GLJ Research founder Gordon Johnson joined Benzinga’s PreMarket Prep show Tuesday. Among the topics Johnson discussed: electric vehicle leader Tesla Inc (NASDAQ:TSLA) and the recent EV truck IPO Nikola Corporation (NASDAQ:NKLA).
Tesla’s Q2: Johnson said Tesla investors should be bracing for brutal second-quarter numbers given the state of the global auto market.
“Tesla’s accounting is always tricky. They recognize a lot of things and they pull a lot of things forward. But if you just look at the registration data, in Colorado, which is the most generous EV market, their sales in April-May are down 73%, he told PreMarket Prep.
Johnson said recent numbers in the rest of the U.S., Europe and China also paint a bearish picture for Tesla’s quarter.
Johnson’s Tesla Bear Thesis: Tesla shares have been on an incredible run in the last year, but Johnson remains bearish on the stock.
“I couldn’t be more bearish. Look, Tesla is completely detached from reality. The stock has kicked my butt. I’ll admit that, and people laugh when I say I’m bearish,” he said Tuesday.
Tesla’s valuation is more than double that of VOLKSWAGEN AG/ADR (OTC:VWAGY), which sold 10 million vehicles in 2019, the analyst said. Tesla sold 365,000 vehicles last year.
“They’ve never made a profit. We think they’re going to lose money again this year,” Johnson said.
Tesla CEO Elon Musk has been repeatedly shifting the goalpost when it comes to Tesla’s success story, he said.
Johnson On Tesla's Lineup: “Initially it was the S and the X that were going to dominate in the luxury market. That didn’t happen. Then it was going to be the Model 3, which was their mass-market car, which took them to profitability. That didn’t happen. Then it was the Model Y, right? They won’t even tell you what orders are on the Model Y.”
He noted that Tesla has now shifted attention to its Cybertruck preorders.
“Listen, the deposit for the Cybertruck is $50. I don’t think the truck is street legal. They don’t have a facility to make it. It’s almost like the Tesla Semi, where they were taking preorders for $100,000 three years ago and they still haven’t made the car.”
Analysts and investors seem to be making an erroneous connection between the momentum of Tesla’s stock and its underlying business, Johnson said.
“As we get through this year I think people are going to realize that Tesla’s not only losing share, but momentum for EVs is slowing.”
Johnson On Nikola: Shares of Tesla competitor Nikola have skyrocketed 573% in the last three months. While Johnson doesn’t officially cover Nikola stock, he said he's skeptical of the hype surrounding the company.
“Hydrogen trucks make sense. The problem is [Nikola CEO Trevor Milton] doesn’t have a plant to produce it, he doesn’t have a working truck and the stock is valued as if he’s going to take over the entire trucks space.”
Johnson has a year-end price target of $87 for Tesla. The stock was trading 0.68% higher at $1,001.08 at the time of publication Tuesday.
Watch to the full interview with Gordon Johnson in the clip below, or listen to the podcast here.
PreMarket Prep is a daily trading show hosted by prop trader Dennis Dick and former floor trader Joel Elconin. You can watch PreMarket Prep live every day from 8-9 a.m. ET here. The replay can be found on Benzinga's YouTube channel, and the podcast is on iTunes, Google Play, Soundcloud, Stitcher and Tunein.
Photo courtesy of Tesla.