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If Bill Gates shorts TSLA stock, he’s making a big mistake


Today the internet is buzzing with a leaked text conversation between Elon Musk and Bill Gates. On April 22, a popular Twitter (NYSE:TWTR) shared profile several screenshots of the alleged conversation between the two tech moguls. When Musk asked Gates if he still had a short position against TSLA, Gates admitted he did. Musk later declined to discuss climate change-focused philanthropic opportunities with Gates because of his position. He described Tesla as “the company doing the most to solve climate change”.

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Ever since Musk began maneuvering to acquire Twitter, TSLA stock has faced turbulent conditions. Today, however, the turbulence culminated in a historic moment. This afternoon, Twitter announced that it had accepted Musk’s $44 billion offer.

The news sent TSLA stock plummeting after an attempted rally earlier in the day. Shares closed lower than one percent, likely due to concerns over possible restructuring plans.

So far, Gates has not issued a statement regarding its short position in TSLA shares. However, his action towards the company deserves a closer look as Tesla prepares for a monumental change.

What’s going on with TSLA stocks?

From a purely financial standpoint, now is not the time to short TSLA shares. The company just posted impressive earnings for the first quarter of 2022, beating expectations in both revenue and earnings. Shortly before, it had also recorded record sales in the face of production and supply chain constraints. Given where TSLA was trading a few months ago, the electric vehicle (EV) innovator has clearly come a long way.

Of course, there’s still a lot we don’t know about Gates’ alleged short position. We don’t know when Gates pulled it, or his rationale for the decision. In fact, all investors know that the position is supposed to be $500 million. In the texts, Gates did not deny this amount, confirming instead that he had not closed it.

Gates may be betting against Tesla, but not many other pundits. Generally, Wall Street does not consider TSLA to be a short name. analysts on TipRanks rate the stock as a “moderate buy”, with 15 out of 29 retaining a “buy” rating. Moreover, although investor Michael Burry recently speculated that Tesla may soon be buried by growing competition, the stock’s recent performance does not support this view.

What this means

Ultimately, shorting TSLA shares doesn’t quite fit Gates’ image as a climate change activist either. After all, he devoted considerable time and resources to resolving the crisis. For that reason, the fact that Gates is shorting the profitable growth stock suggests he may be betting against Elon Musk more than anything else.

Some critics have expressed concerns about the true green nature of Tesla’s technology. The company has drawn ire for its failure to report its carbon emissions before. Still, recent performance proves that TSLA shares shouldn’t be shorted either.

At the date of publication, Samuel O’Brient held (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.



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