Microsoft (NASDAQ: MSFT) co-founder Bill Gates has long been a proponent of environmental initiatives and a sustainable future. However, according to Walter Isaacson's 2023 biography of Elon Musk, Gates' alleged undisclosed short position against Tesla (NASDAQ: TSLA) led Musk to view his actions as hypocritical.
A short position is simply betting against the company, and investors profit when share prices drop. Isaacson's book highlighted that Gates' bet against Tesla reportedly resulted in a $1.5 billion (£1.17 billion) loss for him as share prices jumped by over 61% year-to-date and 1,578% in the past five years to close at $400.99 (£314.03) on 10th December.
Musk's Long-term Issue With Gates Betting Against Tesla
In a recent X post, Musk highlighted that Gates' short position in Tesla could result in the bankruptcy of the Microsoft founder if the EV maker becomes "the world's most valuable company by far."
For that to happen, Tesla shares must grow by 200% as its market cap of $1.251 trillion (£979.71 billion) is still way behind Apple's (NASDAQ: AAPL) $3.729 trillion (£2.92 trillion). To reach there, Tesla would also need to beat incumbents like Meta Platforms (NASDAQ: META), Alphabet (NASDAQ: GOOG), and Nvidia (NASDAQ: NVDA).
Gates placed a massive short bet on Tesla when the company was at its weakest moments several years ago. He reportedly aimed to profit $500 million (£391.57 million) from Tesla's downfall, and the bet against the company also drove the stock down for regular investors.
While Musk was naturally unhappy with Gates' position, things got tense between the two when Gates urged the wealthiest person in the world to donate to his "window-dressing" environmental causes. During a 2022 meeting between the two at Tesla's Austin factory, the billionaires talked about philanthropy and climate issues, and Gates apologised for the short position.
"How can someone say they are passionate about fighting climate change and then do something that reduced the overall investment in the company doing the most?" Musk told Isaacson.
Gates Have Repeatedly Appreciated Musk's Achievements
Despite betting against Tesla, Gates has publicly praised Musk's contributions towards building a sustainable future. In a 2021 interview, he said: "What Elon's done with Tesla is fantastic." During a Washington D.C. dinner, he also said, referring to Musk, that "there is no one in our time who has done more to push the bounds of science and innovation than he has."
Tesla shares have soared since Republican Donald Trump's reelection in early November. Although the President-elect could eliminate EV tax credits, among other policy changes that could impact the industry, Trump's transition team is likely to prioritise the implementation of a federal framework for fully autonomous vehicles.
CFRA analyst Garrett Nelson recently lifted his Tesla target price to $450 (£353.18) apiece, while Morgan Stanley analyst Adam Jonas bumped his target price to $400 (£313.94) per share. Despite potential headwinds for the EV industry, these analysts believe that Musk's entry into the political sphere as the Department of Government Efficiency co-leader will also play a key role in potentially boosting Tesla's fundamental outlook.
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