BlackBull Markets | Jul 18, 2021 11:49PM ET
Tesla (NASDAQ:TSLA) appears to have tremendous short potential still. It might pay to wait for the Company’s stock to fall below $560 per share, though. On at least two occasions in 2021, buyers have been waiting at this price point to scoop up shares, significantly countering any downwards momentum. Thus, waiting for a decent break below $560 might be prudent before betting against the EV manufacturer. For the more cautious, waiting until $500 is another entry point worth considering.
YTD, Tesla shares have fallen 11.7%. For the stock to reach $560 or $500, the stock would have to fall another 13.1% and 22.4%, respectively.
Can bad PR help Tesla shorts?
The issues that have recently affected Tesla include:
In May, Michael Burry, via his investment company, Scion Asset Management, revealed a half-a-billion short position against Tesla.
One reason that Burry is so Bearish on Tesla is that he sees a significant portion as unsustainable. Currently, Tesla pads its balance sheet by selling carbon credits to other automakers. In April, Tesla reported $518 million from the sale of carbon, equivalent to 20% of the Company’s revenue for the period. Naturally, Burry sees this form of revenue drying up soon, as Tesla’s competitors push into EV production themselves and require fewer credits from the EV leader.
Curiously, Tesla shares have risen 11.6% since Burry’s revelation.
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