Automaker Tesla started the year on a high. The company announced that it had produced a record 300,000 electric vehicles between October and December 2021. Fraser Perring doesn’t believe the hype. The activist short, best known for an early bet against Wirecard, has bet Tesla’s share price will fall. In an interview with the FAZ, he explained that his company Viceroy Research had invested about 6 percent of its funds in shorting Tesla. “Every single automaker is making electric vehicles now,” he argued. “Tesla’s market share is shrinking no matter what angle you look at it from. Tesla loses its first-mover advantage because the company doesn’t maintain quality, doesn’t recall cars in a timely manner, and doesn’t cooperate with authorities. All of these problems add up to a company that isn’t worth a trillion dollars.”
Not the first time
He named Volkswagen, Toyota, Hyundai and Kia as makers of better electric vehicles and called Tesla’s Autopilot feature false advertising because it requires constant human supervision. Tesla shares are currently trading at more than $1,000 on the Nasdaq technology exchange. In Perring’s view, they’re worth no more than a tenth of that. It’s the third time Viceroy has shorted Tesla since the summer of 2020, Perring says. He claims to have lost money on the first investment and made money on the second. Perring isn’t the only one questioning Tesla’s valuation. Analyst David Trainer of equity research firm New Constructs said in September that Tesla’s stock price should be closer to $50, noting that the company’s electric-car sales in Europe are lagging those of its peers. Trainer called the company “a house of cards”. Tesla has long been one of the most shorted companies in the world, but many short sellers have abandoned their bets against the company as the stock’s surge caused them significant losses. According to data provider S3 Partners, short positions as a percentage of total Tesla shares available for trading have fallen from 19.6 percent in January 2020 to 2.8 percent this month. “Shorts were burned alive,” Perring commented on others’ bets against Tesla. However, he claimed that his investment would not suffer a similar fate as the market began to take notice of the stock’s overvaluation.
, recommendations: 15
, recommendations: 35
Independently of this, Perring explained in an interview with the FAZ that he intends to publish a report on a German company. He declined to name the target company, but said Viceroy’s nearly year-long investigation uncovered a “pervasive fraud” at the company. He added that he had already alerted BaFin to the alleged misconduct. Perring is the activist short seller who most often targets German stocks. One of his most recent targets was Linz-based tech group S&T, which he accused on December 16 of fraud and bankruptcy, causing the company’s stock to lose 29 percent of its value that day.
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