Sam Boughedda

In a Thursday note, Gordon Johnson (CEO and co-founder of GLJ Research) outlined his bear thesis regarding Tesla (NASDAQ;) to investors.

Long-time Tesla fan and bearer, John the Bear pointed out five reasons why they believe Tesla faces “major difficulties” in 2018. This includes problems in China and its “FSD lie” problem, autonomous vehicle competition, and problems with image.

Johnson pointed out the “China/profit Problem” of the company, stating that Tesla’s sales were “slipping in only one market it can turn a profit.”

Gordon wrote that the Chinese EV market had completely blindsided TSLA Bulls and TSLA, “who for years have been laughing about ‘The Next Tesla Killer” headlines/claims, believing competition would take years. TSLA bulls now run out of excuses (e.g. Tesla’s China business),”.

Regarding full self-driving, the analyst argued that “it’s obvious ‘FSD’, or more importantly the BIG THING E. Musk has promised – regarding the fleet of millions of TSLA cars being able to just ‘wake up’ with a software update that now makes everyone’s TSLA’s a robotaxi – is not happening.”

Johnson noted that there is now autonomous vehicle competition, with “half a dozen businesses, mostly in China and Cruise in SF, who can offer driverless rides for a fee.”

Concerning Tesla’s supposed image problem, the analyst said it is “crumbling,” while regarding Twitter, he said every M&A/other lawyer he has spoken to believes, Musk will not be able to back out of the acquisition, meaning he will likely “have to sell $15B-$20BN more of TSLA stock to fund the acquisition.”