Noted Tesla bear says Musk’s EV maker could ‘go bust’ and stock is worth $14
Elon Musk, CEO of Tesla, speaks at the Atreju political convention organized by Fratelli d’Italia (Brothers of Italy), in Rome, Italy, on Dec. 15, 2023.
Antonio Masiello | Getty Images
Tesla could “go bust” while its stock could fall to $14, Per Lekander, a hedge fund manager who has been shorting Elon Musk‘s electric car maker since 2020, told CNBC on Wednesday.
His comments come after Tesla reported 386,810 vehicle deliveries in the first quarter of the year, significantly below even the lowest market estimates.
“This was really the beginning of the end of the Tesla bubble, which probably, arguably was the biggest stock market bubble in modern history,” Lekander, managing partner at investment management firm Clean Energy Transition, said on “Squawk Box Europe.”
“I actually think the company could go bust.”
Tesla was not immediately available for comment when contacted by CNBC.
Lekander was a former portfolio manager at investment firm Lansdowne Partners who successfully called a 2018 rally in carbon prices. Since 2020, Clean Energy Transition has been short Tesla’s stock, meaning Lekander’s firm will profit if the automaker’s shares fall.
In a March 2021 interview with CNBC, Lekander called for Tesla’s stock to go down. At the time of the interview, Tesla’s shares closed at $233.94. On Tuesday, the stock closed at $166.63. But Lekander also called for a comeback of the traditional automakers, singling out Volkswagen. Shares of Volkswagen have fallen around 53% since that call, though they rallied at the start of this year.
Lekander has taken his bearish Tesla call further, suggesting the stock could fall to $14 per share. He said his call is based on an estimate that the company’s full-year earnings per share this year would be $1.40. Lekander contends that Tesla is a “no growth” stock and should be valued on 10 times forward earnings, versus around 58 times forward earnings currently. Forward earnings are an important metric used by traders to gauge the value of a stock.
If Tesla’s stock hit $14, that would represent around 91% downside from Tuesday’s close. Tesla’s shares have already fallen more than 30% this year.
“I think however Tesla cannot be at $14. If it falls under a certain level because of everything that’s been going on, it’s going to go bust.”
Lekander gave a number of reasons for his negative outlook. He said Tesla’s business model has been based on strong revenue growth, vertical integration and direct-to-consumer sales. Vertical integration broadly refers to when one company internally handles many parts of a process from the manufacturing of the car to the software. This model is “brilliant” when a company grows, but goes in “reverse” when sales fall, Lekander said.
The hedge fund boss said Tesla’s first-quarter problems were not to do with some of the reasons the company cited such as supply chain disruption. Instead, it is a “demand problem,” according to Lekander, who said two cars — the Model 3 and Model Y — make up the bulk of the U.S. automaker’s sales. And the company does not see another new vehicle being released until 2025.
“I don’t see any reason whatsoever to see any recovery over the next two years given that these models are stale and given the economy is not rocketing,” Lekander said.
Tesla said in its statement Tuesday it had faced numerous challenges during the quarter.
Negative Tesla voices growing
Lekander is among a chorus of negative voices on Tesla after disappointing delivery numbers.
“While the long-term proposition of electrical vehicles remains unchanged, the realities of delivering on that proposition are really starting to tell as Tesla (and the others) have run out of well-heeled consumers willing to pay big money to be beta testers,” Richard Windsor, founder of Radio Free Mobile, said in a research note Wednesday.
Windsor questioned Tesla’s roughly $500 billion valuation calling it “ludicrous” at a time when the company is facing rising competition.
“There is still plenty of downside in Tesla’s shares,” Windsor said.
Dan Ives, a noted Tesla bull at Wedbush Securities, who has a $300 price target on the electric vehicle maker, has become concerned.
“Let’s call this as it is: While we were anticipating a bad 1Q, this was an unmitigated disaster 1Q that is hard to explain away. We view this as a seminal moment in the Tesla story for Musk to either turn this around and reverse the black eye 1Q performance,” Ives said in a note Tuesday.
“Otherwise, some darker days could clearly be ahead that could disrupt the long-term Tesla narrative,” he added.
Analysts at HSBC and TD Cowen cut their price targets on Tesla’s stock on Wednesday.
Cathie Wood buys Tesla stock
Tesla is arguably one of the most divisive stocks on Wall Street and there are many that are still bullish on the company.
Cathie Wood’s Ark Invest bought Tesla stock for some of its funds this week ahead of the first-quarter delivery numbers in a sign of support.
Meanwhile, some analysts are talking up the longer-term potential of Tesla.
Tom Narayan, analyst at RBC Capital Markets, told CNBC’s “Squawk Box Asia” on Wednesday that most of the reasons behind the fall in first-quarter deliveries were “one-time in nature.”
But he said one near-term catalyst could be a recent directive from Tesla’s CEO to employees to install and show customers how to use the latest version of the company’s driver assist system, marketed as FSD or Full Self-Driving. Tesla also launched a free trial of the service for compatible cars which usually costs $199 per month.
