Prominent Short Seller Danny Moses Exits Tesla Position, Citing Fundamental Shift
In a surprising turn of events, renowned short-seller and founder of Moses Ventures, Danny Moses, announced on Tuesday that he has closed his short position in Tesla Inc. (TSLA). This decision, after years of betting against the electric vehicle giant, marks a significant shift in market sentiment and raises questions about the future trajectory of Tesla’s stock price. Moses, known for his accurate predictions and involvement in the “Big Short,” explains his change of heart based on a perceived change in Tesla’s trading dynamics, moving from speculation to a more fundamental valuation.
Key Takeaways: A Paradigm Shift in Tesla’s Market Position
- Short Seller Exit: Prominent short-seller Danny Moses has closed his long-held short position in Tesla.
- Fundamental Shift: Moses cites a transition in Tesla’s trading from speculative narratives to a more fundamentals-driven market.
- Market Reaction: Tesla’s stock price experienced a slight dip following the announcement, but remains significantly up year-to-date.
- Analyst Upgrade: Analyst Craig Irwin of Roth MKM recently upgraded Tesla’s rating to “buy” from “neutral,” significantly raising the price target.
- Political Influence: The changing political landscape and Elon Musk’s relationship with President-elect Donald Trump are suggested as influencing factors.
Moses’ Rationale: From Short to Neutral on Tesla
Moses, who initially shorted Tesla in November 2016 following its acquisition of SolarCity—a deal he considered “awful”—explained his recent decision to CNBC. He stated that Tesla’s trading patterns, for a considerable period, were detached from fundamental business performance. However, he noted a significant change in the first quarter of this year. “When the story moves from non-fundamentals to technicals… that’s when I leave the story,” Moses emphasized. This indicates a shift from speculative trading based on promises and narratives to one more closely aligned with measurable financial results.
The Weight of Promises and Political Dynamics
Moses highlighted the challenge of shorting a company whose valuation heavily relies on future promises. “It’s very difficult to short a name that is not trading on fundamentals. It’s also hard to go long a name when it’s all on promises,” he explained. He pointed towards Elon Musk’s history of ambitious—though not always realized—promises, adding, “Musk has promised things in the past that never came to fruition.” Furthermore, Moses expressed skepticism about Musk’s recent statements regarding significant federal budget cuts, stating, “You’re not gonna be able to do that.“
The political landscape also appears to have played a role. Moses’ comments suggest that Elon Musk’s developing relationship with President-elect Donald Trump—and the potential benefits for Tesla in the new administration— influenced his decision. The recent rally in Tesla’s stock price following Trump’s election victory underscores this correlation.
Analyst Sentiment: A Bullish Upturn
Moses’ decision is not an isolated incident. The change in market sentiment towards Tesla is further highlighted by the recent upgrade from Roth MKM analyst Craig Irwin. Irwin, previously a long-time Tesla bear, dramatically increased his price target for Tesla from $85 to $380, citing the potential benefits from Musk’s newly established political connections. He upgraded the stock from “neutral” to “buy,” demonstrating a significant shift in his outlook, a reflection of a broader change within the analyst community, with a consensus “Buy” rating currently prevailing. This collective uptick in analyst sentiment suggests a surge in confidence surrounding Tesla’s prospects.
Divergent Analyst Views: A closer look at price targets
While the overall analyst sentiment leans strongly bullish, there is some divergence in price targets. Other firms such as Stifel and UBS have set more conservative price targets, resulting in an average price target of $339, implying a modest potential downside of 3.5%, showcasing that despite the significant overall bullishness, a cautious outlook remains among certain segments of the financial analyst community.
Tesla’s Stock Performance: A Year of Growth
Tesla’s stock closed at $351.42 on Tuesday, a modest 1.6% decrease for the day. Despite the recent slight downturn, following the announcements from Danny Moses, the stock has seen substantial year-to-date growth of approximately 41.5%. This impressive performance underscores the significant market interest and investor confidence in Tesla’s future despite the recent news concerning short-seller activity. The impressive run-up following the Presidential elections further reinforced the power of political sentiment in driving markets.
Conclusion: A New Chapter for Tesla?
Danny Moses’ exit from his short position on Tesla signifies a potential turning point for the electric vehicle maker. The shift from a market driven by speculative narratives to one grounded in fundamental performance, coupled with optimistic projections from prominent analysts, presents a compelling case for Tesla’s continued growth. Though uncertainties remain, the convergence of factors—financial performance, political alignment, and analyst upgrades—suggests a promising outlook for Tesla in the near future – despite the ongoing debate on valuation amongst various financial professionals.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always conduct thorough research and consult with a financial advisor before making any investment decisions.
