Steve Eisman, one of the investors who famously bet against the subprime mortgage crisis, said he has killed his money-losing bet against Tesla amid its "cult-like" rally.
"I covered it a while ago," Eisman told Bloomberg Television on Wednesday. "Look, everybody has a pain threshold. When a stock becomes unmoored from valuation because it has certain dynamic growth aspects to it, and has cult-like aspects to it, you have to just walk away."
Eisman first revealed his short position on Tesla's stock in July 2018. The investor was one of many as the electric-car marker was the most shorted stock in the U.S. as recently as last week, according to S3 Partners. Short sellers covering their trade has been part of the fuel for Tesla's recent run-up.
These investors bet against the stock by borrowing shares from an investment bank and then selling them. Short sellers hope the stock will go down, so they can buy the shares back at lower prices and return them to the investment bank, turning a profit on the difference.
But, with Tesla's stock doubling in 2020 alone, short sellers are getting crushed, logging $11.5 billion in mark-to-market losses this year as of Tuesday's close, S3 data said.
Eisman, now a money manager at Neuberger Berman, said he can't put his finger on Tesla's monster rally. The stock has skyrocketed 140% since July 2018.
"Sometimes things can't be explained that well. If you are short, you've got to walk away. There's no glory in losing money," said Eisman, who was depicted in Michael Lewis' book "The Big Short" and the subsequent Oscar-winning movie of the same name.
Shares of Tesla plunged 17% on Wednesday in its first decline in seven days after the company announced a delay in its Model 3 deliveries due to the coronavirus. The losses cut Tesla's year-to-date gains to about 75%.