"I Drive Tesla Too... But Its Stock Is Overvalued," Says Legendary US Hedge Fund Manager

Dan Niles' Pessimistic Outlook on Tesla Stock
"High Interest Rates, Challenging Auto Sales Environment"

Dan Niles, founder of the famous American hedge fund 'Satori Fund,' has expressed a pessimistic outlook on the stock price of electric vehicle manufacturer 'Tesla.'

On the 12th (local time), Niles appeared on the US economic media CNBC and revealed that he currently holds a short position on Tesla. Tesla's stock price has risen about 5% since the beginning of this month.

Regarding why he bet on Tesla's decline despite the overall optimistic US stock market, he explained, "Tesla's stock price has more than doubled this year, but the stock market situation is unfolding quite differently from the beginning of the year," adding, "Tesla will face serious negative factors and headwinds over several months."

Dan Niles, Founder of Satori Fund
Photo by Yonhap News

He pointed out the poor performance in Tesla's key performance indicator, vehicle deliveries. Tesla has set its delivery target for this year at 1.8 million units. However, the third-quarter deliveries were only 435,059 units, falling short of market expectations.

Tesla is implementing an aggressive price reduction strategy to respond to Chinese electric vehicle companies expanding their market share through low-price offensives. Nevertheless, the decline in vehicle deliveries is a significant burden on the company's gross margin (the amount remaining after subtracting the cost of sales from total sales).

Niles attributed the sluggishness of Tesla and other electric vehicle companies to "the challenging environment for car sales caused by soaring interest rates, with the 10-year Treasury yield surpassing 4.8%." He also predicted that demand for electric vehicle companies could shrink further in the future.

Tesla Model 3 electric cars shipped from the factory [Image source=Reuters Yonhap News]

He emphasized, "Tesla's total margin will continue to face pressure going forward."

However, Niles added that apart from his short position, he positively evaluates Tesla as a company and its products. He also emphasized that he is an owner of Tesla's 'Model X.'

He said, "Elon Musk is the Thomas Edison of our time," but pointed out that Tesla's current stock price is trading at an excessively high level compared to the company's value.

Meanwhile, Tesla closed the day down 1.57% at $258.87.

This content was produced with the assistance of AI translation services.