Why famed short-seller Carson Block won't bet against Tesla

• The famed short-seller Carson Block said he wouldn't bet against Elon Musk's Tesla.

• He argued that the EV maker's sheer size gave it a strong capital base that could weather turmoil.

• "Elon pulls rabbits out of the hat constantly," he said, adding, "I just won't bet against Elon."

Carson Block, known for his shrewd short bets against companies, says he won't bet against Tesla.

The famed Muddy Waters investor said he concluded in 2021 that shorting Tesla was a fool's errand. He said he realized the company's capital base was its safety net.

"What all of the bears missed" was that Elon Musk "understood that the scale he needed to have was capital base," Block told Bloomberg TV on Monday. "And so when he was able to yoke that stock price way up and have this enormous market cap — I mean, even if the company is bleeding billions of dollars and the stock is sinking, there's so much market cap that he can continue to raise money."

It's an about-face for Block, who said he had bet against Tesla in the past. He told Bloomberg that several years ago his firm held long-dated puts on Tesla designed to capitalize on a share-price drop that nearly materialized.

"It is a volatile stock, but, you know, it continues to get flows," Block said, adding: "Tesla's not going bankrupt for a very long time. And that's what the bears missed, because the bears were hung up on this 'Oh, it bleeds money, it's going to go bankrupt.'"

Tesla's financial health has been the subject of ceaseless investor scrutiny. The car manufacturer posted its first consecutive quarterly profit in 2019, and the years since haven't been altogether smooth. This year the electric-vehicle maker has lost market share to competitors amid slowing demand, causing free-cash-flow and revenue figures to disappoint over the past few quarters.

For some, that's made Tesla's lofty share price difficult to justify. The short-seller Per Lekander recently called it the "biggest stock-market bubble in world history" and predicted it would plunge by about 93%, to $15 a share.

But Block isn't sweating any of those elements and thinks Musk will continue to surprise any doubters.

"Elon pulls rabbits out of the hat constantly," he said, adding, "I just won't bet against Elon."

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