Why Jim Chanos and Hedge Funds Hate Tesla

Barclays PLC (ADR) (NYSE:BCS) downgraded Tesla to ‘Underweight’ from ‘Equal Weight’ on Friday, and cut its price target to $180 from $190, stating that Tesla was facing pressure on its gross margins and deliveries guidance due to manufacturing challenges. Robert W. Baird & Co. downgraded it to ‘Neutral’ on Wednesday, from ‘Outperform’, and cut its price target to $282 from $335, citing the Model X’s unexpectedly higher price point as being a threat to the vehicle’s projected sales. Even Tesla bull Morgan Stanley (NYSE:MS) cut its price target to $450 from $465, suggesting that Model X sales targets would be difficult to reach next year due to its price.

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Alongside Chanos, the elite hedge funds tracked by Insider Monkey have collectively been bearish on Tesla Motors Inc (NASDAQ:TSLA) for some time. Back in February, we ranked Tesla as the stock hedge funds in our database were betting against the most. Just 25 hedge funds were long Tesla at that time, while 22 had positions of put options underlying shares of the company. Fast forward two quarters and the sentiment hasn’t shifted much, as 26 hedge funds were long Tesla, owning just 4.10% of its shares, while 15 funds still held positions of put options underlying Tesla shares.

Leading the bears’ charge was Paul J. Isaac’s Arbiter Partners with a position of put options underlying 822,300 shares of Tesla, with the position being his most lucrative with a value of over $220 million. Other investors betting against Tesla include Leon Shaulov’s Maplelane Capital, with a position of put options underlying 470,000 Tesla shares, and GRT Capital Partners, founded by Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk.

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