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'Watch out Tesla believers': Critics are piling on to warn the 300% stock rally will crash and burn

Feb 5, 2020, 17:56 IST

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  • Tesla shares have soared 300% in six months, hitting an all-time high of over $900 on Tuesday.
  • Investors, analysts, and politicians are warning investors the rally won't last.
  • "I have no doubt it will end in tears for many people," one investor said.
  • "The stock is going to get absolutely clobbered," a market strategist told CNBC.
  • Visit Business Insider's homepage for more stories.

Tesla shares have surged about 300% in the past six months, hitting an all-time high of over $900 on Tuesday. Traders, analysts, and politicians are lining up to warn investors that the run up won't last.

"This is obviously a computer-generated rally, it's not a reflection on the company, or on valuation. It's just a trade," Andrew Left, the activist short seller behind Citron Research, told MarketWatch this week.

"Yes, I'm shorting it ... whoever bought it at these prices has to flush it out, and when it flushes, it's going to flush hard," he added.

Left's comments came after Citron blasted the stock rally as unsustainable.

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"We believe even Elon would short the stock here if he was a fund manager," the equity-research publisher tweeted on Tuesday. "This is no longer about the technology, it has become the new Wall St casino."

Others have warned Tesla's rally will hurt those left holding the stock when the music stops.

"This is an incredibly dangerous place to be buying the stock and I have no doubt it will end in tears for many people," trader and analyst Jani Ziedins wrote in a recent post on his Cracked Market blog.

"Owning a stock that's tripled over the last few months is great, but don't mistake serendipity for skill," he continued. "While the fools are spending all of their time daydreaming about what they will buy when the stock breaks $1,200, smart money is selling their stock to those greedy dreamers."

Matt Maley, chief market strategist at Miller Tabak, echoed those sentiments in a CNBC interview this week.

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"This is taking Tesla well above a level that would be supported by its current fundamentals," he said. "The stock is going to get absolutely clobbered at some point before long."

Even former presidential candidate Ralph Nader sounded the alarm, warning Tesla could take down the entire stock market.

"When the stock market bubble implodes, it will have been started by the surge in Tesla shares beyond speculative zeal," he tweeted.

"Watch out Tesla believers," he added in a follow-up tweet.

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