As Teslas biggest bear, Johnson has taken abuse for years from bullish analysts and investors for arguing that Elon Musks EV giant is overvalued.
The bulls point to booming EV sales and potential growth drivers like self-driving advancements and battery storage technology as evidence that Tesla stock will eventually become the most valuable on Earth. But with shares down over 70% in the past 12 months, some Tesla investors are beginning to heed Johnsons warnings.
Weve been saying this all along, but nobody wanted to listen, the CEO of GLJ Research told Fortune on Tuesday. Its just a car company that cant sell its capacity.
Tesla managed to deliver 40% more cars last year than it did in 2021, but the company still missed its vehicle delivery target for the full year 2022. And Johnson believes that Teslas latest deliveries miss is just a preview of whats to come.
He argues that the companys lead times, how long it takes customers to get their vehicles, and backlog, the number of orders waiting to be filled, have dropped dramatically in recent weeks, revealing demand weakness.
Their actual new orders were around 250,000 cars in the fourth quarter. Thats down quarter-over-quarter and down year-over-year, Johnson said. Yet its valued as if its hyper growth. That is why the stock is imploding.
Wedbushs Dan Ives still believes Tesla stock will rise to $175 per share, or roughly 60% from current levels, on the back of continued sales growth.
But Johnson argues Musks golden child will fall to just $24.33 per share by the end of 2023 as investors recognize that it has built too much capacity. That represents a potential 75% plus drop from Tuesdays closing price.
False promises and a rich valuation
Tesla isnt Elon Musks only company, and his other ventures have worried some analysts in recent weeks.
Musks $44 billion Twitter acquisition has been the subject of a heated debate among analysts, with some arguing that the purchase, along with Musks sales to fund it, have hurt share prices and Teslas brand.
But Johnson said that he believes Teslas real issue is a more long-term growth problem that makes its current valuation illogical.
Wall Street is expecting 35% to 40% delivery growth next year, but Johnson argues Tesla wont come anywhere close to that unless it cuts pricesand the company has already instituted multiple price cuts in the U.S. and China. At the end of December, they went so far as to offer customers a $7,500 discount on two major car models if they bought them before the end of the year.
This is a company thats valued for tremendous growth, Johnson said. Theyre valued at around two times Toyota. Toyota sells 11 million cars a year; Tesla sells 1.3 million cars a year. So if theyre valued at double Toyota, then they should be growing significantly, right? But theyre not.
Johnson also argued that promises from bullish analysts and Elon Musk that Tesla will find new opportunities for growth in areas outside of EV sales should be met with suspicion. He noted that Musk has made false promises before, including saying Tesla would have one million Robo taxis on the road by 2020 and that the CyberTruck would begin deliveries in 2021.
Do you see a pattern here? he said, warning investors not to get sucked into stories and instead focus on real developments.
Finally, Johnson said that, despite Teslas 70% plus drop over the past 12 months, short interest in the companyor the amount of investors betting against the stockis still low, which could create problems as the stock falls.
Basically, theres nobody short, he explained. And the reason thats important, is because when stocks start to fall, typically, theres a lot of short interest. And when those shorts cover that creates a buying cushion that helps stop the fall. Theres no cushion here. Thats a big problem if youre a long Tesla.
Tesla did not immediately respond to Fortunes request for comment. The company dissolved its PR department several years ago.
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