Investor's Corner
Dissecting Jim Chanos’ short seller arguments about Tesla
All innovative companies attract negative press coverage, but the tide of anti-Tesla scare stories and misinformation has reached such preposterous proportions that it has become a story in itself (remember, colleagues, we’re supposed to report the news, not make it). It’s widely believed that much of the mud, especially the articles that focus on financial and stock-market topics, originates with short sellers, who have collectively bet some $12 billion against the California carmaker.
Perhaps the best-known and most articulate of the short sellers is Jim Chanos, a hedge fund operator who distinguished himself by calling attention to Enron’s shenanigans back in 2000. Chanos has made no secret of his disdain for Tesla, or his interest in profiting from its demise. Chanos figures prominently in Matt Taibbi’s 2014 book, The Divide: American Injustice in the Age of the Wealth Gap. A recent series of posts on the Tesla Motors Club forum argues that Chanos and other shorts are following a tried-and-true playbook that they’ve used to attack other companies in the past.
Enter Galileo Russell, a young independent stock analyst, who became something of a hero among Teslaphiles when Elon Musk granted him a lot of quality time on a now-famous conference call. In a new video, Russell answers Chanos’s bearish arguments about Tesla point by point.
Above: Galileo Russell takes on infamous Tesla short Jim Chanos (Youtube: HyperChange TV)
Chanos is no mindless naysayer or anonymous comment-section troll. “He has a reputation for being one of Wall Street’s best and sharpest short sellers and for good reason,” says Galileo. “His hedge fund Kynikos Associates [the name comes from the Greek for “cynic”] has a track record that has crushed the market.” Furthermore, Chanos has been “very vocal and public and transparent about his short of Tesla for years – he’s done a ton of interviews on CNBC and Bloomberg explaining his short rationale, so this gives me a ton of material to really understand what his thinking is.”
Galileo has “a ton of respect” for Chanos, but thinks “he is wrong on this trade.” In this video, which is worth watching all the way through, the exuberant young pundit answers the diehard bear’s long list of anti-Tesla arguments one by one.
Chanos and others have made much of Tesla’s supposedly high rate of executive departures (“rats leaving a sinking ship”). However, according to Galileo, “He has cherry-picked the names of 39 Tesla executives who’ve left over the past two years.” Tesla has 37,000 employees. The average tenure of departing execs has been about 4.6 years – not far off the 5.3-year average term of execs at the largest US companies. Mr. Russell also reminds us of a certain group of leaders who haven’t jumped ship, and don’t seem likely to: CEO Elon Musk (15 years with the company); CTO JB Straubel (14 years); CFO Deepak Ahuja (10 years) and Senior Design Director Franz von Holzhausen (8 years).
Is Tesla “structurally unprofitable,” as Chanos claims? Maybe, but so was a certain other growing tech company called Amazon. Is Tesla indulging in creative accounting by not including its R&D expenses in gross margins? Nope – unlike legacy OEMs, most of Tesla’s R&D goes for future products. Tesla’s accounting isn’t deceptive, says Galileo – it’s just more like that of a tech company than a traditional automaker.
Galileo goes on to address several more of Chanos’s anti-Tesla points: coming competition from the legacy automakers (almost no one in the EV industry takes this threat seriously – Big Auto has made it abundantly clear that its main agenda is to hold back the tide of electrification, not join it); delays in rolling out Autopilot, the Semi and the Roadster; and even a far-fetched notion that Elon Musk is planning to step down as CEO.
In every case, Mr. Russell marshals detailed facts and figures to support his rebuttals. Even if you’re a Tesla skeptic, you’ll be forced to admit that this is a virtuoso performance by an extremely well-informed and insightful analyst.
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Note: Article originally published on evannex.com by Charles Morris; Source: HyperChange TV
Tesla stock (NASDAQ: TSLA) has landed an elusive “must own” status from Wall Street firm Melius, according to a new note released early this week.
Analyst Rob Wertheimer said Tesla will lead the charge in world-changing tech, given the company’s focus on self-driving, autonomy, and Robotaxi. In a note to investors, Wertheimer said “the world is about to change, dramatically,” because of the advent of self-driving cars.
He looks at the industry and sees many potential players, but the firm says there will only be one true winner:
“Our point is not that Tesla is at risk, it’s that everybody else is.”
The major argument is that autonomy is nearing a tipping point where years of chipping away at the software and data needed to develop a sound, safe, and effective form of autonomous driving technology turn into an avalanche of progress.
Wertheimer believes autonomy is a $7 trillion sector,” and in the coming years, investors will see “hundreds of billions in value shift to Tesla.”
A lot of the major growth has to do with the all-too-common “butts in seats” strategy, as Wertheimer believes that only a fraction of people in the United States have ridden in a self-driving car. In Tesla’s regard, only “tens of thousands” have tried Tesla’s latest Full Self-Driving (Supervised) version, which is v14.
