Tesla stock: The new Big Short?

Wall Street appears to be tired of Elon Musk overpromising and underdelivering on Tesla's new afford...

Posted: Jan 4, 2018 7:17 PM
Updated: Jan 4, 2018 7:17 PM

Wall Street appears to be tired of Elon Musk overpromising and underdelivering on Tesla's new affordable Model 3 electric car.

Shares of Tesla fell 3% Thursday after the company disclosed that it is still having a tough time getting its Model 3 to customers on time. Tesla is way behind on its ambitious production goals.

The stock has now plunged more than 20% from the all-time high it set last year, which means that Tesla is technically now its own little bear market.

Short sellers, investors who bet that a stock will go down and profit when the price falls, have piled into Tesla lately.

According to research firm S3 Partners, which tracks short selling, Tesla has been an extremely profitable trade for the past few months.

Ihor Dusaniwsky, managing director of predictive analytics for S3 Partners, tweeted after Tesla's disappointing outlook that short sellers were set to make nearly $240 million from the stock's most recent decline.

Even big, well-known Wall Street firms are souring on Tesla.

JPMorgan analyst Ryan Brinkman wrote in a report last month that he thinks Tesla stock could fall 40% in 2018 due to the Model 3 difficulties.

Competition could be another big problem.

While Tesla is the clear leader with higher-end, luxury electric vehicles thanks to its Model S sedan and Model X crossover, it's unclear if Tesla will be able to sell as many cheaper Model 3s as needed to truly become a true mass market auto company.

Nissan already is selling the Leaf. And GM has a big lead over Tesla with its Bolt. General Motors said Wednesday that it delivered more than 3,200 Bolts to customers in December -- more than double the number of Model 3s that Tesla delivered for the entire fourth quarter.

Related: 2018 will be the year of the electric car

There's also the issue of whether Tesla (and Musk for that matter) are overextended.

Tesla is also busy ramping up production of a semitruck for big corporate customers (Walmart and UPS have already placed orders) and integrating the SolarCity solar panel acquisition.

This wouldn't necessarily be a problem if Tesla was already a profitable market leader.

But the company is continuing to lose money, raising fears that Tesla may need to sell more stock to fund its ambitious plans. Doing that would reduce the value of shares for Tesla's existing investors.

Finally, Musk also runs rocket company SpaceX and tunneling business The Boring Company.

So it's reasonable for Wall Street to wonder if Musk simply has too much on his plate. Tesla is a classic cult stock. There is considerable hype and it may be impossible for Tesla to live up to it.

Huntsville/Redstone
Partly Cloudy
57° wxIcon
Hi: 59° Lo: 41°
Feels Like: 57°
Muscle Shoals
Partly Cloudy
56° wxIcon
Hi: 55° Lo: 38°
Feels Like: 56°
Huntsville/Madison
Partly Cloudy
55° wxIcon
Hi: 53° Lo: 40°
Feels Like: 55°
Decatur
Partly Cloudy
56° wxIcon
Hi: 58° Lo: 42°
Feels Like: 56°
Fort Payne
Partly Cloudy
57° wxIcon
Hi: 59° Lo: 39°
Feels Like: 57°
WAAY Radar
WAAY WAAY-TV Cam
WAAY Temperatures

Alabama Coronavirus Cases

Cases: 498076

Reported Deaths: 10094
CountyCasesDeaths
Jefferson716711387
Mobile36294737
Madison32616468
Tuscaloosa24340421
Montgomery22739519
Shelby22174218
Baldwin19873289
Lee15039157
Calhoun13832293
Morgan13753254
Etowah13390325
Marshall11448211
Houston10124264
Elmore9483190
Limestone9420138
St. Clair9022227
Cullman8984182
Lauderdale8612214
DeKalb8489175
Talladega7606165
Walker6585259
Jackson6545104
Autauga632492
Blount6236127
Colbert6001121
Coffee5264103
Dale4671107
Russell406933
Franklin399878
Covington3993106
Chilton3898103
Escambia379173
Tallapoosa3622143
Clarke344053
Chambers3431111
Dallas3422142
Pike293373
Marion288695
Lawrence284985
Winston258368
Bibb246160
Geneva240370
Marengo238857
Pickens225457
Barbour213651
Hale212269
Fayette202057
Butler201466
Henry183541
Cherokee178039
Monroe166739
Randolph164840
Washington156836
Macon147745
Crenshaw146255
Clay145954
Cleburne139841
Lamar133733
Lowndes132751
Wilcox122925
Bullock117336
Conecuh107024
Perry106127
Sumter99732
Coosa90224
Greene88532
Choctaw55323
Out of AL00
Unassigned00

Tennessee Coronavirus Cases

Cases: 779449

Reported Deaths: 11501
CountyCasesDeaths
Shelby876181509
Davidson81809871
Knox46250587
Hamilton40539463
Rutherford38563386
Williamson25382204
Sumner21448318
Montgomery17484213
Out of TN1706694
Wilson16510211
Unassigned15772127
Sullivan14431274
Blount14141183
Bradley12996141
Washington12818234
Maury12246163
Sevier12109164
Putnam10635170
Madison10123230
Robertson8997121
Hamblen8063165
Anderson8044158
Greene7309145
Tipton6962103
Coffee6418115
Dickson6256106
Gibson6196141
Cumberland6127122
Carter5990155
McMinn594592
Roane592696
Bedford5816120
Loudon571966
Jefferson5688119
Lawrence557483
Monroe536590
Warren532576
Hawkins527195
Dyer5242101
Franklin475785
Fayette468372
Obion436995
Lincoln415662
Rhea415273
Cocke401295
Cheatham394544
Marshall391956
Campbell381859
Weakley379359
Giles375297
Henderson362273
Carroll349181
White339366
Hardeman338864
Macon337273
Hardin331563
Lauderdale309642
Henry301275
Marion294744
Scott288144
Wayne287630
Overton285557
Claiborne283069
McNairy268353
Hickman266541
DeKalb266151
Haywood264960
Smith256936
Grainger244246
Trousdale239822
Morgan230338
Fentress229544
Johnson217138
Chester202348
Bledsoe201010
Crockett197547
Unicoi181447
Polk177722
Cannon176730
Union173033
Grundy169730
Lake167926
Sequatchie157327
Humphreys154921
Decatur153837
Benton151039
Lewis147425
Meigs126722
Jackson125634
Stewart124025
Clay107130
Houston103632
Perry103527
Moore94516
Van Buren79720
Pickett74623
Hancock49712

Community Events