REUTERS/ Brendan McDermid
- The former hedge-fund manager Whitney Tilson doubled down on his Tesla short thesis on Friday, saying he doesn’t "think the company will ever report another profitable quarter."
- Tilson predicted earlier this week that Tesla shares would fall below $100 by the end of this year.
- Last week, Tesla unveiled its $35,000 Model 3 sedan and said it would close most of its retail stores.
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The former hedge-fund manager Whitney Tilson on Friday doubled down on his short thesis against Tesla.
"Tesla is facing a tidal wave of new competition and I question whether it can make money at the new, lower price points announced last week, so I don’t think the company will ever report another profitable quarter," Tilson, the former manager of the $50 million hedge fund Kase Capital, said in an email.
He added that the electric-car maker reminds him of the scene in Titanic where "the engineer shows the captain why ‘it’s a mathematical certainty’ that the ship will sink, yet the band calmly plays on."
Tilson closed his fund in September of 2017 after underperformance.
His comments come just days after he called for Tesla’s stock to plunge below $100 this year.
"Today I’m making one of my rare big calls: we will look back on last Friday as the beginning of the end for Tesla’s stock," he said in a newsletter distributed Monday, adding that the stock will be "under $100" before the end of 2019.
Alongside last week’s unveiling of the $35,000 Model 3, CEO Elon Musk warned Tesla might not be profitable in the first quarter of 2019 after achieving consecutive quarters of profitability in the second half of last year, a first in the company’s history. In February, Musk had said the company would be profitable in "all quarters going forward."
The electric-car maker also last week said it was shifting to online-only sales, and shutting down the majority of its 378 retail stores.
"Shifting all sales online, combined with other ongoing cost efficiencies, will enable us to lower all vehicle prices by about 6% on average, allowing us to achieve the $35,000 Model 3 price point earlier than we expected," the company said in a blog post.
The reaction from Wall Street has been mixed, with the majority of analysts holding firm on their previous calls.
"In our opinion this announcement is a potential game changer for Musk and Tesla as the $35k vehicle at profitable margins is a linchpin to the bull thesis in the name and we view this news as a major step forward," Wedbush’s Dan Ives said.
Morgan Stanley’s Adam Jonas was less optimistic. "While this may stabilize the air-pocket in Q1 sales, we’re concerned it’s a sign of a brand that may be, at the margin, losing its halo of exclusivity," he said. "We think the bears have more material to work with than bulls here."
Tesla was trading higher by 1.2% at $280.19 a share on Friday.
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