What Is the Real Reason Jim Chanos Is Short Tesla?

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JUL 22 2018 BY EVANNEX 58

‘PERCEIVED SOLVENCY’ COULD BE THE REAL REASON JIM CHANOS IS SHORT TESLA

Tesla has reached its artificial milestone of producing 5,000 Model 3s per week, and media outlets (and buyers) continue to post rave reviews. The company’s three vehicles are the three top-selling EVs in the US market. Model S has been consistently outselling every competing large luxury sedan for a couple of years, and it appears as if Model 3 will similarly dominate the small sedan segment. At least two sets of auto industry experts (Munro & Associates and a group commissioned by German automakers) have performed teardowns of Model 3 and concluded that the new EV should be earning a healthy profit margin.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Charles Morris. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: Tesla store (Image: Tesla)

Does this really sound like a company in trouble?

Short seller Jim Chanos and a host of other TSLA bears seem to think so. What do they know that we don’t? Rising youtube star Galileo Russell recently refuted Chanos’s list of anti-Tesla arguments point by point, and trader jesselivenomore detailed how Chanos and others have a history of manipulating the media to influence companies’ stock prices for fun and profit. Both thinkers have recently published follow-ups to their earlier presentations.

In a new video, Galileo Russell argues that the logic behind shorting TSLA has nothing to do with its products, and everything to do with financial engineering. As long as Tesla is reliant on the capital markets, it’s reliant on a perception of solvency. In other words, if potential investors can be convinced that the company is insolvent (whether it really is or not), they’ll remove their chips from the table, and a manufactured story will become a self-fulfilling prophecy.

Above: Galileo Russell discusses the real reason he believes Jim Chanos is short Tesla (Youtube: Hyperchange TV)

Companies in hyper-growth mode invest more money in developing new products than they bring in from sales of existing products. To keep the party going, they must continually raise new capital by issuing stock or bonds. Thus they are vulnerable to bad news, real or invented, that adversely affects their stock price and/or bond ratings. Tesla, which has been posting hefty quarterly losses for years, is the epitome of this kind of funding model, and that presents a huge opportunity for short sellers: convince enough people that the company’s in financial trouble, and soon it will be. As investor confidence declines, the stock price goes down and bond interest rates rise, making it more expensive for the company to raise the capital it requires, and a vicious cycle (or a virtuous one from the short sellers’ point of view) starts spinning faster and faster.

Galileo concedes the brilliance of this theory, but doesn’t believe it translates to reality in the case of Tesla. One thing that Average Joe and Jane may not understand (but finance experts like Chanos understand perfectly) is the difference between expenses and capital investment. As Galileo illustrates with a look at pertinent parts of Tesla’s financial statements, the reason for Tesla’s infamous cash burn is that it keeps plowing huge sums into future projects. As your favorite author has pointed out, if failure were imminent, Tesla could freeze R&D spending, put cash-gobbling new products such as the Semi and Roadster on hold, and continue as a small but profitable automaker selling its three highly popular vehicles.

However, that’s a worst-case scenario that no EV-lover wants to see, so Tesla’s continued dependence on capital markets is “a key weak point in its business model.” No matter how many wonderful things Tesla is building, sooner or later the financial music will stop, and funding will dry up. Hence Tesla’s quest to become cash-flow-positive in Q3 and Q4 of this year, which Galileo calls “critical” for the company. Once Tesla can fund its operations from income, its dependence on the capital markets could end, and the shorts will be free to huff and puff all they like.

Meanwhile, Rob Maurer recently interviewed the mysterious jesselivenomore, who turns out to be a professional trader named Chris, for his Tesla Daily podcast. In the 44-minute interview, Chris expands on the points he made in an earlier series of posts on the Tesla Motors Club Forum. In years past, Chanos and colleagues, including several well-known hedge fund wizards, have targeted various companies, including Canadian insurance company Fairfax Financial (a story originally chronicled in The Divide by Matt Taibbi) and the late SolarCity, and Chris believes that they are now using the same set of financial and media tools against Tesla.

Above: Rob Maurer interviews professional trader Chris (aka jesselivenomore) to discuss his thoughts on Jim Chanos and Tesla (Source: Tesla Daily podcast via TuneIn)

Predatory short sellers target financial and insurance companies because they depend on the capital markets, and Tesla has become much like a financial company. Galileo and Chris agree that the greatest threat to Tesla is not the legacy automakers’ ham-handed attempts at competition, but rather the perception of insolvency that could cut off its access to capital.

