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Tesla can grow and sell tons of cars and the stock price might still fall. Cisco Systems is a great example of a fantastically profitable business with a stock

Tesla can grow and sell tons of cars and the stock price might still fall. Cisco Systems is a great example of a fantastically profitable business with a stock price that's still below peak. It's an incredibly successful company that makes more than $10 billion in profit every year. The stock price is still below the March 2000 peak. If Tesla "only" made $20 billion in profit a year, the market would probably consider it a failure. Expectations are high. I can see the bull case for Tesla becoming a multi-trillion dollar company or the bear case. Hard to assess Burry's position without knowing the expiration date and strike price of his puts.

felixfurtak 5y ago
Some interesting parallels with automotive industry here. Cisco saw huge valuation base on a perceived future. Nortel (who were more of an incumbent) also saw massive stock price increases at that time. Only one of these two companies survived. Cisco had the right tech but Nortel had fundamentally the wrong tech. I suspect we'll see something similar in the automotive industry.
roland35 5y ago
I was curious and looked it up- Cisco is indeed still off of its peak stock price $52 vs $77 in 3/2000... But if you reinvested their dividends you would be a little closer! Just don't adjust for inflation! $10k invested on 1/2000 would have peaked at $14k in March, and now would be worth $9.5k
bob1029 5y ago
>Hard to assess Burry's position without knowing the expiration date and strike price of his puts. Even if you knew the exact pieces of paper that he held today, that would tell you nothing about his overall plan. Very few options strategies involve a one-time purchase of contracts in hopes that the dates & prices on those will hold until conclusion. For something this big, you would continue to acquire (and sell) contracts at a range of strike prices & expiration dates until the overall play is concluded.

felixfurtak 5y ago

Some interesting parallels with automotive industry here. Cisco saw huge valuation base on a perceived future. Nortel (who were more of an incumbent) also saw massive stock price increases at that time. Only one of these two companies survived. Cisco had the right tech but Nortel had fundamentally the wrong tech. I suspect we'll see something similar in the automotive industry.

roland35 5y ago

I was curious and looked it up- Cisco is indeed still off of its peak stock price $52 vs $77 in 3/2000... But if you reinvested their dividends you would be a little closer! Just don't adjust for inflation! $10k invested on 1/2000 would have peaked at $14k in March, and now would be worth $9.5k

bob1029 5y ago

>Hard to assess Burry's position without knowing the expiration date and strike price of his puts. Even if you knew the exact pieces of paper that he held today, that would tell you nothing about his overall plan. Very few options strategies involve a one-time purchase of contracts in hopes that the dates & prices on those will hold until conclusion. For something this big, you would continue to acquire (and sell) contracts at a range of strike prices & expiration dates until the overall play is concluded.