller Carson Block won’t bet against Tesla
Carson Block, known for his shrewd short bets against companies, says he won’t bet against Tesla.
The famed Muddy Waters investor said he came to the conclusion that shorting Tesla is a fool’s errand in 2021, when he realized that the company’s capital base is its safety net.
“What all the bears missed was … Elon understood that the scale he needed to have was capital base,” Block told Bloomberg TV on Monday. “And so when he was able to yoke that stock price way up and have this enormous market cap, I mean, even if the company is bleeding billions of dollars and the stock is sinking, there’s so much market cap that he can continue to raise money.”
It’s an about-face of sorts for Block, who said he’d bet against Tesla in the past. He told Bloomberg that several years ago his firm held long-dated puts on Tesla designed to capitalize on a share-price drop that nearly materialized.
“It’s a volatile stock, but, you know, it continues to get flows,” Block said. “Tesla’s not going bankrupt for a very long time. And that’s what the bears missed, because the bears were hung up on this, ‘Oh, it bleeds money. It’s going to go bankrupt.'”
To this point, Tesla’s financial health has been the subject of ceaseless investor scrutiny. It took until 2019 for the car manufacturer to post its first consecutive quarterly profit, and the years since haven’t been altogether smooth: in 2024, the electric vehicle maker has continued losing market share to competitors amid slowing demand, causing free cash flow and revenue figures to disappoint over the past few quarters.
For some, that’s made Tesla’s lofty share price difficult to justify. Short-seller Per Lekander recently called it the “biggest stock market bubble in world history,” and predicts that Tesla will eventually plunge around 93% to to $15 a share.
But Block isn’t sweating any of those elements, and thinks Musk will continue to surprise any doubters.
“Elon pulls rabbits out of the hat constantly,” he said. “I just won’t bet against Elon.”
