|Chicken Little admits to shorting Tesla at $364
It is embarrassing to short Tesla because it is among the most shorted stocks in the world. So with all my alleged financial sophistication, wisdom, training, and ability, I come up with the most obvious position in the world. And my super bowl pick - The New England Patriots (kidding on this one -- I pick Tom Brady for the Senior Bowl).
Why short Tesla when it is so obvious? First, let me report that I do not agree with the most common reasons to short Tesla.
Incorrect Bear reason #1 - production difficulties.
Tesla bears frequently recount horrors from inside the factory. Reworked parts, late nights, etc. These may all be true, but making cars in high volume is a solved problem. The world is very good at making cars.
Incorrect Bear reason #2 - Car quality.
I believe that Tesla makes the best electric car, for most people, in the world. They seem great to me, and I would consider buying one. Especially if I could drive in the carpool lane in California.
So if Tesla will make an enormous number of awesome vehicles, why short the stock? The explanation is that Tesla lines up terribly with the macro trends that I predict. I see a deflationary depression where people hold on to their cars longer, where financial conditions tighten, and where gas price stay low.
The problem for Tesla is not making great cars in high volume. It is raising the capital to make those cars, and selling cars into a frugal environment.