Is it time to short Tesla (NASDAQ:TSLA)? It’s a question a lot of investors have asked in the past year as the market capitalization of the electric car maker has grown to US$63bn.
That means it is more valuable than General Motors (NYSE:GM) and Ford Motor Company (NYSE:F) by some margin.
And to the lay investor this seems well out of whack with fundamentals, particularly as Tesla is loss-making.
So, it’s ideal opportunity for those ballsy enough to bet on the stock eventually hitting reverse gear because it is too expensive.
Think again
JAMM Investing’s blog on the Seeking Alpha site tackles the Tesla short trade head on.
JAMM admits the issues such as the company’s “aggressive accounting, quality defects (especially for the Model X), TSLA's cash burn, and Musk's aggressive and inaccurate statements”, support the naysayers’ case. Cash burn is also a risk.
Tesla Model 3 here, there and everywhere! Don't miss our Model 3 sightings gallery, updated daily - https://t.co/oDZ4IGydfP pic.twitter.com/VtcX1NISLU
— TESLARATI (@Teslarati) June 19, 2017
However the only thing likely to sink Tesla is if sales growth fails to live up to some “supercharged” expectations. With the huge backlog for the Model 3, demand remains high, says JAMM.
“I believe that TSLA is overvalued but that the chickens may take as long as a year or two to come home to roost,” it adds.
“The short-term outlook is positive because of the Model 3 backlog and relative lack of competition.”
Mid-morning Tesla shares were changing hands for US$382.15, up 1.5%.