Tesla (TSLA) short, mcap=$659bn, price $208 vs $123

TSLA short pitch:
– Bulls incorrectly assume that Tesla will dominate the end-state auto market.
– That assumption is just wrong.
– Sub-$50 *valuation* for Tesla is not just a $TSLAQ fever dream.
– Two things that happened over the last six months cast doubt on the “dominance” forecast that underpins Tesla’s valuation:
(1) Order rates have started to collapse and this is negatively impacting Tesla’s margins.
(2) BYD has already overtaken Tesla as the leading EV car maker – sells almost 2x more cars and is growing faster and the company has global ambitions.
– Tesla’s auto valuation requires that the industry not be a competitive post-EV transition, but BYD is a fierce competitor now.

TSLA valuation:

– Market so far has been valuing Tesla by analogy – “The next Apple” was the anchoring theme for a while.
– Once investors start anchoring Tesla’s valuation to an auto industry comp, it’s game over.

Exp. gain: 75% to $50/share.

Full write-up (free guest account required):