JPM Has Bad News For TSLA Fans And Is Spreading The Gospel — WHICH Side Of The Investment/Trade Are YOU On?

Here we go, Spies! It's like an epic boxing match is about to happen in 2018.

Except it's potentially setting up to be a bloodbath on Wall Street. That's because it's becoming clear that the love for Tesla is starting to get questioned. Enough of the rhetoric, and hopes and dreams of Tesla CEO, Elon Musk.

The Street only speaks one language: Profits.

With the Model 3's launch flub — which may turn out to be the biggest f#$% up in the history of an automaker as there is insane, pent up demand — the guns are turning towards the equity and ready to unload their payload. The first move is coming via JP Morgan, who is now telling investors to short shares of TSLA.

Due to increased competition in 2018 and a potential capital raise that would further dilute the stock, a JPM analyst believes there's a potential 40 percent dog leg down over the next 12 months. Although 40 percent sounds like a ridiculous number, you do have to recognize the company's super inflated valuation, which even Musk agrees is unwarranted.

Having said that, I am curious: WHICH side of the TSLA investment/trade are you on? And, do you consider TSLA an investment or merely a trade at this point?

What say you, Spies?

**Note: Although it's painfully obvious, let me remind you that AutoSpies is not dolling out investment advice and it is in your best interest to consult a licensed, financial professional before making any investment decisions. In addition, I have no holdings in TSLA, or any automotive equity for that matter, at this time.

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MDarringer - 12/3/2017 7:48:46 PM

+8 Boost

The bottom line is that EVs are niche vehicles and will be for some time. It's exceedingly hard for a niche manufacturer to be viable. Porsche glommed on the VW eons ago. Aston Martin is in bed with Mercedes and so on. Geely is apparently looking to buy stuff and Tesla would make a brilliant addition to Volvo dealers. I honestly believe that Musk's game from the get go was to sell Tesla to someone.

Vette71 - 12/3/2017 10:57:31 PM

+7 Boost

Makes sense. Musk made his fortune building companies to sell to someone else. He is a creator, not someone to run a company. The issue here is when his investors should sell. If the CEO thinks the company is over valued, that's probably a sign to get out. Better to sell before it tops out and falls off a steep cliff.

SanJoseDriver - 12/4/2017 4:46:01 AM

-5 Boost

It could be a terrible move. If Model 3 deliveries take off in 2018 and the price appreciates, many shorts will have to be covered which will then put even more upward pressure on the stock, further screwing the shorts. If they can't ramp to 5k+/week then it could easily sink 40% in 2018. The problem is you have a capped downside with a purchase and uncapped with a short. However, if you feel so strongly against TSLA, then put your money where your mouth is and short it.

SanJoseDriver - 12/5/2017 2:51:34 AM

-6 Boost

Short em then, good luck with that.

TomM - 12/4/2017 7:01:49 AM

+9 Boost

Sorry - SanJoseDriver - but every real investor KNEW that Tesla was not worth the Market Cap initially given it by the stock price - and eventually the stock would have to Justify the price by some REAL Profits. IT was not a question of whether it would come down - but how much and how quickly.

ANd the problem - as Wall Street Sees it - is that the Window of opportunity where Tesla can set its own prices without real competition is closing - and the closer we get to 2020 - the less likely that Tesla will be able to maintain its "closed" pricing scheme. ANd that creates a problem - did Tesla price its cars enough to allow for DISCOUNTING? And how will that affect its ability to show a profit. Yes - TESLA could continue to survive with poorer profit levels - but that would still have an effect on the stock price.

I believe that eventually - TEsla will have to allow for a dealer network to compete against other offerings that WILL have far more availability - and again - that means either the price goes up - or the profits go down. When it is nearly the only game in town - they can force people to travel long distances to buy one - but MOST people buy cars in a MUCH MORE local area - and that will handicap Tesla as well.

SanJoseDriver - 12/5/2017 2:57:42 AM

-6 Boost

They have already discounted many times, but usually not in the traditional sense. They simply provide more value at the same price point. $75k used to get you a 60D, now it gets you a 75D with air suspension included (used to be a $2,500 upgrade) as well as upgraded motors that do 0-60 in 4.1 seconds (used to be 5.2). They have dropped prices on the 100D and P100D models as well and bundled in premium features. They can adjust prices or change feature sets at any time without having to worry about how it will impact a dealer network. They only have to worry about pissing off customers that just bought a car.