Walter Isaacson countedin Elon Musk’s biography that there was a time when Elon Musk and Bill Gates were about to collaborate in some philanthropic projects. However, the CEO of Tesla discovered something that definitively broke the good harmony between both millionaires: Bill Gates had short investments in Tesla.
Following the unstoppable rise of Tesla shares in recent weeks, Elon Musk has responded to an X user with a message in which the millionaire assures that: “If Tesla becomes by far the most valuable company in the world, that short position will bankrupt even Bill Gates.” It’s not the first time that is expressed in those terms towards the founder of Microsoft.
The background of the message. The relationship between Bill Gates and Elon Musk is tense to say the least, since the Tesla CEO discovered that the Microsoft co-founder had shorted shares of his company and a few weeks earlier had lost $1.5 billion with them. Gates confirmed that he had that package of shares “at a loss” and acknowledged his mistake and apologized, although he did not get rid of the shares.
“How is it possible that someone so committed to climate changewithdraw your support for a company that makes electric cars? It’s pure hypocrisy. “Why make money off the failure of a sustainable energy car company?” Musk said.
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What are short investments? Short positions, or short investmentsis an investment system that, instead of betting that the company will gain financial muscle by making each of its actions cost more money, does it the other way around: it makes a profit when the company loses money. Hence Elon Musk’s anger with Gates.
To do this, the shares of a company are “borrowed” from a broker that offers this service. The investor sells that share (which is not his) with the commitment to recover it within a certain period of time and return it to its owner. If the investor sells that share for $10 and, after a while, that share loses 50% of its value, when he buys it back, he will pay half of what he was paid when he sold it. When the investor returns the shares to their owner, keeps the difference that has been obtained during the process.
The problem is that stocks go up. The problem with investing short is that, if the shares of the company in question rise, the investor would be buying the most expensive shares (not the cheapest), so he would be forced to pay an extra cost and lose money given that he has the commitment to return those shares to their owner within a period of time.
In the case of Tesla, the shares have had a meteoric rise since Elon Musk presented financial results at the end of October.
As published The Economic TimesTesla shares have appreciated 56.91% driven by Trump’s victory, which fortune has catapulted of Elon Musk and the rest of the investors, causing serious losses to those who had short positions. This has fulfilled Elon Musk’s promise to “annihilate” those who have these types of downward positions in Tesla. From there to ensuring that Bill Gates could end up bankrupt because of it, there is a way.
Can Tesla bankrupt Gates? While it is true that Bill Gates’ fortune is not found at its bestto say that this revaluation will end up causing the millionaire’s bankruptcy is too much to assume, starting with the fact that there is no evidence that the millionaire still maintains that investment today.
According to calculations from the investment portal Gurufocus.com, and assuming that one day Tesla shares reach the price of $2,622.28 to surpass Apple and become the most valuable technologyGates’ position in Tesla would cause losses of about $23,559 million. Which is a lot of money, yes, but not so much that Bill Gates cannot cover it with his $106.9 billion assets.
In techopiniones | Elon Musk Vows Bill Gates Will Be ‘Annihilated’ If He Doesn’t Stop Shorting Tesla Stock
Image | Flickr (Governor Tom Wolf), Wikimedia Commons (Ministry of Communications)