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Jim Chanos still thinks Tesla’s stock is a house of cards, but he’s adjusting his plan to profit from its collapse.
The famed short seller told CNBC on Wednesday that he has turned his disastrous, longstanding short bet against Elon Musk’s electric car company into a put position — a safer way to make a bearish bet on the hottest stock in modern history.
Chanos, known for profitable short bets against Enron and Wirecard, put on his short against Tesla in 2016 and has been one of Musk’s most public and vocal critics, one referring to Tesla as “a walking insolvency.”
But since he started betting against Musk and his cars, Tesla stock has gone up more than 2,000 percent, making it nearly impossible for Chanos and his fellow short-sellers to stay in their positions.
Musk has not been overly gracious about Chanos’ defeat, tweeting in November 2019, “So many reporters gave Chanos airtime when he called Tesla a worthless fraud. Now that he has been proven wrong, silence…”
In December, Chanos said he had cut his short against Tesla, admitting that the investment had been “painful” and tipping his hat to Musk, saying “Job well done so far.’”
By turning his short into a put, Chanos is limiting his risk by buying an options contract that allows him to sell a stock at a predetermined price. While the profits on puts are smaller than a full-on short position, Chanos’ exposure to Tesla’s still-surging stock price is limited.
Tesla stock rose 0.7 percent to $850.45 on Wednesday after hitting an all-time high of $880 earlier this month.
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