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Tilson Vs. Left: Short Sellers Place $10,000 Bet On Tesla's Profitability

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Tilson Vs. Left: Short Sellers Place $10,000 Bet On Tesla's Profitability

Two high-profile short sellers are making a friendly bet for charity on whether or not Tesla Inc (NASDAQ: TSLA) will turn a profit in any quarter of 2019.

Tesla bear and former Kase Capital Management hedge fund manager Whitney Tilson has bet Citron Research founder Andrew Left and a group of other Tesla bulls $10,000 that Tesla will not be profitable in any quarter this year. Proceeds from the friendly wager will go to the winner’s charity of choice.

"[Ten people] bet a total of $3,000 and my friend and famed short seller, Andrew Left, took the remaining $7,000 of the $10,000 I’m willing to wager," Tilson wrote in the Monday morning newsletter.

Tilson’s Bearish Take

Tilson said in a newsletter the string of recent headlines from Tesla all point to a company in trouble.

Tesla recently announced it was closing all of its retail stores and cutting prices on the Model 3. Over the weekend, the company said it has decided it will leave a small portion of its brick-and-mortar stores open and will raise prices on its vehicles by 3 percent to pay for them. Tilson said layoffs, guiding for more earnings losses in the first quarter and CEO Elon Musk bickering with the SEC are all red flags.

“It’s just preposterous on its face. Tesla is clearly in deep trouble – yet the stock is down only ~5% since this news emerged a week ago,” Tilson wrote.

Left’s Bullish Take

Left is bullish on Tesla and said last Friday that, even through all the media criticism, Musk and Tesla have been an incredible success story.

“As the critics continue to make baseless claims and flood my emails and networks with hatred for Tesla, the competition continues to be in awe,” he wrote.

Left said he doesn’t expect Musk to remain CEO of Tesla for another 10 years, but the flood of negative media coverage of him is excessive given all he has accomplished.

“We were short the stock for several years and remain the lead plaintiff in suing Musk for his 420 tweet. However, his critics are over their skis,” Left said.

Citron has a $320 price target for Tesla.

What’s Next?

Investors will be watching closely to see how Musk replies to the SEC call for him to be held in contempt of court for tweeting misleading production guidance in February. Tesla investors will also be watching closely to gauge long-term demand for the $35,000 Model 3 and just how much of a margin impact the lower-priced sales will have.

Tesla's stock traded higher by 1.5 percent Monday but is down 21 percent overall in the past three months. Shares traded at $288.47 at time of publication.

Related Links:

Would Tesla's Downfall Have A Domino Effect? Tilson Follows Up On Bearish Call

Whitney Tilson: Tesla Shares Will Breach $100 By Year's End

Latest Ratings for TSLA

DateFirmActionFromTo
Oct 2019DowngradesMarket OutperformMarket Perform
Sep 2019Initiates Coverage OnBuy
Jul 2019ReiteratesUnderweight

View More Analyst Ratings for TSLA
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