ASSET MANAGER: Be Prepared For A Wild Ride To The Downside For Tesla

Five months ago Longboard Capital Management called Tesla the new Apple, and predicted it would go up to $US200/ share from it’s then level of $US55/share.
Now things are looking a little different, according to Longboard’s CEO Cole Wilcox.

Tesla stock has tanked 16% after the electric vehicle maker reported losses of $US0.32 per share in its earnings last night, worse than analysts expected loss of $US0.25 per share.

Wilcox now believes that there is nowhere for the stock to go but down.

In an interview with CNBC, Wilcox says that while Tesla has been the top pick for momentum players this year, they cannot expect the momentum to continue next year.

“The short side is the way to play the trade next year. 2014 is the year of the honeymoon ending for Tesla shareholders and ultimately people will be very disappointed as the economic reality of the company doesn’t catch up where the momentum is at today,” he says.

“Ultimately, I think we’re in for a wild ride to the downside as we go forward in the future.”

James Albertine of Stifel Equity Research agrees with him, adding that Tesla’s massive capex is going to catch up with its cash balances next quarter.

“Our question remains in 2014, what’s the extent of the cash burn? It’s [going to be in] infrastructure build out, retail buildout, building to a European and global audience that has right hand as well as left-hand drive.”

Watch the full segment below:

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