In a recent viral X post, Elon Musk brought back to discussion about Bill Gates (Trades, Portfolio)' short position against Tesla (TSLA, Financial) as a potential cause of bankruptcy for the Microsoft's co-founder. Traced back, in Walter Isaacson's 2023 biography of Elon Musk, it is written that Bill Gates (Trades, Portfolio) undisclosed his short position in big amount against Tesla.
As one of the loudest supporters for environmental and sustainability, Elon Musk said that Bill Gates (Trades, Portfolio) was hypocritical, supposed that he needs to support Tesla as the world's most valuable EV maker by far. Gates' short position on Tesla meaning he will profit when the Tesla share prices drop.
The biography highlighted that his short bet against Tesla resulted to a $1.5 billion loss at price $400.99 per December 10, 2024, as Tesla share prices instead of dropping, jumped by 61% year-to-date.
Given the number, I wonder at what price Bill Gates (Trades, Portfolio) shorted Tesla and how many shares. By the 61% increase year-to-date into account and the anchored price of $400.99, we can now calculate the price which Gates shorted Tesla. And after that we can also triangulate the number of Tesla shares that he short too.
Triangulation of Gates' Short Price and Number of Tesla Shares
The Price:
Initial Price = The Price in December 10th / 100%+61%
Initial Price = 440.99/1.66 = 250
Now we know that Bill Gates (Trades, Portfolio) likely shorted Tesla at around $250 per share. With the calculated share price and a $1.5 billion loss, we can estimate the number of shares he shorted.
The Number of Shares:
Number of Shares = Total Loss / Loss per Share
The loss per share = $440.99 - $250
The loss per share = $150.99 or rounded to $151
Number of Shares = 1,500,000,000 / 151
Number of Shares = 9,933,963
It is assumed that Bill Gates (Trades, Portfolio) has shorted 9,933,963 Tesla shares.
Bankrupt By Shorting Tesla?
Musk wrote, “If Tesla does become the world's most valuable company by far, that short position will bankrupt even Bill Gates (Trades, Portfolio).”
Well, as of now Apple Inc (AAPL, Financial) is the world's most valuable company in the world with market capitalization reaching $3.771 trillion. And Tesla now has its market capitalization at $1.356 trillion. The difference of the two companies is $2.415 trillion ($3.771 - $1.356 = $2.415).
With Tesla's 1.1 billion shares outstanding, and current stock price of $422.28, just to match Apple's market cap, Tesla is required to have its price at:
Required Price = (Difference / Number of Shares) + Current Price
Required Price = (2,415 billion / 1.1 billion) + 422.28
Required Price = $2,622.28
Tesla needs to see its share price at $2,622.28 just to match Apple, that means 520.97% from today's price of $422.28.
Calculating Bill Gates (Trades, Portfolio)' Loss
If Tesla stock price really go to $2,622.28 someday, with Bill Gates (Trades, Portfolio)' estimated 9,933,963 Tesla shares at $250 per share, we can estimate Bill Gates (Trades, Portfolio)' loss from shorting Tesla by using the following formula:
Loss = (New Price−Short Price) × Number of Shares
Loss = (2,622.28−250) × 9,933,963
Loss = 23,559,195,870.84
So, if Tesla really go to $2,622.28 or more then Bill Gates (Trades, Portfolio) would approximately have himself a $23.56 billions of loss.
As of now, as one of the wealthiest persons on earth with $108.2 billion net worth, a loss of $23.56 billion won't make him bankrupt but surely cause a huge loss that reduce almost one fourth of his worth.
The question remained: Can Tesla go to at least $2,622.28 per share?
