Position: Bought to Open – 1 TSLA 08/15/2025 $200 Put @ $3.20
Total Cost: $320.0

Tesla (NASDAQ: TSLA) has been one of the most volatile—and polarizing—stocks in the market for over a decade. While bulls tout Elon Musk’s visionary leadership and Tesla’s dominance in electric vehicles, I’m taking the other side of that trade. On May 13, I opened a bearish position by buying a long-dated $200 put option expiring August 15, 2025.

Here’s why I shorted Tesla.

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1. Sales Slipping in China

Tesla’s sales in China, one of its most important markets, have been trending in the wrong direction. In May 2025, sales reportedly dropped 56% year-over-year, signaling a dramatic loss of momentum. This isn’t just a temporary dip—it’s a reflection of Tesla’s weakening brand power in a fiercely competitive space, where companies like BYD and XPeng are gaining ground with strong local support and expanding model lineups.

When a company is priced like a high-growth juggernaut but is posting sharp volume declines in critical markets, something doesn’t add up.

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2. Competitive Pressure Is Mounting

Tesla was once synonymous with electric vehicles, but that’s no longer the case. Nearly every legacy automaker—from Ford to Mercedes-Benz—has launched credible EVs, and newer entrants are ramping up innovation and scale. Tesla’s once-differentiated edge is eroding.

To maintain demand, Tesla has slashed prices, which boosts unit volume but pressures margins. This is classic industry commoditization—and it’s not bullish for long-term profitability.

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3. Leadership Distractions and Political Fallout

Elon Musk is brilliant, but increasingly controversial. His involvement with X (formerly Twitter), Neuralink, and other side ventures raises questions about his focus. More recently, his political leanings and ties to controversial figures have caused backlash among institutional investors, with some funds publicly halting new investments in Tesla due to reputational risks.

When a CEO becomes a liability to the stock price, it’s time to reconsider the fundamentals.

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4. The FSD and Robotaxi Mirage

For years, Tesla has promised a future dominated by autonomous vehicles and revenue-rich robotaxis. However, the company’s Full Self-Driving (FSD) technology is still in beta, and regulatory approval remains elusive. Some investors now doubt whether this business line will ever generate meaningful profits. I share that skepticism.

With no clear monetization pathway, these narratives feel more like marketing than reality.

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5. Valuation Is Detached From Fundamentals

Despite the concerns above, Tesla is trading at over $300 per share, with a market cap north of $1 trillion. That valuation assumes exponential growth in both vehicle volume and high-margin tech products—expectations I view as overly optimistic.

Tesla’s valuation has more in common with a software giant than a car company, yet its core business is deeply rooted in the low-margin world of manufacturing and logistics.

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6. Timing the Trade: August 2025 Expiration

I chose the August 15, 2025 $200 put because it gives the trade time to work. Tesla may beat short-term expectations, but I believe the cracks will deepen in the second half of the year. Disappointing earnings, lackluster delivery numbers, or another macro shock could serve as catalysts.

The $3.20 premium is relatively low for a long-dated option, giving me leveraged downside exposure with clearly defined risk.

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Final Thoughts

This is not a trade against Tesla’s long-term potential to innovate or push the envelope. It’s a trade against how the market is pricing that potential today.

Tesla may still be a major player in the future of energy and mobility, but as it stands in mid-2025, the stock looks bloated, the risks are mounting, and the euphoria has returned without the fundamentals to back it up.

For now, I’m betting that reality will catch up with the narrative.

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Disclosure: This post is not financial advice. I hold a bearish options position in Tesla as described.

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