Gary Black, Managing Partner of The Future Fund LLC, has expressed his unwillingness to short Tesla Inc. despite his concerns with the EV giant’s valuation. Black shared his insights on social media platform X, stating that shorting stocks is no picnic.
Ideal Candidates for Shorting
According to Black, the ideal candidates for shorting include businesses that face secular demand decline or permanent market share loss, and lack the tech, brand, distribution, or management depth to reverse their fortunes. He emphasized that his company won’t short a company just because it looks expensive; instead, they just won’t own it. Black also mentioned that stocks with more than 10% short interest aren’t ideal candidates.
Tesla’s Strong Position
Black believes that Tesla is too good a company to short, even at 198x 2026 Adj EPS. He cited the growing adoption of EVs across the globe and noted that the company’s marketing issues are easy to fix. Black also expressed his belief that Tesla would solve unsupervised autonomy, which would ultimately sell more Teslas.
Valuation Concerns and the Need for Marketing
Concerns from Other Investors
Former fund manager George Noble shared concerns about Tesla’s stock valuation, stating that it is at least 5x overpriced. Noble also criticized the “irresponsible figures cited by the narrative promoting Tesla momentum investors.” Investor Michael Burry, known for his role in “The Big Short,” called Tesla “ridiculously overvalued” but confirmed that he did not hold a short position against the company.
The Need for Stronger Marketing
Black highlighted the need for stronger marketing for Tesla’s products, stating that the company could fall behind its Robotaxi competitors due to its heavy reliance on word-of-mouth advertising. He suggested that CEO Musk’s relevance in pop culture and social media is not a substitute for traditional marketing means.
Tesla’s Current Performance
Tesla scores well on the Momentum and Quality metrics but offers poor Value. The company has a favorable price trend in the Short, Medium, and Long term. As of the latest update, TSLA gained 0.46% during pre-market trading.
Conclusion
Gary Black’s refusal to short Tesla despite valuation worries reflects his confidence in the company’s potential for growth and innovation. While other investors have expressed concerns about Tesla’s valuation, Black’s stance highlights the complexities of investing in the EV market. As the industry continues to evolve, it will be interesting to see how Tesla navigates the challenges and opportunities ahead.