A short seller who accurately predicted the downfall of German payment processor Wirecard is now betting that Tesla’s stock will fall, claiming that the company is overvalued compared to auto giants Toyota and Volkswagen. “Are Toyota and VW undervalued or is Tesla overpriced?” Fraser Perring, the founder of investigative financial research group Viceroy Research, tweeted Wednesday as he announced his short position on Tesla shares. “Tesla’s quality and [full self-driving technology] will be measured by the consumers. I’m short again.” Shares of Tesla fell by more than 3 percent during trading on Wall Street on Friday. Since the start of the new year, the company’s stock has dipped by more than 10 percent. Overall, however, the stock has performed well, rising by more than 50 percent over the last year and more than 2,400 percent over the course of the last five years. Tesla’s market capitalization of $1.1 trillion is more than three times that of its closest competitor, Toyota, which is worth $280 billion. The third most valuable car company in the world is VW, with a market capitalization of $140 billion. But Toyota and Volkswagen are more profitable than Tesla and sell more cars. While Tesla sold nearly 309,000 cars last quarter, both Toyota and Volkswagen each reported more than 2 million vehicles sold during that same period. Perring isn’t the first activist short-seller to predict Tesla’s demise. Carson Block, the founder of hedge fund manager Muddy Waters Research, warned that it was a mistake to buy put options for Tesla, as he did. He also said it was wrong to underestimate Musk. Last summer, Block said that he agreed that Tesla was overvalued. The company market capitalization at the time was $710 billion. Other well-known investors who bought short positions with Tesla include David Einhorn of Greenlight Capital and Jim Chanos of Kynikos Associates. An investor who sells a stock short profits if the value of the stock falls. An investor borrows shares of an asset and then sells the borrowed shares to buyers at market price. The investor sells it with the intention of buying it back later for less money. Musk has expressed disdain for short-sellers. In 2019, he said the practice “should be illegal.” Musk’s outfit has become the most valuable carmaker in the world. In fourth quarter of fiscal year 2021, it set a record for vehicle deliveries, shipping 308,600 cars to customers, easily surpassing analysts’ projections. Overall, Tesla shipped 936,172 cars from its factories to customers last year — an 87 percent increase from the previous year. Tesla’s meteoric rise has galvanized legacy automakers like Volkswagen, Toyota, Fiat Chrysler, and others to pour tens of billions of dollars into production of their own fleets of electric vehicles in what has become an increasingly competitive sector. Volkswagen and Toyota plan to invest a combined $170 billion in the next few years as part of a strategy to scale up their transition from internal-combustion engines to battery-powered vehicles. Perring, a British analyst and former social worker, co-authored a report on Wirecard that alleged widespread fraud and money-laundering. The firm eventually collapsed in 2020, owing nearly $4 billion to creditors.
