Tesla in crisis as investors cash in
SPECULATORS have ramped up pressure on Tesla as the electric car maker deals with the fallout from a series of outbursts by boss Elon Musk.
In an escalation of their longrunning feud with the billionaire, investors betting the firm’s shares will fall have continued to increase their positions against it.
These so-called short-sellers are up £940m since Musk’s infamous tweet about taking his firm private – even though the stock shot up after he bragged of having ‘funding secured’ for the move.
Since then, however, the chief executive’s comments have come under scrutiny from America’s financial watchdog, the Securities and Exchange Commission (SEC), as questions continue to surround his claim that a deal will be backed by Saudi Arabia’s sovereign wealth fund.
Meanwhile, a disastrous interview in which he admitted he was suffering from exhaustion has also helped to hammer shares.
Amid the turmoil, long-term short-sellers have continued to increase their exposure to Tesla, despite facing overall losses of nearly £4bn over the past two years, according to analysis by the financial technology company S3 Partners.
Crispin Odey, a Tesla shorter and one of the UK’s top fund managers, said on Friday that he believed Tesla was entering ‘the final stage of its life’.
Musk has branded short-sellers ‘not super-smart’ and ‘jerks who want us to die’. However, the firm remains the most shorted stock in the US, with more than 20pc – or 35m – of its shares on loan.
S3 said it set the stage for shortsellers to reap either huge gains or losses, depending on whether Musk pulls off his privatisation and emerge unscathed from a probe by the SEC. It added: ‘2018 is yet again another losing year for Tesla short-sellers, but short interest continued to climb. If the deal falls through and/or the SEC has issues with Musk’s tweets, we’ll see short-sellers increasing their short positions as they recoup all or part of their losses.’
It comes after Tesla shares plunged 9pc on Friday as investors fretted about Musk’s future. He has taunted short-sellers whenever Tesla’s stock has jumped higher, and even followed up on a pledge to send David Einhorn, of short-seller Greenlight Capital, a pair of shorts by post. Einhorn tweeted: ‘I want to thank @elonmusk for the shorts. He is a man of his word!’
But in an interview last week, a tearful Musk, 47, complained he was stressed, blaming short-sellers. The father-of-five, who claimed to be working 120-hour weeks, predicted more months of ‘extreme torture’ and accused short-sellers of ‘desperately pushing a narrative that will possibly result in Tesla’s destruction’.
The interview sparked concern among Tesla’s supporters, some of whom urged Musk to rest.
However, responding yesterday to an open letter from Arianna Huffington, which said he was overworking himself, Musk replied: ‘Ford & Tesla are the only 2 American car companies to avoid bankruptcy. I just got home from the factory. You think this is an option. It is not.’