Tesla, Inc. TSLA took a sharp nosedive on Wednesday following a downgrade from Wells Fargo, which raised concerns about the electric vehicle maker’s ability to meet delivery targets. Adding to the downward pressure, a prominent Tesla investor and YouTuber announced his decision to short the stock, citing broader economic factors.
Pointing Finger At The Fed: “Going short Tesla,” declared Kevin Paffrath, better known as “Meet Kevin” on YouTube and social media.
With nearly 2 million subscribers on his YouTube channel and over 339,000 followers on X, Paffrath expressed his frustration, saying, “But I feel stabbed in the back and a lot of it doesn’t even have to do with Tesla, has to do with what I think the Federal Reserve is about to do to us.” He clarified that his short position is only for the short term.
Paffrath then delved into the recent reversal in consumer price inflation, noting a stall in structural inflation despite a sharp drop in cyclical inflation since June 2022. He speculated on the Federal Reserve’s upcoming Summary of Economic Projections, suggesting that the central bank may signal rate hikes to combat inflation, contrary to the market’s expectation of rate cuts.
See Also: Everything You Need To Know About Tesla Stock
Risks Abound: “But what you have in the near term is the political weight of Elon Musk going from basically CEO at Tesla to CEO of Twitter to now CEO of border patrol. So you have the political weight of that you have a real Twitter financing risk,” Paffrath said.
He cautioned about liquidity risks for Tesla, as Musk’s involvement in other projects could divert resources from the EV maker. Additionally, Paffrath pointed out potential challenges such as rising transportation costs and margin contraction, exacerbated by geopolitical tensions and promotional incentives.
“Between now and the end of next year the tailwind of rates coming down probably isn’t going to happen as quickly as we thought and it’s entirely possible that maybe maybe all of a sudden rates come down quicker than we thought,” Paffrath said.
Looking Ahead: Paffrath suggested a possible decline to around $148 in the short term, with a strong support level at $101.
“I think, it’s unfortunate the situation Tesla is in and I don’t think all of the bad is priced in yet so unfortunately I think it’s going to get a lot worse before it gets better.”
Tesla closed Wednesday’s trading session down 4.54% at $169.48, according to Benzinga Pro data.
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