Tesla news: Short seller claims Musk's company is headed for a worse obstacle

Elon Musk revealing a Tesla Energy battery for businesses and utility companies during an event in Hawthorne, California REUTERS/Patrick T. Fallon/Files

Tesla is headed for a rough year in 2018, as a popular stock market short seller has claimed that the company is headed for a "brick wall."

Jim Chanos, a well-known short seller and investment manager, states that the future of Elon Musk's company is looking grim. For those unaware, short selling is the act of taking out a loan of shares from a company with a promise to buy them back regardless of the stock prices in the future. However, short-sellers also expect the shares they borrowed to be worth a lot less come the time they need to buy them back, essentially giving them a net gain.

With that in mind, it just so happens that Tesla is a favorite among short sellers as it is headed for a rough near future according to Chanos. He also added that "Tesla is one of the bad ones." He believes that Musk will soon leave the company once it has become apparent that it is a sinking boat, as well as due to the fact that Musk has another company called Space Exploration Technologies Corp., which could need his attention more than Tesla.

Additionally, the short sellers predict that once bigger car companies like Porsche and BMW begin creating competitive car models which can rival the Tesla cars, Tesla's advantage over them and the novelty of its ideas will soon fade. Tesla also was not the first innovator when it comes to self-driving cars, as another company, named Alphabet Inc. and its Waymo car project, is the leader when it comes to autonomous vehicles. In addition, Volkswagen AG has also been working on the idea for a while.

On a final note from Chanos, he also admitted that he and other short sellers think that Tesla is worth zero, particularly in terms of equity due to the observation that Tesla has made a lot of announcements which were inaccurate or false. "Let's just say Tesla and Mr. Musk have a broad interpretation of the truth. There have been all kinds of announcements that this company has made...that turned out not to be true," said Chanos.

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