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Lucian Miers: Still Short Tesla

By Lucian Miers | Monday 13 August 2018


Disclosure: The author has a short position in one or more of the shares mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Last week was not ideal for those short of Tesla (US - TSLA) after that tweet announcing the potential biggest take private deal in history. Nothing now surprises me with this company and, also having been a victim of the Autonomy-Hewlett Packard debacle seven years ago, I am wary to dismiss the possibility of a deal out of hand. But as the week closed without any further details emerging, it is looking increasingly likely to me that the funding might not be “secured” as claimed.
 
Recent reports suggest that the big Wall Street banks and private equity firms are not involved, and that Softbank and the Saudis have denied participation. This leaves the Chinese. But if Musk really wanted to hurt the bears, why not mention a Chinese name attached to a deal, albeit subject to shareholder approval? - which would put the stock at around the muted $420, instead of a good $65 shy of it.
 
As always, Musk’s motivation is baffling. Is he desperate and finally unhinged, or is he playing a brilliant game of chess and thinking several moves ahead of the opposition?
 
That opposition is now likely to include the SEC, if the Wall Street Journal is to be believed, and the stakes, if funding turns out to be less than “secure” are extremely high. Throw in the couple of law suits which were launched on Friday and I still believe the risk reward on this infuriating name is very much skewed to the downside.

This article first appeared on the Nifty Fifty website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website ahead of the next share tip from Tom & Steve and a new shorting piece from Lucian shortly click HERE


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