Michael Burry, the investor recognized for his notable wager against the U.S. housing market during the 2008 financial crisis, has adopted a bearish view on Oracle Corporation (NYSE: ORCL). In a Substack post released following market close last Friday, Burry disclosed his ownership of put options on Oracle shares. This follows his prior short-selling of Oracle stock within the last six months.
Oracle, primarily known as a leading software provider of database solutions, has in recent years broadened its reach into the cloud computing arena. This strategic pivot, however, has involved incurring a considerable amount of debt aimed at expanding the company’s data center infrastructure to support its cloud services. Currently, the company carries approximately $95 billion in debt, positioning it as the largest non-financial corporate issuer within the Bloomberg high-grade index.
When questioned by a reader regarding his rationale for shorting Oracle, Burry articulated his discontent with the company's current strategic path and investments. Although he refrained from detailing the specific terms of the put options held, Burry’s statements underline concerns about how Oracle is balancing its legacy business with new ventures in cloud services.
The year has been challenging for Oracle’s equity performance; its share price has declined markedly by close to 40% from its September peak. This significant depreciation tracks alongside apprehensions regarding the company's elevated leverage and cloud transition strategies.
Meanwhile, Burry expressed reservations about betting against certain large technology titans, specifically Meta Platforms Inc. (NASDAQ: META), Alphabet Inc. (NASDAQ: GOOGL), and Microsoft Corp. (NASDAQ: MSFT). He highlighted that these companies possess diverse business activities extending beyond artificial intelligence. Consequently, he believes they are likely to sustain their competitive positions in core markets despite possible setbacks associated with excess technological capacity.
Burry’s decision to short Oracle stands out, given his reputation for identifying overvalued entities and corporate vulnerabilities. The move implies that he perceives fundamental weaknesses within Oracle’s business model and capital structure, particularly related to the substantial indebtedness incurred to fund cloud computing growth. Although similar bets have proved lucrative in prior instances, such as during the mortgage crisis, the outcome of his current position on Oracle remains to be seen.
Oracle’s current stock price at the time of reporting is $197.74, marginally down by 0.39%, reflecting ongoing market uncertainties. Contrastingly, Alphabet’s shares trade at $329.20, up 0.19%, Meta Platforms at $653.10 with a slight 0.01% increase, and Microsoft at $479.05, slipping marginally by 0.05%.