Tesla could go bust, a hedge fund manager warns

For some, Tesla (NASDAQ:TSLA) is the electric vehicle (EV) market king and Tesla’s stock is experiencing a downturn due to industry headwinds. However, there are some bears who believe the stock is in a bubble.

In fact, one hedge fund manager recently told CNBC that Tesla “could go bust.”

Tesla stock could go bust - hedge fund manager

The publication revealed in an article Wednesday that Per Lekander, a hedge fund manager who has been shorting the electric vehicle company since 2020, said, following Tesla’s 386,810 vehicle deliveries in the first quarter, that “this was really the beginning of the end of the Tesla bubble.”

Lekander, a managing partner at Clean Energy Transition and a former portfolio manager at Lansdowne Partners, told CNBC’s Squawk Box Europe that Tesla was “probably, arguably was the biggest stock market bubble in modern history.”

Lekander added: “I actually think the company could go bust.”

It’s not the first time that Lekander has said Tesla shares will fall, saying the stock will decline back in March 2021, when it was close to $233 per share. It continued from that level to above $400 later in the year.

In addition, CNBC notes that Lekander has taken his call for a Tesla stock decline further, indicating the stock could tumble to $14 per share based on an estimate that Tesla’s full-year earnings per share this year would be $1.40.

He has described Tesla as a “no growth” stock.

Lekander’s reasons for his bearish call include Tesla’s business model, which he said has been based on solid revenue growth, vertical integration and direct-to-consumer sales. While he notes the model is “brilliant” when a company grows, he believes it goes in “reverse” when sales fall.

Furthermore, he believes Tesla’s issues are a demand problem, not supply chain disruption, and he doesn’t see any reason “to see any recovery over the next two years.”

Tesla stock falls after soft deliveries

Tesla posted its first-quarter delivery numbers this week, falling short of analyst expectations, which caused the stock to decline.

The electric vehicle giant revealed it delivered 386,810 vehicles, below the estimated 449,080, according to Bloomberg consensus. Model 3 and Model Y deliveries came in at 369,783, marking a 10% year-over-year decline, which was also below the expected 426,940 units.

Meanwhile, quarterly production hit 433,371 vehicles, below an anticipated 452,976. Model 3/Y made up 412,376 of that total, again falling short of the 439,194 forecast.

The decline in volumes was “partially due to the early phase of the production ramp of the updated Model 3 at our Fremont factory and factory shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin,” Tesla stated.

The electric vehicle giant also said it managed to deploy 4,053 MWh of energy storage products during the quarter.