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Jim Chanos Says Tesla Should Trade Like a Carmaker, Not Tech Company

Jim Chanos Says Tesla Should Trade Like a Carmaker, Not Tech Company

(Bloomberg) -- Short seller Jim Chanos predicted Tesla Inc. will lose money again this year and believes investors will eventually trade the stock more like a carmaker than a tech company.

“It has to lay people off like a car company, not like a Silicon Valley software company,” Chanos, the president of Kynikos Associates, said of Tesla on Bloomberg Television. “It has manufacturing plants like a car company. It’s got a lot of debt like a car company. So investors can try, can convince themselves all they want, that this is a software company or this is some leading-edge technology company. Sadly, the numbers belie that.”

Jim Chanos Says Tesla Should Trade Like a Carmaker, Not Tech Company

Chanos has been publicly short Tesla for several years. When the electric-car maker was in the process of merging with SolarCity Corp. in September 2016, he said the combined company would be a “walking insolvency.” As Chief Executive Officer Elon Musk was struggling to ramp up production of the Model 3 sedan in late 2017, Chanos predicted Tesla was “headed for a brick wall.”

Musk acknowledged almost a year later that Tesla had narrowly avoided insolvency, though the company is now on much firmer footing. It’s selling the Model 3 in volumes no other automaker has seen with an electric vehicle, and two quarters of profit sent the shares soaring from late last year through mid February.

While the spread of the coronavirus wiped out a fair amount of gains, the stock is still up 37% this year and 125% since Oct. 23, when the company reported earnings for the third quarter of last year.

“So far,” Chanos said, betting against Tesla “has not been the correct call, I will admit.”

©2020 Bloomberg L.P.