A
Tesla
short-seller
named
two
auto
stocks
that
he
believes
have
the
potential
to
deliver
100%
upside
for
investors.
Per
Lekander,
managing
partner
at
investment
management
firm
Clean
Energy
Transition
,
is
bullish
on
Mercedes
Benz
and
Stellantis
despite
the
challenges
faced
by
these
companies
in
the
electric
vehicle
(EV)
market.
Lekander,
who
holds
a
short
position
in
Tesla
shares,
has
said
the
EV
carmaker
could
“go
bust”
while
its
stock
could
fall
to
$14.
Short-sellers
profit
when
shares
fall.
His
comments
came
after
Tesla
reported
386,810
vehicle
deliveries
in
the
first
quarter,
significantly
below
the
lowest
market
estimates
.
“This
was
really
the
beginning
of
the
end
of
the
Tesla
bubble,
which
probably,
arguably
was
the
biggest
stock
market
bubble
in
modern
history,”
Lekander
told
CNBC’s
“Squawk
Box
Europe”
Wednesday.
Lekander’s
firm
manages
nearly
$3
billion
in
assets
and
successfully
called
a
2018
rally
in
carbon
prices.
The
hedge
fund
manager
said
that
the
Tesla
bubble
had
created
what
he
called
an
“anti-bubble”
in
the
auto
sector,
causing
investors
to
be
overly
bearish
on
companies
that
are
actually
performing
well.
He
pointed
out
that
Stellantis
,
which
owns
Alfa
Romeo,
Chrysler,
Dodge,
Fiat,
Jeep
and
more,
has
delivered
nearly
100%
total
return
in
the
last
two
years,
with
30%
coming
from
dividends.
Mercedes
has
also
performed
well,
albeit
to
a
lesser
extent,
with
35%
total
returns.
In
comparison,
Tesla’s
value
has
halved
over
the
same
period.
STLA
TSLA
line
2022-04-03
Despite
their
strong
performance,
both
Stellantis
and
Mercedes
are
trading
at
about
six
times
forward
price-to-earnings
ratio
(P/E),
which
Lekander
believes
is
a
significant
undervaluation.
Meanwhile,
Tesla
continues
to
be
valued
at
nearly
60
times
next
year’s
earnings.
He
attributed
this
to
the
unreasonably
rosy
expectations
surrounding
Tesla
and
the
EV
market,
which
has
led
to
a
pessimistic
outlook
for
traditional
automakers.
Stellantis
is
due
to
report
its
first-quarter
total
sales
on
April
30.
Tesla
will
report
earnings
on
April
23.
Valuing
AI
in
auto
Lekander
also
dismissed
the
notion
that
Tesla’s
self-driving
software
justifies
its
high
valuation,
noting
that
the
product
is
still
in
early
research
and
development.
In
fact,
he
pointed
out
that
Mercedes
is
one
of
the
only
automakers
to
have
partnered
with
Nvidia,
an
AI
chipmaker,
to
make
”
software-defined
vehicles
”
in
the
near
future.
“I
thus
remain
massively
bullish
quality
auto
stocks,
Stellantis
and
Mercedes
are
my
favourites
as
they
are
well
run
and
fully
investor
owned,”
Lekander
told
CNBC
via
email.
He
believes
that
if
these
companies
were
valued
on
similar
terms
to
other
large
manufacturers,
shares
of
Stellantis
and
Mercedes
could
double
from
current
levels.
“If
I
compare
to
other
industrials
companies
with
similar
margins,
cyclicality
and
balance
sheets
Stellantis
should
be
a
10x
PE
stock
and
Mercedes
more
like
15x
implying
that
they
still
have
at
least
100%
upside
from
here,”
Lekander
said.
—
CNBC’s
Arjun
Kharpal
contributed
to
this
report.