However, while Galileo respects Chris’s analysis, and discusses it in depth, he also detects a whiff of conspiracy theory – he doesn’t believe “bad actors” are out there planting negative stories to try to bring down the TSLA stock price, although he concedes that there are certainly plenty with strong incentives to do so.

Whatever the motives and methods behind Tesla’s financial enemies may be, the company’s path to victory is clear. If Tesla can start generating profit and positive cash flow, its solvency will be demonstrably real, and it will no longer need to worry about peoples’ perceptions. So that’s the next milestone to watch for: now that the California carmaker has started putting the marvelous Model 3 in its patient customers’ driveways, it needs to put some black ink on its next income statement.

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Written by: Charles Morris; Source: Hyperchange TV / Tesla Daily podcast

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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58 Comments on "What Is the Real Reason Jim Chanos Is Short Tesla?"

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“…if potential investors can be convinced that the company is insolvent (whether it really is or not), they’ll remove their chips from the table, and a manufactured story will become a self-fulfilling prophecy.”

Well of course. Predicting the downfall of a person or a company is one way to help make that happen. The action of any one anti-Tesla FUDster, even a high-profile one like Chanos or Edward Niedermeyer, is probably irrelevant, but since a large number of them cooperate daily to promote their FUD (it’s not a hidden “conspiracy”; the way they copy and spread each others’ FUD is pretty obvious on the Seeking Alpha forum and elsewhere on social media), the group effort probably does have some success at dishonestly manipulating Tesla’s stock price. That’s the real reason Elon is upset at them, not because they are merely shorting Tesla’s stock!

(continued…)

This is true only for a company who’s survival depends on regularly infusions of fresh money from investors, because its writing losses and burning cash. If all investors would short microsoft or google, and drive down their stock price, that would not harm there business.

While I am not a “financial guy”, still I strongly doubt your claim that there is any publicly owned company for which driving down the stock price significantly would have no impact on the business.

a minor impact. At least not a catastrophic impact, as for Tesla.
Moreover, for a company that has tons of cash, little debt, and regularly generates high profits, the stock price will hardly collapse.
Tesla is a company with tons of debt, regularly generating high losses, so the stock price relies exclusivly on the faith in a brighter future.

The WSJ is reporting that Tesla is demanding cash back from suppliers “to ensure Tesla’s continued operation.”

That’s not going to be good for the stock, for deposit refunds, or for new orders.

There’s some hidden reason why Tesla is not going to the capital markets. Some day we will find out what it was.

Elon's Mini Submarine

I’m sure the usual Tesla apologists and stock pumpers (Pushy Troll, Get Real, Nix, etc.) will try to put a positive spin on this troubling development. LOL!

tesla has not been depending on regular capital markets. They make heavy use of other Silicon valley money.
That is why shorting tesla is a horrible mistake.

You are correct:
https://www.wsj.com/articles/tesla-asks-suppliers-for-cash-back-to-help-turn-a-profit-1532301091
and it’s not as simple as the headline. Key statement:
“Tesla declined to comment on the specific memo. But it confirmed it is seeking price reductions from suppliers for projects, some of which date back to 2016”

Sounds like a negotiating tactic now that they are at volume. My guess is they have some good pencil sharpeners in Palo Alto who are noticing their suppliers aren’t giving them the best prices.

Thank you for giving us the Truth, Vexar! 🙂

“The WSJ is reporting that Tesla is demanding cash back from suppliers ‘to ensure Tesla’s continued operation’.”

If you say so, it’s 99 & 44/100 percent sure to be untrue.

(…continued from above)

“What Is the Real Reason Jim Chanos Is Short Tesla?”

That’s a different question. One can be a stock shorter without being a habitual liar and disinformation-monger. “Short” investing serves a useful function, putting a brake on stock market volatility. Arguably Tesla’s highly volatile stock could use more of a brake! What no company, including Tesla, “needs” is a bunch of people dedicated to spreading disinformation, lies, and half-truths about the company on a daily basis.

But to answer the question: The same reason anyone invests in the stock market, either “long” or “short”: To make money the lazy way, without expending any effort at it.

I doubt the upsides of allowing short investing outweighs the downside. I think it’s deeply unhealthy that people who do nothing but pushing money around are allowed to get invested in the demise of businesses that actually deliver useful products and services and will unavoidable start promoting the downfall of their targets.

