Wall Street Pit

Noted Investor Betting On Tesla Motors (TSLA) Stock Crash

Gloom, Bloom & Doom Report’s publisher Marc Faber gave a rather bold claim that Tesla Motors Inc (NASDAQ:TSLA) stock would slip to $0.00 on CNBC’s “Trading Nation.” Dubbed as the Dr. Doom of the trading market, Faber said the automaker’s stock is likely to nosedive eventually because of tougher competition, slow production, and costly projects.

The investor also noted that other automakers could also build the same battery-powered vehicles that Tesla is known for at a much lower cost. He highlighted BMW, Nissan, Mercedes, and Toyota’s continuous efforts to develop electric cars efficiently.

BMW and Mercedes-Benz are reportedly launching their own line of electric cars within a few years. On the other hand, Toyota, which rolled out one of the first full hybrid electric sedans, the Prius, in 1997, announced that it would stop producing gasoline-powered vehicles by 2050.

Meanwhile, Nissan came out with its own 100% electric car, LEAF. Although the LEAF is not as powerful or good-looking as Tesla’s electric car, it is more affordable than Model S and Model X, as well as the Model 3.

Faber also claimed that the electric vehicle market is not large enough for major auto giants, adding that once competitors start flooding the market, Tesla’s shares and business will be affected tremendously. Moreover, Tesla’s Model 3’s production is not expected to go full on until the end of this decade.

During the talk, Faber gave a piece of advice to investors who are willing to invest in volatile stocks like Tesla, put some of their investment in treasury. The reason? Faber believes that if the market crashes, the fixed-income security issued by the U.S. government will generally only suffer minimally. He added that if an investor wishes to bet his cash in equities then it’s best to invest in emerging markets, such as Indonesia, Thailand, or Brazil.

Tesla CEO Elon Musk is also making a lot of investors and shareholders nervous with his billion dollar expansion plans and controversial acquisitions. In a 1,500-word manifesto, Musk outlined his plans to expand the company’s electric vehicle line and develop “stunning solar roofs.” The ambitious project could cost the company tens of billions of dollars.

However, Musk was quick to clarify that he has no plans to spend billions of dollars carrying out projects right away.

“Over time, this must necessarily be true,” he said. “Don’t quote me saying I plan to spend tens of billions right now because that would be incorrect.”

Tesla Motor’s shares also took a beating following the exit of a key manufacturing executive for Facebook Inc (NASDAQ:FB). The carmaker’s $2.9 billion takeover of SolarCity Corp (NASDAQ:SCTY), the largest residential solar provider in the US, is also causing Tesla’s share to drop.

The venture, which would integrate Tesla and SolarCity’s respective electric car and solar technologies, could pave the way for new products.

In a report by Wall Street Journal, Musk admitted that merger is risky but once complete, the deal would “bring together two loss-making entities” and create “new opportunities.”

As of August 10, Tesla Motors’s stock closed down 1.50 percent at $225.65. The $34 billion Palo Alto, California-based company has a median Street price target of $231.50 with a high target of $500.

Tesla Motors Inc. is down 4.94% year-over-year, compared with a 4.6% gain in the S&P 500.