If you are a regular reader of my offerings, you will be aware that I have been bearish on Tesla (TSLA) for quite a while. On March 1st, I wrote that the staffing cuts and other cost-cutting moves there could be a good sign in the long-term, but would prove problematic in the short-term, making the stock a sell. Then, three weeks ago, when the stock was jumping on news of a massive capital raise, I sounded a note of caution again. The stock is now 35% lower than when I made that initial call and, from a trading perspective at least, it is time to at least cut, if not reverse, short positions.
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The fundamental problems that I highlighted in those two pieces, most notably the company’s inability to consistently turn a profit, haven’t changed, but that isn’t the point. What has changed is that everyone is now jumping ship, even those that remained bullish for a while.
This week, calls from a couple of those disappointed bulls made the headlines. The first came from Morgan Stanley whose analyst “worst-case scenario” saw TSLA dropping to $10. Then came Citi, whose $36 bear case would have been shocking were it not for what came before. Those are certainly sensational numbers, but that is the problem.
Some may think that the inclusion of those numbers in the reports are an example of “hell hath no fury…” or are cynical attempts to garner publicity. I guess there could be some truth…