Tilson Talks Tesla Deliveries And Guidance, Staying Adaptable As A Trader

Former hedge fund manager Whitney Tilson joined Benzinga’s PreMarket Prep morning show on Monday and discussed his bearish call on Tesla Inc. TSLA earlier this year.

On March 4, Tilson predicted Tesla shares would fall below $100 by the end of 2019. At the time, the stock was trading at around $295. Shared subsequently dropped as low as $177 before bouncing back in recent days to around $214.

Tilson previously got burned badly shorting Tesla stock at around $35 when the stock price skyrocketed from 2013 to 2015. However, Tilson said Monday the bottom is not yet in for Tesla in 2019.

“I still have that [$100] price target on it despite the capital raise, which gives them some more breathing room. The problem with Tesla is it’s burning large amounts of capital, and it used to be it wasn’t clear they could produce all the cars, but now it isn’t clear they can sell all the cars. I actually think they will sell all the cars they produce, but they’ll just have to cut prices massively,” Tilson said.

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Big Q2 Miss Coming?

Tilson attributed last week's bullishness in Tesla to reports that sales numbers are picking up, despite the fact that Tesla will come nowhere near its second-quarter guidance.

“They’re still going to blow their guidance of 90,000 to 100,000 cars. My best estimate is a little over 80,000, so it’s still going to be a big miss in Q2…The problem is I think they’ve had to cut prices a lot in order to move the cars they’re producing and so it’s going to be another terrible quarter in terms of profitability,” Tilson said.

As Tesla continues to burn cash, he predicted the company’s financing issues will become a problem in the near term.

“I’m looking at sort of a distress financing later this year. I don’t think the stock goes to $0 because there are people like Larry Ellison and others who just believe in the story, so they’ll probably raise the capital and avoid bankruptcy and a $0 on the stock. That’s why I put a $100 price target on it, not zero,” Tilson said.

Staying Adaptable

Tilson admits he has changed his stance on shorting Tesla multiple times throughout the years and said adaptability is essential for any successful trader.

Tilson recently made a 180-degree turn on Lumber Liquidators Holdings Inc LL, one of his most famously successful short calls several years ago. Tilson is now a Lumber Liquidators bull.

“It’s a great case study of one of the most important things you must be able to do as an investor, which is keep an open mind and be willing to accept disconfirming information and be willing to either admit that you were wrong or simply say this story has played out and it’s time to take my profits,” Tilson said.

He said it’s even more important to recognize when to admit defeat and cut ties with a losing long position.

Listen to Tilson's full interview in the video below: