Chanos No Longer Believe $TSLA Will Go BK

However, he does believe $TSLA and many other notable names still have a lot of room to fall. Personal peeve: he needs to rid his speech of all the “you knows,” you know?

Bloomberg headline: Jim Chanos On Why Some of the Worst-Hit Stocks Still Have a Long Way Down

Subheadline: And it’s not just the tech and meme stuff that’s vulnerable here.

“It’s sort of like Cisco was in 1999, where people were just kind of put putting their hopes and dreams on, you know, any, any hardware having to do with the internet, Cisco was going to dominate it. And it’s the same sort of thing now. So whether it’s EVs or solar, or what have you, you know, Tesla is seen as the one stop shop for that.

And I think that, accordingly, you know, Tesla still trades at almost 10 times revenues and 30 times gross profits. So it’s trading, you know, like a SAAS company, but it is an auto company. It has gross margins of 30%. Now the risk they have is that almost every other auto company in the world has gross margins of 20%. And so Tesla, which is earning, you know, trading at just a monster multiple, is also trading on a monster multiple of a profit stream that is going to get competed. And that is the risk of Tesla that becomes, you know, just an established EV company amongst a whole bunch of established EV companies.

And I think that one of the things that people thought was that, you know, the other OEMs would never get their act together. And certainly for a while, they didn’t. But now with the advent of Ford and, you know, the F-150 Lightning and lots of other products that are both out and coming, you know, it’s going to be the auto industry and make no mistake about it, Tesla is, is a car company. You know, they’re building car plants. They’re capital intensive. One of the risks to Tesla that I think is underappreciated by the market, and that is this company turned the profitability corner when it opened the China plant. And we and others have a large suspicion that a disproportionate amount of the profits are coming out of Shanghai. And that, of course, you know, raises all kinds of other risks to the multiple, and whether or not they can actually, you know, pay, you know, get their hands on that money. And I think that’s not appreciated by the market as much as it should be. If you look at the company’s gross profit margins, it took off as soon as Shanghai, you know, started volume production.”

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