Famed short-seller Carson Block explains why he refuses to bet against Tesla, says Elon Musk 'specializes in pulling rabbits out of the hat'
- Famed short-seller Carson Block thanked God after saying that he's not short shares of Tesla in an interview with Bloomberg on Wednesday.
- Tesla has more than tripled in value year-to-date after stronger-than-expected delivery data and speculation that the electric-vehicle maker is on the verge of being included in the S&P 500 index.
- "Short it at your own risk," Block advised, adding that Elon Musk "specializes in pulling rabbits out of the hat."
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Tesla has experienced a meteoric rise so far in 2020, and investors betting against the company have been in a world of hurt.
According to data from S3 partners, Tesla short-sellers have lost around $18 billion on the stock so far in 2020.
That's why famed short-seller thanked God after saying that he's not short shares of Tesla in an interview with Bloomberg on Wednesday.
Block has been a long-time critic of Tesla CEO Elon Musk, and added that although he's not currently short shares of the EV company, he still thinks the underlying business is unsustainable, according to the interview.
For now though, it seems animal spirits are a primary factor in driving Tesla shares higher. On Monday, nearly 40,000 Robinhood traders bought shares of Tesla in just four hours.
Block quipped, "We used to joke that Tesla, when it files for bankruptcy, will probably have a $30 billion market cap. Short it at your own risk. I wouldn't do that."
Following Tesla's stronger-than-expected second quarter vehicle delivery data, shares have been on a tear. Investors are now extrapolating a strong second quarter delivery number to the possibility that Tesla may report a profitable second quarter when it reports earnings next week.
If Tesla reports a profitable second quarter, it will become eligible to be included in the S&P 500 index. Inclusion in the S&P 500 index would generate serious short-term demand for Tesla stock, as funds benchmarked against the most popular stock index in the world would likely buy shares.
Tesla is the largest US company by market cap that is not included in the large-cap index.
Block concluded, "It's one thing to bet on Elon Musk, but it's another thing to bet against him. The guy specializes in pulling rabbits out of the hat."
Some analysts seem to agree with Block. On Monday, Piper Sandler raised its price target on Tesla to a Street-high $2,322, representing more than 50% upside potential from current levels.
