The Straw That Could Break Tesla's Back

With Tesla down 54% since I wrote about it in August 2022, many people think it's time to get long. But the market is missing one new serious development that has me cautious.

It has been about six months since I wrote my first Substack article on Tesla, predicting that Elon Musk wouldn’t be able to dodge bullets, as he has been doing with regulators and reality, forever.

That piece, called Peak Tesla, was published on August 8, 2022, with Tesla shares at about $300 per share. Since then, the stock has fallen 54.8%.

The case I laid out at the time mostly surrounded the company’s valuation, rising interest rates and the macro environment, as well as continued investigations into the company’s Full Self Driving product.

Since that piece, new developments have emerged - some just over the last several hours. But as the stock price plunges, it’s always a good idea to continue to reassess your thoughts and reconsider your thesis.

Some of my good friends who have been skeptical of Musk are now long the stock, claiming its $400 billion market cap means it is undervalued and that it has plunged too much. Others, like my friend, Mark Speigel, continue to insist that the company has significantly more downside.

I wanted to offer up an update on relevant new pieces of information that I believe can and will be extremely impactful on the company going forward and talk about my updated thoughts about the company.

I’m not sure I’ve seen a “negative” as material as the one that just popped up for Tesla. And no one seems to notice, or care.