Hedgeye's Industrials Team – led by Sector Head Jay Van Sciver – will be hosting a deep dive institutional call on adding Tesla (TSLA) to their Best Ideas List as a SHORT.
The call will take place on Wednesday June 13, at 11 am ET.
Email sales@hedgeye.com for more information.
Why Add Tesla Now?
We are expecting under-performance as Tesla's exciting concepts transition to mundane execution. Concepts, ideas, and vision can easily win the market's beauty pageant. Grinding out a cheap version of a high-end platform in a competitive market, with a less tolerant customer and expiring tax credits? That gets ugly.
The goal in a story stock is to anticipate the next chapter. Tesla's valuation is silly, and we suspect most sophisticated investors realize it. Short squeezes, as we would characterize the recent move in Tesla shares, often prove attractive short entry points. Currently, many longs are gloating and shorts are no doubt miserable. All this drama comes just ahead of new competition that may permanently degrade Tesla's growth prospects. Longs should be fearful and shorts greedy, as we see it.
Tesla is a temporarily subsidized maker of capital goods. Established equipment markets have seen almost no competitive entry for decades; important structural hurdles typically preclude entry into markets like automobiles and electrical equipment. As Tesla's tax credits are exhausted, existing car makers can introduce EV models with as yet unused tax credits, adding to their already substantial edge. If Tesla even survives to profitability, it would be an exceptional accomplishment.
CALL DETAILS
Ping sales@hedgeye.com for more information. Please note if you are not a current subscriber to our Industrials research there will be a fee associated with this call.
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