The Future Fund Managing Partner Gary Black warns investors that Tesla Inc.’s (NASDAQ:TSLA) massive valuation offers a reason to “not own it,” but he firmly cautions that it is “not a reason to short it.”
A Warning Against Shorting a ‘Visionary’ Automaker – Tesla
While Black emphasized TSLA’s “significant manufacturing cost advantage,” he argued that betting against the automaker run by a “visionary leader who is a magnet for engineering talent” is a dangerous game, anchoring his view on a core market rule: “Never short a great company that sells at an expensive valuation.”
He described it as a “great company with best-in-class technology” that capitalizes on “key secular megatrends” to maintain a true first-mover advantage.
Extended Valuation Offers Reason to ‘Not Own It’
Despite praising Tesla’s business model, Black acknowledges the stock is currently priced at a massive premium. According to Benzinga Pro data, Tesla carries a Forward P/E of 149.25, compared to an industry average of 25.75—meaning it trades roughly 5.79 times higher than legacy peers like Toyota Motor Corp. (NYSE:TM) and General Motors Co. (NYSE:GM).
Black highlighted this aggressive pricing, noting Tesla “trades at an extended valuation.”
Citing a multiple, according to his personal analysis, Black said that TSLA trades at “220x forward earnings vs +35% long-term earnings growth,” which “gives investors reason to not own it, but not a reason to short it.”
Better Alternatives for Short Sellers
Instead of taking a short position in a market leader, Black suggested investors look elsewhere for downside market bets.
“There are plenty of bad companies that have weak products or competitive positions, can’t leverage key secular megatrends, have non-compelling brands, a high cost manufacturing structure, or management teams that can’t execute that I can short instead,” said Black.
In June, Famed “Big Short” investor Michael Burry weighed in on the challenges of short selling, arguing that identifying market excesses is often easier than profiting from their eventual decline.
How Has Tesla Performed in 2026?
Price Action: TSLA stock climbed about 0.22% in premarket trading on Wednesday. The stock has fallen about 20.82% year-to-date, and has declined around 11.7% over the last six months. It closed 3.22% lower at $356.09 per share on Tuesday.
Benzinga’s Edge Stock Rankings indicate that TSLA maintains a weak price trend in the short, long, and medium terms, with a poor value score.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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