Jim Chanos, a renowned short seller and bear on Tesla, recently issued a warning about the current state of the market. He stated that speculation is reaching levels of absurd excess similar to that of 2021. Specifically, he highlighted the resurgence of meme stocks like GameStop and Special Purpose Acquisition Vehicles (SPACs) as dangerous trends to watch out for. Additionally, Chanos emphasized the “absolutely insane valuations” of some restaurant chains as cause for concern.
Chanos cautioned retail investors against blindly following the crowd and investing in assets with high valuations that lack fundamental support. He noted that this fear-of-missing-out (FOMO) style of trading led to disastrous outcomes for many investors in 2021. Despite being a vocal critic of Tesla, Chanos suggested that the electric vehicle company should honor Elon Musk’s massive compensation deal from 2018, as the CEO had successfully met all performance targets. While some Tesla shareholders have criticized the payout as excessive and taken legal action to prevent it, Chanos maintained that a deal is a deal, even if it may not be favorable for shareholders in the long run.
Chanos acknowledged that Musk’s compensation deal was costly for Tesla and questioned what the CEO might demand next if the package is approved. Despite his personal reservations about Musk, Chanos recognized that Musk had fulfilled his obligations under the agreed-upon terms of the compensation deal.
