A few weeks ago, we shared a note about Tesla from the hedge fund Vilas Capital Management. The firm, which is short the shares, said "Tesla is going to crash in the next 3-6 months."

I received an update from Vilas this morning explaining why they're even more bearish on Tesla today. The firm pared its short positions after the recent selloff. And Telsa now comprises about 98% of their short book.

Clearly Vilas thinks Tesla's reckoning is imminent.

You can read the rest of Vilas' thoughts on Tesla below:

Did you know? You can receive all our actionable articles straight to your email inbox... Click here to signup for our Notes from the Field newsletter.

We added meaningfully to our Tesla position in the first quarter at prices in the $340 range. We continue to believe that Tesla is extremely overvalued and that it will experience significant financial difficulties over time.

All companies in a capitalistic system need to earn profits and those profits need to be attractive relative to the amount of shareholder capital employed. Tesla has never earned an annual profit. Along with digital currencies and Unicorns, Tesla appears to be caught up in a gold-rush-fever type of emotional response, both from a "they will take over the world" and a "they will save the world" combination of hopes, instead of their owners looking at the numbers.