Tesla Motors Inc is now on the radar of Dr. Doom aka Mark Faber of the Gloom, Boom and Doom Report, who is well-known for his bearish take on the overall market. But, there are some stocks on whom Faber has a particularly bearish view, and the most important among those is Tesla.
Anyone can do what Tesla does
In an interview to CNBC’s “Trading Nation,” Faber said that what Tesla produces can be produced by Nissan, Mercedes, BMW, and Toyota. And, anybody in the world can make it ultimately, at much lower cost and probably much more efficiently, the expert said.
Faber said the market for Toyota and these large vehicles firms is just not big enough, however, the moment it becomes bigger, they will move into the field, and then Tesla Motors Inc is guaranteed to have a lot of rivals. And, this increased competition would impact Tesla’s business and stock in a big way, notes Faber.
“I think Tesla is a company that is likely to go to zero eventually,” he said.
Mercedes-Benz, who is set to uncover two electric SUVs and two electric sedans under a new line, is all ready to cross the threshold by entering the electric game in a big way, Bloomberg reported. In a recent promotion, BMW, which makes its own electric cars, pinched the Elon Musk-led firm for making buyers wait for their cars, in a recent ad.
What’s his strategy for Tesla?
As per the Automotive News, Tesla’s business development executive – Diarmuid O’Connell – rejected Tesla’s rivals as having “delivered little more than appliances,” as opposed to Tesla’s ground-up strategy of rethinking how vehicles are driven and powered.
As per Faber, his strategy of shorting is a part of his bearish take on the market. Citing Tesla Motors Inc as an example, Faber said “if you are an investor with a lot of nerves and you sleep well at night anyway, then you could hedge the portfolio somewhat by selling short some stocks that are overvalued and are likely to go down.”
Bearish on the index
Talking of the S&P, Faber said, “I think we can easily give back five years of capital gains, which would take the market down to around 1,100.” He didn’t specify the reason behind his bearish attitude toward S&P 500 index, however, said, “one never knows precisely why this will happen.” Faber said he believes the gains in the market are unsustainable.
Faber is foreseeing miserable days for the US index, noting that around 48% of the stocks in the S&P 500 checked their 52-week highs in the past three months while 6% hit their 1-year highs on Monday itself. Faber – in October 2009 – said the overbought Indian and US stocks could be set for a noteworthy fall. The S&P 500 was trading around 1,100 level at that time.
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