The Smart Way….If they wouldn’t make up Lies & miss information to try & achieve their Goal ..As smart as Chanos may be ., Chanos , is reading Tesla the 0ld Fashioned Way …,All Wrong!

Or, maybe he just believes that a company that’s never made any profit and which is, strangely, valued at more than profitable automakers that make 20X-50X more car, is ripe for a fall.

Either GM, Toyota and Ford are under-valued or Tesla is over-valued. He’s probably “long” on those other stories and “short” on yours. Don’t be offended. Just buy some more TSLA– what’s so hard about that? Prove him wrong and buy more stock.

Or, maybe he likes to lie to the public for profit?
If Chanos was actually shorting the FANG stocks, for example, this year he’d be bankrupt. If Chanos makes 7 points and they’re all invalid, then either he’s the stock market’s biggest idiot or he’s lying to the public, for his benefit.

Anyway, if you want to know the character of Jim Chanos, then you can take a deep dive into: The Divide: American INJUSTICE in the Age of the Wealth Gap.
by Matt Taibbi.

That’ll tell you all you need to know about the character of Jim Chanos.

If it were an actual profitable move to provide investors in his fund returns, it might be more understandable. But Jim Thanos is running at about HALF the returns the S&P 500 has returned since 2013. Much worse than monkeys could do choosing stocks with darts.

https://www.tipranks.com/hedge-funds/jim-chanos

He may have some long-term angle he is working like the book describes, but for now it seems to simply be a short term gambit at selling anti-Tesla investors into paying a lot of high management fees to invest in his hedge fund. Why would he actually care if it is a winning or losing strategy, as long as he can skim a couple of million in management fees off the fund?

As long as he can find a long line of suckers to buy his anti-Tesla sales pitch, and get them to invest in his hedge fund with a promise of distant future profits, he still makes money whether he is wrong or right.

Amen. The “fee” scam for hedge fund/investment managers grinds me to no end. It’s all essentially a coin flip, when folks like Chanos call something right, they act like the smartest guy in the room, but conveniently when they call it wrong they quietly still take their fee and move on to other conversation.

Tesla is part of the reason why his fund is doing so badly. I remember when it was looked at his record, he would have been positive if he did not short Tesla. So he has a HUGE incentive to target them.

and more importantly, to lie about it.

he doesn’t believe “bad actors” are out there planting negative stories to try to bring down the TSLA stock price, although he concedes that there are certainly plenty with strong incentives to do so.

Has he ever read a thread on any EV interest site? They are stuffed with shorters spreading dishonest spin against Tesla.

Don’t forget trolls and Russian Trolls, and AI bots.
The short industry has the MONEY to PAY for Bots to go negative on stocks?
Why? Because there’s stupid ALGO trading going on that looks at Market Sentiment, Invalid, Gamed, Gerrymandered like the ILLEGAL US Congress, market sentiment.

Anyway, make the net articles printed on the internet go negative and the stupid ALGO’s kick in and sell.

And where is the SEC I wonder…
And lets not forget the SEC still hasn’t done anything about the RIGGED Trading Systems in place.

So your premise is that they are also shorting Nissan, which is going heavily eV?

Methinx your persecution complex can’t see the inconsistencies in your outlook here. None of this is an issue if Tesla gets profitable… the stock’s down, buy more, make a liar out of your perceived enemies.
But all this tilting at windmills seems hyperbolic– if Tesla only “said what they’d do” and then “did what they’d said” we wouldn’t even be talking about it. They miss their goals nonstop, ,even as the CEO has time to make bizarre public claims about people he doesn’t know?

Grow up, buy some stock and you will get your reward. I guarantee it.

Well, I didn’t say Nissan.
I said the FANG stocks. Chanos is shorting the FANG stocks. Or, he says he is.
Facebook-Apple-Netflix-Google. These are the companies with the most growth in America, and a track record of growth. If you’re old and can’t handle an iPhone that bet might make sense, but not for the rest of the population.

So, maybe Chanos is just an OLD GUY making an OLD GUY, anti-technology bet. That clearly breaks one of Peter Lynch’s rules. Buy the product, buy the stock. And America is buying the product: FANG & Tesla.

Invest in some more shorts Rafael to go with your jealousy.

We can do it, so lets do it.

“Don’t forget trolls and Russian Trolls”

The derangement is real – we haven’t seen this level of paranoia since the Red Scare.

