Michael Burry, renowned for his successful bet against the US housing market during the 2008 financial crisis, has recently adopted a bearish outlook on Oracle Corporation (NYSE:ORCL). In a post on Substack, Burry revealed that he holds put options on Oracle shares, indicating a strategy to profit from a decline in the company’s stock price. He also mentioned having shorted Oracle directly within the past six months.
Oracle, a leading player in database software, has made significant strides in cloud computing services. This expansion has contributed to a considerable increase in the company’s debt, which now stands at approximately $95 billion. This figure positions Oracle as the largest corporate issuer outside the financial sector in the Bloomberg high-grade index.
Burry’s decision to bet against Oracle stems from his concerns regarding the company’s strategic direction and financial health. When responding to a reader’s inquiry about his investment choices, he expressed his dissatisfaction with Oracle’s current positioning. While he did not provide specific details regarding the put options, his stance raises questions about the company’s future performance.
Concerns Over Oracle’s Debt and Market Performance
This year has been challenging for Oracle, with shares experiencing a steep decline of around 40% from their peak in September. The significant debt burden resulting from its cloud computing investments could hinder the company’s ability to navigate market fluctuations effectively.
Burry’s approach is notable, given his track record of identifying overvalued assets. He has also expressed caution regarding shorting larger technology companies such as Meta Platforms Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOGL), and Microsoft Corp. (NASDAQ:MSFT). He believes these corporations, which have diversified operations beyond artificial intelligence, are likely to maintain their market dominance despite challenges.
While Burry’s investment strategies have proven successful in the past, the outcome of his current position against Oracle remains uncertain. His critical view of the company’s debt and strategic decisions might reflect broader concerns within the tech industry.
As the market continues to evolve, stakeholders will be closely monitoring Oracle’s performance and Burry’s bearish bet, which may offer insights into potential vulnerabilities in the company’s business model.
