Tesla will drop 70% after robotaxi and AI ambitions stop shielding a failing business, 'Big Short' investor says

• "Big Short" investor Danny Moses is still betting against Tesla stock and expects it to fall to $50.
• Tesla's focus on Robotaxis and AI is a distraction from its "falling apart" core business, he told CNBC.
• Apart from faulty fundamentals, Moses also noted that the firm is facing a DOJ investigation.

Tesla's stock is cruising toward a steep correction, and will see a drop-off that even new tech initiatives can't steer around, investor Danny Moses told CNBC.

"The Big Short" trader and longtime Tesla bear isn't backing down from his bet against the electric vehicle maker, and he still anticipates Tesla shares to eventually hit $50, a decline of 70% from current levels of $171. That's because the company's robotaxi and artificial intelligence ambitions can only obscure a shaky business outlook for so long. 

The Moses Ventures founder revealed a Tesla short last year, sparked by a frustration over CEO Elon Musk's purchase of X, formerly Twitter. In Moses' view, it chipped away at Musk's attention to Tesla, at a time when numerous headwinds were mounting.

Moses again centered on Musk for why he remains pessimistic on the stock, which has already dropped nearly 33% year-to-date. 

Shares rebounded briefly after the CEO doubled down on robotaxi and AI plans in his first-quarter earnings call, but Moses sees such announcements as a distraction from the company's faulty fundamentals.

"For someone who cares so much about the human race, he is firing a lot of humans at this moment, and everything's kind of falling apart in their core business," he said on Sunday. "So what's he doing? He's pointing everybody to Robotaxis and AI and autonomy and all that."

Before the first-quarter results, many on Wall Street had also turned cautious on the EV firm, citing stumbling delivery volumes and dimming industry outlooks.

The list of headwinds extends beyond its performance, Moses noted, citing that Tesla is now facing an investigation from the Department of Justice to determine whether Tesla has misled consumers and investors about the self-driving capabilities of its vehicles. 

"The more time that goes by here, and their core business is coming under pressure, I think this move to open it for robotaxis and AI is going to fade over time. So $150 billion market cap at 50 bucks — seemed like a reasonable valuation to me," he said.

While Moses holds Tesla as his primary short, he touted a separate autonomous driving firm called Wayve. The firm had recently garnered $1 billion from major investors, such as Nvidia and Bill Gates.