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

Wall Street is full of Tesla, Inc. TSLA bears, but former Kase Capital Management hedge fund manager Whitney Tilson is one of the most aggressive.

After getting burned in the past betting against the electric vehicle maker, Tilson made a bold call on Monday that Tesla shares will trade below $100 by the end of 2019.

What Happened

On Monday, Tilson ramped up his bearish rhetoric against Tesla and CEO Elon Musk.

Tilson said Tesla’s announcement last week that it is cutting the price of the Model 3, closing its brick-and-mortar stores and returning to earnings losses in the first quarter of 2019 is the beginning of the end. 

“I think Musk has no more rabbits to pull out of his hat and therefore it’s all downhill from here,” Tilson wrote. “I predict that by the end of the year, the stock, today at $295, will be under $100.”

Why It’s Important

Tilson took a huge hit when he shorted Tesla stock at around $35 per share back in 2013. Tilson said he was no longer short Tesla in November 2016, when the stock traded at around $190, and called the trade “one of the biggest mistakes long or short of my investment career.”

On Monday, he said he is an admirer of Tesla CEO Elon Musk and of Tesla’s mission.

“While he too often behaves like a narcissistic brat, he’s undeniably an incredible entrepreneur with a remarkable track record." 

However, Tilson said last week’s announcement is a sign that Musk and Tesla are now out of options.

Evidence exists that Model 3 demand is weak and inventories are growing, he said. At the same time, Tilson said he has a feeling that — for the first time — the number of investors losing faith in Musk is starting to exceed the number of investors “drinking his Kool-Aid.”

What’s Next?

Tesla investors are about to be hit with another potentially negative headline in coming weeks when a judge rules on the SEC's call to hold Musk in contempt of court for tweeting misleading 2019 production guidance in February.

Musk agreed to a fraud settlement related to inaccurate tweets last year. Musk has until March 11 to submit a letter to the court pleading his case related to the February tweets.

Tesla stock traded lower by 3.1 percent Monday and is now down down 20.4 percent overall in the past three months.

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Photo courtesy of Tesla. 

Posted In: Citron ResearchKase Capital ManagementWhitney TilsonShort SellersShort IdeasPrice TargetTrading Ideas