Finance

Long-term bears say Tesla could go ‘bankrupt’ and plunge 91% because it’s in a bubble and can’t grow


Tesla CEO MuskBusiness Insider/Samantha Lee

  • Tesla could eventually fall to $14 a share, said per Lekander, a longtime Tesla bear who has been shorting the stock since 2020.

  • Lekander, who has been shorting Tesla stock since 2020, called it the biggest bubble “in modern history.”

  • He said the Musk-led electric car maker is facing demand issues and struggling with its business model.

Per Lekander, a hedge funder and long-term bear, said Tesla’s stock is in a bubble and has “no growth,” putting it at risk of “bankruptcy.”

Lekander told CNBC that he Been shorting Tesla stock since 2020A new warning was issued Wednesday against Elon Musk’s electric car maker. The stock has plunged 34% this year Due to concerns about demand for electric vehicles and Musk’s commitment to the company. car delivery The first season was also weak – adding insult to injury Wall Street sentiment worsens It used to be its favorite stock.

“This is really the beginning of the end of the Tesla bubble, arguably the biggest stock market bubble in modern history. I actually think the stock, the company, could go bankrupt,” Lekander told CNBC on Wednesday.

Lekander predicts the stock could fall to $14 per share, which would represent a 91% drop from current prices. He identified flaws in Tesla’s business model, which he said relies on strong revenue growth, vertical integration to generate profits from car sales, and selling cars directly to consumers.

“This is an excellent model when [there’s] “Growth…because you actually get paid for growth and you get all the profits. The problem is, when you get into trouble and sales go down, it also reverses,” Lekander said, noting Tesla now faces covering its fixed overhead costs and negative working capital, a situation where liabilities exceed business revenue and assets.

Tesla is already facing demand issues at this point, he added. Most of Tesla’s sales come from the Model 3 and Model Y, and new models won’t be launched until 2025. Lekander was skeptical of the timeline, saying it might not come out until 2026.

Meanwhile, Tesla’s rivals are also launching new product lineups for 2024. For example, Volkswagen will launch about 13 new cars this year.

Investors will face a ‘real shock’ when Tesla unveils its product First quarter earnings report LeKander predicts that in a few weeks, the company’s problems will start to show up in “real numbers.”

He later added: “Given that these models are outdated and the economy is not flying high, I don’t see any reason to see any recovery over the next two years.”

Notably, Lekander, who has been critical of Elon Musk’s automaker for years, missed out on Tesla’s massive gains through 2024. By shorting the stock, he has missed out on Tesla’s 354% gain since 2020, and its stock price is slightly lower than Tesla’s stock price. Four years ago it was $30.

Meanwhile, other forecasters on Wall Street believe that despite Tesla’s short-term turmoil, better days are ahead. Wedbush still sees 66% upside potential for the stockDespite the “disaster” in deliveries in the first quarter.

Tesla did not immediately respond to Business Insider’s request for comment.

Read the original article business insider



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