Jim Chanos Says Tesla Is An Overhyped 'Chinese Car Company,' Carvana, Beyond Meat Are Going Bankrupt: Why The 'Nirvana' Won't Last

Zinger Key Points
  • Jim Chanos says the market is pricing in a Goldilocks scenario that he expects to be disrupted by plunging corporate earnings.
  • Tesla is a great example of the sense of 'nirvana' in the market, he says.

Several stocks have made remarkable runs since the start of the year, but famed short seller Jim Chanos expects it all to come crashing down for the bulls.

What To Know: As a hedge fund manager, Chanos teeters between net long and net short. His firm was net long to start the year, but he's pulling the reins on some of his long positions and upping the ante on some of his downside bets

The market expects corporate profits to be up 12% this year, inflation to come down significantly and the Federal Reserve to ease its stance, Chanos said Monday on CNBC's "Fast Money."

"I mean that's pretty much nirvana if you're a bull ... people are pricing in a pretty nice Goldilocks scenario."

Why Chanos Expects Tesla Earnings To Weaken: The legendary short seller expects earnings estimates to continue to be revised down. He used Tesla Inc TSLA as a prime example. 

Street estimates for annual earnings have already fallen from $6 per share to close to $4, but they are going to come down even further, he said: "We think the number has a two in front of it this year."

"Everybody forgets Tesla lost money through 2019 building cars in the United States. It wasn't until they opened Shanghai and that ramped in a major way that their margins took off," Chanos said.

The hedge fund manager noted that China is Tesla's weakest market, which doesn't bode well for the Elon Musk-led company, considering it has struggled to reach profitability outside of Shanghai

"Tesla is a Chinese car company. It really is," Chanos said, noting half of the company's production takes place in China and almost all of its profits are generated there.

Earlier This Month: 'Bring Back The Robots': Tesla Short Seller Pokes Holes In EV Giant's Next 'Bull Narrative'

Chanos On Carvana, Beyond Meat: But it's not just Tesla, Chanos said. Several stocks in his portfolio are up more than Tesla this month and they are dead in the water. "It's been an insane three or four weeks," he added.

He called out Carvana Co CVNA and Beyond Meat Inc BYND, suggesting both companies are headed for bankruptcy.

Carvana shares have more than doubled since the start of the year despite swirling bankruptcy concerns. Carvana is heavily shorted, which is likely intensifying the swift recovery year-to-date.

An impending bankruptcy for Beyond Meat doesn't seem quite so obvious, but Chanos told CNBC he expects the plant-based meat provider to run out of money this year. 

Benzinga reached out to Beyond Meat, but the company did not comment on the famed short seller's remarks.

See Also: Are These Relatively Little-Known Organic And Earth-Friendly Food Stocks On Your Watchlist?

TSLA, CVNA, BYND Price Action: Year-to-date, Tesla shares are up nearly 40%, Beyond Meat is up approximately 33% and Carvana has jumped nearly 105%.

Jim Chanos. Benzinga file photo by Dustin Blitchok.

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