...we can short Tesla on TSLZ (2x Inverse Tesla Daily)...obviously high risk.
On Friday, Dan and Extreme Value analyst Mike Barrett sent their subscribers a new bearish recommendation on Tesla.
Without giving too much away, it's partially tied to the negative sentiment that has been building toward Tesla CEO Elon Musk. Since Inauguration Day, Musk has started taking a "chainsaw" approach to federal workers and programs with his Department of Government Efficiency ("DOGE") side project, seemingly imitating Argentine President Javier Milei.
The move has led to things like protests outside Tesla dealerships over the past week. And Tesla shares are down about 45% since Inauguration Day.
Sentiment can turn quickly, but in Extreme Value, Dan shared many longer-term fundamental reasons for why he's willing to bet against Tesla right now.
They include "the $2 trillion global boondoggle" of government investment in new clean-energy initiatives over the past five years fizzling out and a mass exodus of electric-vehicle ("EV") production from many American carmakers.
Shortly after he was inaugurated, Trump even issued an executive order titled "Unleashing American Energy" that states U.S. policy is to "eliminate the 'electric vehicle mandate'" and ensure "a level regulatory playing field for consumer choice in vehicles" by eliminating things like government subsidies that favor EVs.
Maybe most importantly, though, is that many people have a serious misperception about how Tesla makes (or loses) money. That, combined with Tesla's high market valuation and failure to continue delivering hypergrowth, spells trouble. Putting it all together, Dan said...
Yes, the stock has been one of the best-performing names of the past several years. After all, it's one of the so-called Magnificent Seven stocks that – as a group – have led the S&P 500 Index to historic valuations. But its meteoric rise is due almost entirely to hype. The company grew revenue by less than 1% last year... yet its stock is still priced at an absurdly high valuation. As the EV market cools, that valuation is sure to fall.
On top of that, DOGE has become a new problem for Tesla "at a time when it can't afford any more problems," Dan wrote. And "since Musk appears likely to continue steering DOGE until its scheduled dissolution on July 4, 2026, there's plenty of time for him to do even more damage."
It remains to be seen how long or how much Musk will stick around Washington, D.C. There are financial interests at play, of course, with Tesla trading lower every week since Musk became so active in the Trump administration. It has lost hundreds of billions of dollars in market cap.