“Maybe that gets people in the showrooms, maybe it gets people to subscribe to it, maybe it gets people to buy cars. So there is that near-term catalyst,” Narayan said.
The RBC analyst, who has an outperform rating on Tesla’s stock with a $298 price target, said his valuation is based on Tesla’s energy storage business, which is a “huge opportunity” for the company. And he added that “autonomy” is also a big part of his rating on Tesla.
“If FSD works, now it’s [Tesla] a software business with a software multiples,” Narayan said. Tesla’s FSD system does not make a car autonomous. It still requires a driver to take control of the car.
Courtesy: Uber Eats
Uber said Monday that Pierre-Dimitri Gore-Coty, one of the company’s longest-tenured top executives and the head of is delivery business is leaving after almost 13 years.
Gore-Coty joined Uber as a general manager in France in 2012, and worked his way up to become vice president of mobility for the Europe and Middle East region four years later, according to his LinkedIn profile. He was named senior vice president of delivery in 2021.
“It’s hard to imagine Uber without Pierre, because there hasn’t been much Uber without Pierre,” CEO Dara Khosrowshahi said in a statement that was part of a regulatory filing. “As one of our first employees, he was a driving force behind our global Mobility expansion and stepped up to run Uber Eats just weeks before the first Covid lockdowns.”
The company didn’t say what Gore-Coty plans to do next.
Uber also said that Andrew Macdonald, the company’s senior vice president of mobility and business operations, will become chief operating officer, reporting to Khosrowshahi. Macdonald, 41, will oversee the company’s global mobility, delivery and autonomous businesses in addition to “key cross-platform functions like membership, customer support, safety, and more,” the filing said.
Gore-Coty is one of 11 people listed on Uber’s executive team page. Macdonald is the only one who has worked at the company longer. He joined in May 2012, four months before Gore-Coty, according to LinkedIn.
“These last nearly 13 years have been the ride of a lifetime,” Gore-Coty said in the statement. “It was a true team effort, and I’m so proud of what we’ve built and the impact we’ve had on daily life in cities around the world.”
Uber shares were little changed in extended trading after closing on Monday at $83.64. The stock is up 39% this year, while the Nasdaq is about flat.
Last month, the company reported first-quarter results that beat on earnings but missed on revenue. A month earlier, the Federal Trade Commission sued Uber, alleging that the company engaged in “deceptive billing and cancellation practices” related to its Uber One subscription service.
In an interview with CNBC’s “Squawk Box,” Khosrowshahi characterized the lawsuit as “a bit of a head-scratcher for us.”
WATCH: Record earnings and policy uncertainty will slow the equity rally.
Packages with the logo of Amazon are transported at a packing station of a redistribution center of Amazon in Horn-Bad Meinberg, western Germany, on Dec. 9, 2024.
Ina Fassbender | Afp | Getty Images
German antitrust regulators warned Amazon on Monday that the company’s pricing mechanisms for third-party sellers could run afoul of competition laws.
The Federal Cartel Office said in its preliminary assessment that Amazon’s pricing controls limit the visibility of merchants’ products and, “based on non-transparent marketplace rules,” interfere with their freedom to set prices.
Amazon uses algorithms and statistical models to calculate certain price caps for products, the Cartel Office said. Products that are flagged as having “prices that are too high” or “prices that are not competitive” can then be demoted in search results, excluded from advertising or removed from the buy box, they added.
The buy box is the listing that pops up first when a visitor clicks on a particular product, and the one that gets purchased when a shopper taps “Add to Cart.”
“Competition in online retail in Germany is largely determined by Amazon’s rules for the trading platform,” Federal Cartel Office President Andreas Mundt said in a statement. “Since Amazon competes directly with other marketplace retailers on its platform, influencing competitors’ pricing, even in the form of price caps, is fundamentally questionable from a competition perspective.”
Amazon’s pricing practices not only threaten sellers’ businesses, but could also harm other retailers by deterring them from offering lower prices, the Cartel Office said.
An Amazon spokesperson said the company strongly disagrees with the Cartel Office’s preliminary findings. They added that any changes to Amazon’s pricing mechanisms would be “bad for customers and selling partners.”
“If Amazon is prevented from helping people find competitively priced offers, it will lead to a bad shopping experience for them, as we’d need to promote uncompetitive or even abusive pricing in our store,” the spokesperson said in a statement. “This would mislead customers into thinking they’re getting good value when, in reality, they’re not.”
Amazon can provide feedback to the Cartel Office on its preliminary assessment before it reaches a final decision.
Amazon in 2022 reached a deal with European Union antitrust regulators who were investigating its use of seller data and buy box practices. As part of the settlement, Amazon agreed to display a second buy box on products sold in Europe when there is a second competing offer that’s different on price or delivery.
The U.S. Federal Trade Commission is also probing Amazon’s use of pricing algorithms on its sprawling third-party marketplace as part of a wide-ranging antitrust lawsuit filed in 2023. Amazon has said the FTC’s complaint is “wrong on the facts and the law.”
The case is set to go to trial in October 2026.
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