Analyst says, “Tesla Headed for ‘Brick Wall'”
$TSLA, $F, $VLKAY, $GM
Tesla’s (NASDAQ:TSLA) biggest asset is its stock price.
Tesla “is headed for a brick wall,” analyst/investor Jim Chanos said Wednesday.
“Every Bull market has its poster children,” the President and Founder of hedge fund Kynikos Associates Ltd said at an event in Detroit. “Tesla is one of the bad ones.”
Mr. Chanos has been public about his short position in Tesla Inc. for more than a year. When Tesla was in the process of merging with SolarCity Corp. in September 2016, he said the combined company would be a “walking insolvency.”
Shares of the Elon Musk-led EV maker closed at 196.05 that day and at 339.03 Wednesday.
While Mr. Chanosbuilt his reputation by wagering that Enron Corp. would fail and was proven correct.
He said Wednesday that the number of executive departures Tesla has endured this year is reminiscent of Enron before its fall.
Mr. Chanos also said his Short against Tesla has lost him money to this point and he does not know when its stock actually will decline.
Tesla has been successful because it was the 1st company to make EVs attractive.
As German automakers like Volkswagen, Porsche and BMW AG introduce competing models, Tesla’s advantage will fade to black.
“What Elon did was simple: He made EVs sexy,” Mr. Chanos said. “Prior to that you had to compromise and get something like a Prius. But now he has the entire auto world that has figured that out and is coming up with aspirational cars. He’s fighting a different fight.”
“Detroit and Germany are spending billions of dollars on this,” Mr. Chanos said.
“Tesla is not a leader, Tesla is a bit player.”
Hypmister Musk has trolled some investors in the past for betting against Tesla, tweeting in April about “stormy weather in Shortville” as the company passed Ford Motor Co (NYSE:F) in market capitalization.
Short interest has been inching higher this fall and is now about 24% of free float, IHS Markit data show.
Tesla’s stock price has climbed 59% YTD.
Last month in this column, I reported that Tesla has been working to get its Model 3 into production, burning money at about $16-M a day. The roll-out has been slowed by major problems at its battery factory and only auto plant.
Tesla produced about 16% of the Model 3’s it had targeted for Q-3, and delayed plans to reach weekly output of 5,000 sedans per week to March, from December.
It is clear that Mr. Musk will have to go back to the markets to raise money in order to bring out its recently hyped Semi truck and Roadster sports car. For which he is actually taking reservations requiring hefty deposits, Wild!
Tesla’s biggest asset is its stock price, when it falls, it will fall hard.
|HeffX-LTN Analysis for TSLA:||Overall||Short||Intermediate||Long|
|Neutral (0.09)||Neutral (0.17)||Neutral (0.08)||Neutral (0.03)|
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