Many say that the McCarthy era House Un-American Activities Committee did not expose one single communist.

Contrariwise, FaceBook’s founder has already admitted that hundreds or thousands of fake news ads on Facebook in the last Presidential election were paid for by Russia, and the Mueller investigation recently indicted 12 Russians along with a very detailed description of their methods, tactics, and exactly what members of the Russian military and spy agencies were (and still are) involved.

The McCarthy era “Red scare” turned into a partisan witch hunt. Contrariwise, the ongoing Russian attempts to promote divisiveness and “hack” our elections… is all too real. Don’t bury your head in the sand and pretend it’s not.

https://www.cnn.com/2018/07/13/politics/russia-investigation-indictments/index.html

http://theconversation.com/trump-may-owe-his-2016-victory-to-fake-news-new-study-suggests-91538

The shorters also benefit by there being a wide array of well documented EV opponents who see parroting shorter memes (that they don’t even understand) to be a convenient way of attacking EV’s in general. They see a negative meme put out by shorters, and they blindly parrot it everywhere, regardless of whether it is on topic or not, or whether it is repeatedly proven false.

Tesla is seen as the easy proxy for attacking all EV’s, because they don’t have to attack actual ICE car companies in the process of attacking EV’s. Examples of this, like the Koch bros who created anti-EV and anti-Tesla websites and Fuel Cell fanatics, are well documented in the insideev’s archives.

Finally, shorters benefit from the same old historic inter-brand battles similar to “Ford v. Chevy v. Dodge”, where again anti-Tesla shorter memes are blindly parroted as the nearest weapon to use in battle, even when the meme is completely false.

Shorters know about all this, which is why they target EV and car websites with FUD, so they can take advantage of the multiplier effect. It is a feature of their plan, not an accidental side effect.

“he doesn’t believe “bad actors” are out there planting negative stories to try to bring down the TSLA stock price, although he concedes that there are certainly plenty with strong incentives to do so.”

It is misinformation to question the existence of the disinformation campaigns. There have been very public revelations of extensive disinformation campaigns including this power point by the Western States Petroleum Association: https://www.indybay.org/newsitems/2014/12/12/18765457.php Sharing the misinformation without correcting it is a form of assistance.

But no disinformation EVER comes from Tesla, right?

Your comment here is deflection. My statement has nothing whatsoever to do with Tesla but that didn’t stop you from attempting to use it as an opportunity to bad mouth the company.

“But no disinformation EVER comes from Tesla, right?”

Perhaps you need to look up the definition of “disinformation”? I can’t think of a single bit of disinformation from Tesla, ever. Perhaps you can, but if so, it must be a pretty rare event! Contrariwise, it’s practiced every single day by the anti-Tesla FUDster gang.

Claiming false equivalency is a favorite tactic of anti-Tesla FUDsters.

Ron Swanson's Mustache

The biggest criticisms of Tesla seem to revolve around throwing tantrums about Elon’s missed deadlines and panel gaps.

The shorters and shorter parrots showing up to comment here just proves James right.

The real reason is, Model 3 it´s more than ridiculously cheap interior concept. It is not call of the feature, but clearly a cheapest possible made e-car! I changed my mind and seen friends changing their minds after the first interior preview of the model 3…its plane simple pathetic… We people can not be that pathetic to accept this as some 30.000+bucks car…and that is why most of the shorts are staying!

LOL. No, it’s just you. The model 3 interior looks much better and cleaner than most cars on the road. And if you check the complexity of using buttons and dials on the i-Pace, you’ll see that there’s a steep non-intuitive learning curve there too. Actually, Tesla menu’s being all onscreen is easier to manipulate.

Strange, most of the reviews of the Model 3 have been glowing. I guess those car reviewers must not have the insight and acumen you possess. Luckily, there’s other EV options that aren’t super cheap on the inside, like the Bolt. Wait, I mean..

By the way David, most of the folks I know with Teslas didn’t buy them for the stitching and interior finish. We bought them for what happens when your foot depresses the accelerator. That’s also why Tesla Model 3/S/X reviews typically spend more time talking about what the vehicles can do, not the leather on the seats.

LMAO, “David” is also missing the physical keyboard on his phone!

Ouch, why did you have to point out the phone keyboard thingy, “Captain Obvious”?

Now, thanks to your “missing physical keyboard” comment, I can never look at a regular old school dash the same way.

ARRG!

