- Loup Venture co-founder Gene Munster criticized Michael Burry's bet against Tesla calling it "dangerous."
- Munster says Tesla could be worth more than $2 trillion long-term.
- "The most frequent mistake I made as an analyst was making a recommendation based on valuation when there was a secular theme," Munster said.
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Michael Burry's bet against Tesla is "dangerous," according to Loup Ventures' Gene Munster, who says the electric-vehicle giant could be worth north of $2 trillion over the long term.
Burry – best known for his billion-dollar bet against the US housing bubble in the mid-2000s, and immortalized in Michael Lewis' book "The Big Short" – revealed in a regulatory filing on Monday that his hedge fund, Scion Asset Management, held bearish put options on over 800,000 shares of Elon Musk's electric-car company as of March 31.
Munster, a veteran tech analyst and the co-founder of Loup Ventures, said in an interview with CNBC on Tuesday that in his experience, it's risky to short a long-term "theme" like electric vehicles.
"That's the dicey part of this short call. Ultimately, when you're shorting a theme, it gets really dangerous," Munster said. "I think it's a risky bet to go against this company long term."
Munster went on to describe how some of the biggest mistakes he made when he was a sell-side analyst were recommendations against "themes" in the market based on current valuations.
"I was a sell-side analyst for a long time, I made many of an incorrect call, the most frequent mistake I made as an analyst was making a recommendation based on valuation when there was a secular theme," Munster said.
Munster highlighted the growth of the EV market in the interview as well, calling it "quite spectacular," and said any short-bets against Tesla would have to be based on a lack of belief that the firm can capture market share around the globe.
Munster also said he believes Tesla will take over anywhere from 15% to 20% of total car sales globally in the coming years.
If Tesla does hit that mark, the company could be worth over $2 trillion, according to Munster.
"If they get there, to jump forward five years, what this company ultimately could be worth if you get to that 20% mark and in five years we're going to be thinking about 6, 7 years out, you can get to a case where this can be a much bigger company, a $2 trillion-plus company," Munster said.
The Loup Venture's founder went on to explain the bull case for Tesla, arguing that the EV giant is set to operate with a more traditional tech model, moving into hardware and software services for revenue gains.
"The real substance of the bull case is a business model that is more like a traditional tech model…if they are successful at hardware, software services similar to Apple and look at what Apple trades at, about a 6x revenue multiple, you can build a case that Tesla can get there too," he said.
Munster concluded by saying that there is "a question around competition," but that he thinks there's a strong case that long-term Tesla investors will be rewarded for their patience. However, the veteran tech stock analyst added that "near term all bets are off."
