Tesla, Inc. (NASDAQ:TSLA) faced a significant downturn on Wednesday after receiving a downgrade from Wells Fargo, heightening concerns regarding the electric vehicle manufacturer’s ability to meet its delivery targets. Adding to the downward pressure, prominent Tesla investor and YouTuber Kevin Paffrath, known as “Meet Kevin,” announced his decision to short the stock, citing broader economic factors.
With a substantial following of nearly 2 million subscribers on his YouTube channel and over 339,000 followers on X, Paffrath voiced his frustration, stating, “But I feel stabbed in the back and a lot of it doesn’t even have to do with Tesla, has to do with what I think the Federal Reserve is about to do to us.” He clarified that his short position is only intended for the short term. Paffrath then delved into the recent reversal in consumer price inflation, noting a stall in structural inflation despite a significant drop in cyclical inflation since June 2022. He speculated on the Federal Reserve’s upcoming Summary of Economic Projections, suggesting that the central bank may signal rate hikes to combat inflation, contrary to the market’s expectation of rate cuts.
Paffrath also highlighted various risks facing Tesla, including the political weight of Elon Musk’s expanding roles beyond Tesla, such as CEO of Twitter and CEO of border patrol. He warned about liquidity risks for Tesla, as Musk’s involvement in other projects could divert resources from the EV maker. Additionally, Paffrath pointed out potential challenges such as rising transportation costs and margin contraction, exacerbated by geopolitical tensions and promotional incentives.
Regarding Tesla’s stock price, Paffrath suggested a possible decline to around $148 in the short term, with a strong support level at $101. He expressed his belief that the situation for Tesla may worsen before showing signs of improvement.
Tesla concluded Wednesday’s trading session down 4.54% at $169.48, according to data from Benzinga Pro.