David, no one believes you. You never changed your mind because you never intended to buy a Model 3 in the first place. From your history of comments that is clear. We’ve had our Model 3 for less than a month and took it on a 460 mile trip. It was great. I already am used to the center display and do not miss the buttons and knobs. It’s like learning any new UI like on a phone. After a short time it becomes second nature and isn’t an issue. In fact I would say the center screen is great. In fact cruising down the highway silently WITH the minimalist interior that has a great sound system and very comfortable seats is a huge plus. It is one of the most relaxing, peaceful and satisfying cars I have ever driven on the highway. If I had to make some sort of review on what could be better it would have nothing to do with it not feeling luxurious because it doesn’t look like the cockpit of the Space Shuttle with wall to wall buttons and knobs. For me it would be that my phone doesn’t stay connected reliably enough to… Read more »

Fyi. I’m not sure the history of comments you refer to. The David commenting above is not me. The names are pretty generic here and multiple people can easily post with the same name.

Sadly, that is true; there isn’t any registration of screen names, so someone can easily imitate another.

And those who voted down the above comment… well, you’re simply wrong.

How can saying multiple people are using the “David” name be voted down? How has this site become so toxic?

I finally sat in a Model 3 the other day. I’m not a fan of tons of buttons and knobs, so naturally I liked it. It was very easy to adjust the mirrors, steering wheel, etc. using the thumbwheels. You set this stuff once and it remembers you. Your spouse, kids, etc. can all have their own profile. I can see some people disliking it, but Tesla doesn’t have to sell to every person on earth. I think their target market will overwhelmingly favor the Model 3’s approach.

My only minor complaint is the screen looks “too big” when you first sit down. The rest of the dash is so clean and uncluttered, the big tablet really sticks out. It’s not a show-stopper, though. The real problem, IMHO, is it makes the Model S and X interiors look really dated.

Ron Swanson's Mustache

If you want something with a button-covered traditional interior, go buy a used GMC from the 1990s.

The rest of us have moved on to touch screens and voice control. You know, the interfaces of the future.

Chanos reason to short Tesla is probably the same than mine: He does not believe, that Tesla is able to become profitable. Period.

Well gaggagme, I hope you put ALL of your wealth into your shorts then.
I will make sure and drive by your cardboard living arrangements and wave at you from my Model 3!

Ok, Tesla is now producing 4000+ M3 / week comfortably. That is roughly 16,000 M3s / month. By end of August, they are supposed to be at 6000/week. I would give them end of Sept. IOW, they will be at 24,000 M3s / month. Add to that with ~1000 / week of MS as well as MX. That gives some 30,000+ cars / month. That means a minimum of 30+ K cars * $40K per car = $1,200,000,000 / month in revenue.

Then remember that Tesla is making 30+% profit margins on these cars, or $360,000,000.
A profit margin of 1/3 B every month.

And you think that they are unable to become profitable.

Tesla may have to curb it’s appetite in biting off more than it can chew. It’s a situation where the cream could turn sour, but that’s more of a hope than a likely-hood. The problem for Jim Chanos, and other shorts is that their thesis is wearing thin. I mean how many times in succession do we see Jim trot out and smirk, and smile when the subject Tesla arises and he pontificates on their imminent failure once again. I think he needs to rely on a more refined definition of certain words, and phrases. The diaphanous web of lies he weaves only serves to obscure the imminent success of Tesla, but it can’t impede its progression. His list of reasons for shorting Tesla aren’t really worthy of refutation as they are technically not correct, and rely on speculation that states that Tesla is worthless as a company. He’s all wrong except for where he’s possibly right, and that is the well will run dry, and if conditions do eventually meet his criteria then things could go South for Tesla in a hurry. I think certain wells could go dry but, there are artesian springs running nearby and they won’t… Read more »

I find it humorous how shills like Chanos create a narrative about a company like Tesla and then allow their own personal bias to consume them. The effort they go to in order to create the narrative is pretty pathetic and sad- but at the end of the day, after all the manufactured negative white noise is wiped away, Tesla has created and continues to create products that work and that people like. That’s all that really matters. 99% of the time I spend interacting with Tesla is when I’m driving in my car and it never gets old. No amount of folks like Chanos telling me I’m supposed to hate Tesla will make me do so. Because the product is the product, and it’s really really good.

