Back in April 2013, Longboard Asset Management issued a report in which it predicted that Tesla’s stock would trade at $200 within five years. At the time the stock was trading around the $40 mark and it reached $200 less than a year after the report. Longboard also predicted that Tesla would dominate the market of Electric Vehicles and compared the company’s importance in the EV industry with Apple’s role in the smartphone market.
Currently, Tesla’s stock is trading at around $201 per share, and as it was one of the most shorted stocks at $40, it still remains highly shorted now with almost 29% of the float being short. At the current scale Tesla is still more a high tech stock rather than automotive, but the company plans to expand its deliveries after it opens its Gigafactory in Nevada. Moreover, the company has recently expanded its product line and has started deliveries of its Model X SUV and plans to launch a budget version of a fully electric vehicle, Model 3, which will be revealed at the end of March.
Nevertheless, the company run by Elon Musk still has more room to grow and has to prove to investors that it is a worthy holding. Meanwhile, the stock remains to be considered overvalued by many long and short investors, with notorious short-seller Jim Chanos of Kynikos Associates being in the latter group. Mr. Chanos has mentioned on several occasions that he might be short Tesla. During an interview with Bloomberg in October, 2015, Chanos said:
“[…] what Tesla had is innovation and a head start in this market that other companies are now catching up to. And they have to become a car manufacturer. And becoming a car manufacturer is a lot more difficult than becoming a high tech darling.”
During another interview with CNN Money (also in October, 2015) Chanos also criticized the stock and said that Tesla has a long way to go before it can justify its high valuation.
“I think Tesla’s got a great product, but Tesla’s gotta navigate from being a, basically, small boutique, elite car manufacturer, to a mass market automobile manufacturer. That’s a very, very difficult thing. To compete with the likes of BMW and GM is a different matter than just selling 50,000 $100,000 cars. […] In order to sell millions of cars, which is where the stock is valued…they’ve got a long way to go,” Chanos said.
Keeping this in mind, we’re going to review the key action encompassing Tesla Motors Inc (NASDAQ:TSLA).