Jim Chanos, the prominent investor at the head of hedge fund Kynikos Associates, has some choice words for Tesla Inc. and its board a day after CEO Elon Musk put the kibosh on a plan to take the electric-car maker from out of public hands:
‘The corporate-governance disaster that is Tesla continues. Keep in mind that Musk informed the board on Thursday, according to his Friday night post.’
Musk in a blog post wrote on Friday that “given the feedback I’ve received, it’s apparent that most of Tesla’s existing shareholders believe we are better off as a public company.”
Musk stunned fans and critics of Tesl TSLA, +0.85% alike on Aug. 7 when he announced plans to take the car manufacturer private at $420 a share, describing that he had “funding secured,” suggesting that the process was in its later stages.
The controversial announcement set off a firestorm that reportedly sparked an investigation by the Securities and Exchange Commission and a host of investor lawsuits, with questions swirling about the CEO’s intentions.
Chanos is no fan of Tesla. On the day of Musk’s go-private Twitter missive, the famed short seller — meaning that he places wagers that come good only when a company’s shares lose value — said the bounce that Tesla enjoys from bearish investors being squeezed is the only positive narrative that the company has: “The short position is the best thing the stock has going for it. ‘Musk vs. The Shorts’ is a far better narrative than ‘Tesla vs. Mercedes/Audi/Porsche,’ ” Chanos told CNBC.
Tesla’s stock rose 11% to $379.57 on the day Musk tweeted about his plan. But since that point it has been less buoyant, with shares sinking by 5.8% as of Friday’s close.
That said, Tesla shares haven’t been a short-seller paradise.
So far this year, they have climbed 3.7%, and the stock performance thus far in August puts shares on track for a gain of 8.3%, according to FactSet data. By comparison, the S&P 500 index SPX, +0.62% has gained 2.1% in August and is on track to climb by 7.5% in the first eight months of 2018, while the Dow Jones Industrial Average DJIA, +0.52% has advanced 1.5% this month so far and 4.3% to this point in 2018.
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