Evannex, where I always go for unbiased Tesla info, LOL. Chanos runs a short fund. Institutions and wealthy investors put money with him to hedge their market exposure. He’s one of the best at finding overvalued companies, so when a downturn comes investors in his fund make money which helps offset losses on their other investments. A lot of listed companies inflate their stock with hot air. A lot of gullible investors buy the lies that come from the CEO and end up funding dubious and/or fraudulent enterprises. As a society we suffer when we pour resources into boondoggles instead of sound projects. Short sellers provide a valuable service to the market and the economy at large. Short sellers are sometimes wrong, of course. Some companies that look dubious end up succeeding. Bears take their position and tell the world why, just like bulls. For every Chanos listing Tesla’s flaws there are 10-100 bulls saying positive things. In many cases, very stupid things (just read some of the crap from Trip Chowdrawhatshisname, or Adam Jonas). Who’s “lying”, Chanos or Musk? We won’t know for many years. if ever. Remember Musk launching the Model 3 with 50 “production cars”? Remember the… Read more »

This guy is beyond retarded. Why does anyone think he knows what he’s talking about?? I can’t detect even a shred of credibility.

The shorts are starting to leverage up early this morning, they have some new cannon fodder, in the latest Tesla news spin cycle.

There will be some “J. Chan Short” profit taking, on this coming next little leg down. Another excellent buying opportunity, for the Tesla longs, will once again will present itself, at the end of this late morning “tending lower” dip.

Get ready folks, “start your engines”!

And why is Elon and his TSLA fanatics so concerned about short selling? Well, for one, if TSLA stock doesn’t maintain/hit certain stock valuations in the near future, the company will have to pony up $1.2 BILLION in debt payments. That’ll probably throw a slight kink into Elon’s profitability plans. Tesla/Elon/TSLA longs have every incentive to inflate the stock price by whatever means necessary. If there is such thing as “positive FUD”, Elon and TSLA diehards are pushing that out as much as possible. Tesla is now begging suppliers to cut pricing on existing contracts. Lol
4% down in pre-market trading on the news.

“Tesla will need to pay down a $230 million convertible bond this November if its stock doesn’t reach a conversion price of $560.64, and a $920 million convertible note next March if the stock doesn’t reach $359.87.”
https://www.wsj.com/articles/tesla-asks-suppliers-for-cash-back-to-help-turn-a-profit-1532301091

Tesla “now begging suppliers”, is some of your best work yet!

“J. Chan” will keep priming, as long as you keep pumping! Keep up the good work!

And… you still drive a Bolt..

Article title l: “What Is the Real Reason Jim Chanos Is Short Tesla?”
—————-

Answer: Chanos is today short TSLA because he has allowed himself to break the #1 rule in stock investing:

Don’t allow emotion/ego to get in way of cutting your losses and moving on to the next deal.

Chanos was arguably on solid well reasoned ground when he originally shorted TSLA because from an automotive historical perspective it was highly improbable that Tesla would succeed as as a major car maker… it was statistically more probable that Tesla would join The Tucker in the long list of spectacular start-up automotive failures.

It has become increasingly obvious that Tesla has managed to defy the historical odds against it… but Chanos has allowed his emotion/ego to get attached to his large TSLA short position… big mistake.

… Why has Chanos allow emotion/ego to get in way of cutting his TSLA short losses and moving on to the next deal?

Answer:

Chanos recycled his successful Enron short strategy and applied it to Tesla… meaning Chanos himslelf is the public face band-leader in charge of promoting the “Fall of Telsa” narrative. Also same as with Enron, Chanos has worked in cordination with his investor associates to insure that other investors piled-on shorting TSLA to further reinforce the Chanos “Fall of Tesla” narrative. Some of those Chanos associates are the same guys that worked with Chanos on Enron so they likely feel comfortable/obligated to work with Chanos on taking down Tesla.

Chanos, whatever you think of him, is in the end human and taking such a public lead against Tesla (basically wrapping his reputation around the “Fall or Tesla” narrative) understandably binds Chanos’s emotions/ego to his Tesla short position. Worked for Chanos with Enron… not likely to work with Tesla.

Chanos is at a critical juncture…. soon cut his losses in his TSLA short position and publicly declare he called this one wrong or continue to ride his position into the ground along with his reputation.

For Chanos:

When in a free fall and your main chute fails it’s a good idea to not allow yourself to enter a mental denial state that the main chute has failed… and instead cut-away the main chute and pull the handle on your reserve chute while sufficient altitude allows the reserve to save your life… perhaps injured but alive.