(Bloomberg) - Fraser Perring, the short seller who accused Wirecard AG of fraud years before the German payment processing company’s collapse, is betting Tesla Inc.’s stratospheric valuation will come back down to earth.
The founder of Viceroy Research tweeted Wednesday that there is “price dislocation” between shares of Tesla and incumbent carmakers Toyota Motor Corp. and Volkswagen AG. The two largest auto manufacturers each sold roughly 10 or 11 vehicles for every one that Tesla delivered last year, yet the company led by Elon Musk has a $1.15 trillion market capitalization, more than double the combined valuations of Toyota and VW.
“I never short just on overvaluation, but whether there is complete and utter rubbish justifying an absurd valuation going around about a company,” Perring said in a phone interview. “Being conservative, this company is overvalued, I think, at least by a factor of 10.”
Perring was part of a team behind a 2016 report that accused Wirecard management and board members of money laundering and facilitating the evasion of U.S. restrictions on internet gambling. The company collapsed in June 2020 after revealing that 1.9 billion euros ($2.1 billion) of assets listed on its balance sheet probably never existed.
While Viceroy has a long track record of attacking companies with detailed reports alleging management impropriety and wrongdoing, Musk may not be its next target.
“We run campaigns. Is Tesla a campaign for us? No,” Perring said. “It’s a healthy, fundamental short.”
He’s been relatively conservative with regard to the size of his bet against Tesla, describing it as roughly 5% of his portfolio.
“This is high-conviction, but because of how it trades, you have to manage the risks tightly,” he said.
Musk, Tesla’s chief executive officer, tweeted in 2018 that short selling should be illegal and called those who take part in wagering against companies “value destroyers.” Tesla has long been one of the U.S. market’s largest shorts, which cost bears billions as the stock soared the last two years.