American investment manager and short-sellerÂ extraordinaire Jim Chanos claims Tesla is “headed for a brick wall.”Â Having deemed the automaker as structurally unprofitable,Â Chanos said, “Three years ago, this company was supposed to be making money [today]. And now, it’s supposed to be making money by 2020. I’m guessing by 2019, we’ll hear about 2025.”
However, while Tesla has taken on massive amounts of debt to ensure its evolution as company, investors haven’t seemed to mind. Its stock price has climbed from $33 a share in 2013 to almost $380 in September of 2017. As a short-seller, Chanos says he’s lost money on the company in the past since the stock price never seems to go down, and that’s what he finds the most alarming.
“Nobody is buying Tesla stock based upon the current business,” he said. “It’s all based on the future and the hope for half-a-million to a million Model 3s per year.”
“But let me make an important point, one of the reasons this company was successful and that Musk had a vision ahead of everyone else is that he made electric vehicles sexy,” Chanos told Bloomberg. “The Model S was a sexy car.”
Unfortunately,Â Chanos also noticed that established automakers have seen Tesla’s hand and are now working to deliver some legitimate competition. He believes this will be the company’s downfall, noting that it has lost the lead in autonomous driving development to manufacturers like General Motors and Audi.
Chanos is probably most famous for successfully predicting the financial implosion ofÂ Enron in 2001Â â€” and he claims to have noticed things reminiscent of that corporate disaster in Tesla. However, while the automaker has lost aÂ vice president of business development, two software chiefs for Autopilot, and theÂ director of its battery technology in the last 12 months, there are reasons to doubt Chanos’ Humpty Dumpty scenario.
Overvalued as its stock price may be, Tesla has begun to diversity itself â€” taking on mainstream, lower-priced vehicles with the Model 3 while also developing an electric semi truck. It would need to truly muck up both of these products to cripple Wall Street’s current confidence in the brand. Fortunately forÂ Chanos, Tesla’s launch of the Model 3 hasn’t been without problems. But that could change withÂ suppliers now reporting that they are operating under Teslaâ€™s guidance of 5,000 units per week.
That said, the stock market is a fickle mistress operating under the influence of imagery bullshit and faith-based investing. This is whereÂ Chanos’ final prediction, where Musk departs Tesla to focus on one of his other companies in the coming years, comes into play. Without Elon, the company may lose thatÂ je ne sais quoi thatÂ makes it irresistible to investors. But the CEO has issued no hints that he’ll leave the company anytime soon, so any claim that he might take a hike is purely speculativeÂ â€” sort of like the stock market itself.
[Image: Tesla Motors]