What Happened: Jim Chanos has been short on Tesla since 2016. “It wasn’t such a bad short,” for the first four years, but the last 12 months is a different story, he told in a Bloomberg interview.
“It’s been painful, clearly,” Chanos said. Tesla has gained more than 700% in the last 12 months, and its market capitalization is above $500 billion, bigger than all but five members of the S&P 500.
Chanos has reduced the size of his Tesla short position from the maximum 5% of capital allowed at his hedge-fund firm Kynikos Associates.
Chanos said that a lot of other companies are trying to ride on the EV bandwagon. He is short on Nikola Corporation NKLA too.
Why It Matters: Chanos still takes issue with Tesla’s business model and valuation. Some consider Tesla as an electric-vehicle play, while some view it as an autonomous-vehicle company.
“It’s whatever people want to believe Elon Musk is touting,” said Chanos. He said that Tesla’s five straight quarters of profit are due to sales of energy credits rather than car sales. It is trading at 900 times trailing earnings and more than 150 times estimated earnings for the next four quarters.
Chanos said he has never met Elon Musk or had a conversation with him. If they were to meet, he would tell Musk, “job well done so far.”
According to Chanos, investors are looking at the Fed as their insurance policy in the zero-interest-rate environment, thinking the Fed will never let them lose money.
Price Action: TSLA shares closed 4.3% higher at $593.38 on Thursday.
Click here to check out Benzinga’s EV Hub for the latest electric vehicles news.
Image Courtesy: Wikimedia
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.