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Short Seller Jim Chanos Explains Why He Still Doesn't Like Tesla

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Short Seller Jim Chanos Explains Why He Still Doesn't Like Tesla

Tesla Inc’s (NASDAQ: TSLA) stock might have increased by 6.5 times this year, but that hasn’t instilled any confidence in Jim Chanos, according to Barron’s.

Jim Chanos is a well-known fundamental short seller of Enron fame and the founder and President of Kynikos Associates LP.

What Happened: Weeding out the fluff and sticking to the basics of Tesla’s business, he says that, “however you might want to dream about autonomous taxis, spaceflight, tunnels underground, whatever - they are a car company, and they are an unprofitable car company.” Chanos said during Barron’s Executive Briefing on Investing and Money on Monday.

Labeling the market’s momentous growth phase as a “Golden age of fraud,” the short seller hints that financial frauds would come undone once the market enters into a contraction phase. He drew some of these references to the dot-com bubble burst two and a half decades ago.

See Also: Apple Gets $200 Bull Case Target From Wedbush On Strongest Product Cycle Since 2014

Why Does It Matter: Last Friday, there were reports that the Chanos had trimmed his short on Tesla, a position he has held on to since 2016.

Chanos has made calls and market predictions that turned out to be profitable over time on many occasions. The short seller called out Enron’s impending doom back in 2001, a decision that generated $500 million in profit, based on a report by Seeking Alpha.

Earlier in July, Chanos made a similar short position in Wirecard (OTC: WCAGY) and bagged $100 million in profits when the scam emerged, the Financial Times reports.

The veteran alleges that companies’ financial fraud is done legally, but “overall, there is an intent to mislead” while reporting accounting entries and financial statements.

Price Action: TSLA gained 1.27% on Tuesday, to close at $649.88.

Click here to check out Benzinga’s EV Hub for the latest electric vehicles news.

Image Courtesy: Wikimedia

 

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