Tesla Full Self-Driving v14.2 – Full Review, the Good and the Bad
When it reaches a widespread rollout and more people are able to experience Tesla Full Self-Driving v14, he believes “it will shock most people.”
Citing things like Tesla’s massive data pool from its vehicles, as well as its shift to end-to-end neural nets in 2021 and 2022, as well as the upcoming AI5 chip, which will be put into a handful of vehicles next year, but will reach a wider rollout in 2027, Melius believes many investors are not aware of the pace of advancement in self-driving.
Tesla’s lead in its self-driving efforts is expanding, Wertheimer says. The company is making strategic choices on everything from hardware to software, manufacturing, and overall vehicle design. He says Tesla has left legacy automakers struggling to keep pace as they still rely on outdated architectures and fragmented supplier systems.
Tesla shares are up over 6 percent at 10:40 a.m. on the East Coast, trading at around $416.
Investor's Corner
Tesla analyst maintains $500 PT, says FSD drives better than humans now
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Tesla (NASDAQ:TSLA) received fresh support from Piper Sandler this week after analysts toured the Fremont Factory and tested the company’s latest Full Self-Driving software. The firm reaffirmed its $500 price target, stating that FSD V14 delivered a notably smooth robotaxi demonstration and may already perform at levels comparable to, if not better than, average human drivers.
The team also met with Tesla leaders for more than an hour to discuss autonomy, chip development, and upcoming deployment plans.
Analysts highlight autonomy progress
During more than 75 minutes of focused discussions, analysts reportedly focused on FSD v14’s updates. Piper Sandler’s team pointed to meaningful strides in perception, object handling, and overall ride smoothness during the robotaxi demo.
The visit also included discussions on updates to Tesla’s in-house chip initiatives, its Optimus program, and the growth of the company’s battery storage business. Analysts noted that Tesla continues refining cost structures and capital expenditure expectations, which are key elements in future margin recovery, as noted in a Yahoo Finance report.
Analyst Alexander Potter noted that “we think FSD is a truly impressive product that is (probably) already better at driving than the average American.” This conclusion was strengthened by what he described as a “flawless robotaxi ride to the hotel.”
Street targets diverge on TSLA
While Piper Sandler stands by its $500 target, it is not the highest estimate on the Street. Wedbush, for one, has a $600 per share price target for TSLA stock.
Other institutions have also weighed in on TSLA stock as of late. HSBC reiterated a Reduce rating with a $131 target, citing a gap between earnings fundamentals and the company’s market value. By contrast, TD Cowen maintained a Buy rating and a $509 target, pointing to strong autonomous driving demonstrations in Austin and the pace of software-driven improvements.
Stifel analysts also lifted their price target for Tesla to $508 per share over the company’s ongoing robotaxi and FSD programs.
Investor's Corner
Tesla wins $508 price target from Stifel as Robotaxi rollout gains speed
The firm cited meaningful progress in Tesla’s robotaxi roadmap, ongoing Full Self-Driving enhancements, and the company’s long-term growth initiatives.
Tesla received another round of bullish analyst updates this week, led by Stifel, raising its price target to $508 from $483 while reaffirming a “Buy” rating. The firm cited meaningful progress in Tesla’s robotaxi roadmap, ongoing Full Self-Driving enhancements, and the company’s long-term growth initiatives.
Robotaxi rollout, FSD updates, and new affordable cars
Stifel expects Tesla’s robotaxi fleet to expand into 8–10 major metropolitan areas by the end of 2025, including Austin, where early deployments without safety drivers are targeted before year-end. Additional markets under evaluation include Nevada, Florida, and Arizona, as noted in an Investing.com report. The firm also highlighted strong early performance for FSD Version 14, with upcoming releases adding new “reasoning capabilities” designed to improve complex decision-making using full 360-degree vision.
Tesla has also taken steps to offset the loss of U.S. EV tax credits by launching the Model Y Standard and Model 3 Standard at $39,990 and $36,990, Stifel noted. Both vehicles deliver more than 300 miles of range and are positioned to sustain demand despite shifting incentives. Stifel raised its EBITDA forecasts to $14.9 billion for 2025 and $19.5 billion for 2026, assigning partial valuation weightings to Tesla’s FSD, robotaxi, and Optimus initiatives.
TD Cowen also places an optimistic price target
TD Cowen reiterated its Buy rating with a $509 price target after a research tour of Giga Texas, citing production scale and operational execution as key strengths. The firm posted its optimistic price target following a recent Mobility Bus tour in Austin. The tour included a visit to Giga Texas, which offered fresh insights into the company’s operations and prospects.
Additional analyst movements include Truist Securities maintaining its Hold rating following shareholder approval of Elon Musk’s compensation plan, viewing the vote as reducing leadership uncertainty.
@teslarati Tesla Full Self-Driving yields for pedestrians while human drivers do not…the future is here! #tesla #teslafsd #fullselfdriving ♬ 2 Little 2 Late – Levi & Mario
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