Billionaire George Soros Cuts His Ties To Elon Musk
© Courtesy of TheStreetElon Musk won't see any familiar faces at Tesla's May 16 shareholder meeting in Austin, Texas.
Billionaire Musk George Soros, the world's most famous short seller, will not attend Tesla's shareholder meeting, as he has not been a shareholder in the electric car maker since March 31.
Soros Fund Management, the financier's hedge fund, has divested all Tesla shares it bought starting in the second quarter of 2022, according to a regulatory filing. He surprised all the hedge funds by adjusting his investment strategy in the auto industry from this quarter.
The billionaire, who has settled on bets on electric car startups like Lucid Motors ( LCID ) - Free Report and Rivian ( RIVN ) - Free Report , also disclosed his stake in Tesla. First, he bought 29,883 Tesla shares worth more than $20.1 million on June 30.
He trusted the Austin, Texas group and its charismatic and temperamental CEO Elon Musk, taking advantage of a more than 50% drop in shares between January and September 2022 to triple his stake in Tesla to 89,647 shares as of September 30.
Soros bet on Tesla
The big investment suggests Soros believed in Musk's strategy for Tesla, even as the billionaire was distracted by his $44 billion purchase of Twitter. At the time, the techno king was embroiled in a legal battle with Twitter 1.0 management and had little to say about Tesla. Tesla's fundamentals were very strong. In the third quarter, it reported adjusted EBITDA of nearly $5 billion, up 55% year-over-year, and revenue rose 56% to $21.5 billion.
In the first nine months of 2022, it delivered 907,573 vehicles, 45% more year-on-year, and produced 927,910 vehicles, almost 49% more.
In the fourth quarter of 2022, Soros continued his strategy of acquiring Tesla shares. As of Dec. 31, it held 132,046 shares, according to filings with the Securities and Exchange Commission. This represents an increase of 42,399 shares since September 30. His stake in Tesla at the time was about $16.27 million.
Interestingly, the famous Forward company continued to buy Tesla shares when the Model Y SUV maker suffered a stock market crash. In total, Tesla shares have lost 65% of their value over the past year.
Three months later, Soros sold all of his Tesla shares. He was no longer in office as of March 31, according to new filings with the Securities and Exchange Commission.
potential damages
It's not clear what prompted Soros to sell all of his Tesla positions, but it's important to note that Tesla's stock price recovered 68.4% in the first three months of the year, since the group reported exceptional results on January 25 with net sales of $12.6 billion. in 2022 The group aims to produce 2 million vehicles in 2023, after 1.37 million last year. Added to this good news is the start of production of the company's first pickup truck, the Cybertruck, later this year. This car is the cash cow of the future as wallets are full and expectations are high.
In the bad news category, Tesla has dramatically cut the prices of its cars, including the wildly popular Model Y and Model 3, which has eroded profit margins. Moreover, competition is increasing, with more and more electric vehicles appearing on the market.
Soros' investment in Tesla was not particularly profitable. At best, that netted him $3.8 million, as he sold the stock in the second (209.39), third (227.26) and fourth (109.10) quarters of 2022 at the lowest price and bought the highest price (214.24). . ) in the first quarter of 2023.
In the average scenario, Soros lost $9.8 million. This assumption assumes that Tesla bought the stock at the average price of the quarter and sold it at the average price of the last quarter.
At worst, the legendary investor lost a total of $26.2 million. This scenario, like the first, is unlikely because it is based on the assumption that Soros did everything at the worst possible time, while the first scenario suggests that he did everything at the right time.
Stock market rules require fund managers with more than $100 million in U.S. stocks to file a document known as a 13F within 45 days of the end of the quarter, reporting their holdings of U.S.-traded stocks.
The value of Soros' US stock portfolio fell nearly 11% in one quarter to $6.5 billion. Soros Fund Management is a family office that manages public and private capital.
"SFM invests globally across a wide range of strategies and asset classes, including equities, fixed income, commodities, currencies, alternative assets and private equity," the firm says on its website.
Soros, whose net worth is estimated to be around $8.5 billion as of May 13, is known to invest in philanthropy, according to the Bloomberg Billionaires Index. Most of his company's assets are in the Open Society Foundation, which "supports people around the world who work for justice, equality and freedom of expression."