Chanos: Tesla Is 'Overpriced,' I'm A Potential Purchaser Of Glencore Stock
• In new interviews, Jim Chanos explains why he continues to short Tesla Motors Inc (NASDAQ: TSLA) and why Glencore (LON:GLEN) is on his radar.
• Chanos believes Tesla has a “great product,” but faces major roadblocks on the path to the mass market.
• He believes Tesla’s stock is currently priced as if the company were already selling millions of units.
In a recent interview with CNN, Jim Chanos, founder and president of Kynikos Associates, explained the reasons why he continues to maintain his bearish outlook for Tesla. Shares of Tesla are down 11.1 percent since the company unveiled its new Model X on September 29.
Chanos has no problem with Tesla’s products at all, acknowledging that the company makes “great cars,” but he sees the stock priced as if the company has already become a mass market hit.
“I think Tesla’s got a great product, but Tesla’s got to navigate from being basically a small, boutique, elite car manufacturer to a mass market automobile manufacturer. That’s a very, very difficult thing,” Chanos explained.
As Tesla CEO Elon Musk acknowledged himself in 2014, Chanos believes that Tesla’s share price has gotten way ahead of itself.
“In order to sell millions of cars, which is where the stock is valued, the stock is priced as if they’re going to completely succeed in being a major car manufacturer. They’ve got a long way to go,” he said.
One of the major hurdles that Chanos sees for Tesla in coming years is the massive amount of capital it would require for Tesla to grow its operations to match its share price. In order to scale-up its manufacturing to compete head-to-head with Ford Motor Company (NYSE: F) and General Motors Company (NYSE: GM), Tesla will need to continue to pour money into expanding its business for years to come.
“People who buy the car wax eloquently about the stock,” Chanos concluded. “But it’s a different animal to be competing in the $35,000 to $40,000 space.”
On His Radar: Glencore
Commodities giant Glencore, meanwhile, has lost half of its value in three months as debt issues plague the company. On Bloomberg, Chanos said Kynikos was "not going to comment on our position on Glencore...but I will say is we know the company pretty well."
He added, "Let's just say I'm a potential purchaser…to close out a short position you have to buy stock."
Disclosure: the author has no position in the stocks mentioned.
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