Over the years, the number of people betting against Tesla Inc TSLA and Elon Musk has increased. Musk has been silencing many of his doubters since Tesla went public in June 2010, with the stock outperforming expectations.
Intriguingly, one of the richest people in the world has been betting against the success of Tesla stock.
What Happened: Over the years, Musk has dealt with pressure from short sellers, which inspired him to release a piece of merchandise dubbed “sexy short shorts.” The shorts were sold out quickly on the Tesla site and saw the website crash due to demand.
The Tesla CEO seemed to mock the Securities and Exchange Commission (SEC), sarcastically referring to it as the "Shortseller Enrichment Commission." He promised to send some of the shorts to them, to provide solace during what he deemed "these difficult times".
One of Musk’s most vocal critics from the start has been CNBC host Jim Cramer. Musk was asked about Cramer’s take on Tesla’s future ahead of Tesla’s 2010 IPO.
“Sure, Jim, we’re no Bear Stearns, but I think we’re going to do OK. Jim, I think, recommended Bear Stearns and Lehman and other things, so frankly I think he’s a contra-indicator,” Musk said.
A more surprising person betting against Musk was revealed to be Microsoft co-founder Bill Gates. In a February appearance on the “Joe Rogan Experience” podcast, Musk revealed that he believed Gates had a short position on Tesla stock.
“I also heard that at one point he had a large short position. I don’t know if that’s true or not, but it seems weird. People I know who know the situation pretty well, I asked them ‘are you sure?’ and they said 'yes, he has a huge short position on Tesla.' That didn’t work out too well,” Musk told Joe Rogan.
Shortly after the comments from Musk, Gates was interviewed by CNBC’s Andrew Ross Sorkin.
“What Elon’s done with Tesla is fantastic,” Gates said. “We need more Elon Musks.”
Gates was asked directly if he was short Tesla stock.
“I don’t talk about my investments,” Gates replied, failing to deny the accusation.
In April 2022, leaked texts between Gates and Musk revealed that Gates was still short the stock. Ahead of a proposed meeting between the two billionaires, Musk asked Gates via text if he still held a short position on Tesla.
“Sorry to say I haven’t closed it out,” Gates said. “I would like to discuss philanthropy possibilities.”
Musk's reply to Gates was straightforward and sharp. “Sorry, But I cannot take your philanthropy on climate change seriously when you have a massive, short position against Tesla, the company doing the most to solve climate change.”
Musk told a user on Twitter that the texts were real.
Gates has praised Musk for what he has done for electric vehicles but has also said that more should be done for other clean energy initiatives.
“It’s important to say that what Elon did with Tesla is one of the greatest contributions to climate change anyone’s ever made. And you know, underestimating Elon is not a good idea,” Gates told the New York Times.
Related Link: Elon Musk Exposes Hypocrisy Of Bill Gates Climate Change
Investing $1,000 in Tesla Stock: The comments by Gates on CNBC and the leaked texts, which Musk confirmed to be real, highlight that Gates likely was short Tesla stock.
The big question marks are when did Gates go short Tesla and is he still short.
Short sellers of Tesla in 2022 enjoyed strong returns, with shares down over 60% on the year. Musk once estimated that Gates would need $1.5 billion to $2 billion to close out his $500 million short bet on Tesla.
Using the appearance on the Joe Rogan Experience podcast as a starting point, investors could have seen an opportunity to bet with Elon Musk and Tesla and go against Gates being short.
An investor could have purchased 3.74 shares of Tesla at the time with $1,000 based on a split-adjusted price of $267.09. The $1,000 investment would be worth $1,043.27 today, based on a price of $278.95 for Tesla at the time of writing.
While the 4.3% hypothetical return seems mild, it could have been much better for investors who properly timed their trades.
The $1,000 investment from February 2021 would have been worth $1,533.29 in November 2021, up 53.3%, when Tesla hit all-time highs.
Tesla stock traded between $24.08 and $235.22 in 2020, a year that could have seen Gates initiate his short position. The average share price for Tesla was a split-adjusted $96.67.
Investors who put $1,000 into Tesla in 2020 when Gates may have initiated his short position could have bought 10.34 shares based on the yearly average. The same $1,000 investment would be worth $2,884.34 today.
Read Next: Bill Gates Explains Why His Tesla Short Position Shouldn't Hurt Elon Musk
Photo: Greg Rubenstein and TED Conference on Flickr
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