Why One Hedge Fund Thinks Tesla Is Worth $0: The Full Presentation

With Elon Musk's public behavior becoming increasingly erratic, irrational and bizarre - just over the weekend trolling Warren Buffett that he is "super serious" about attacking Berkshire's Candy moat, just hours after he threatened Tesla shorts with "unreal carnage" in a tweet that some have alleged is a violation of securities laws - the Tesla bears have been getting increasingly more vocal.

And it's not just Jim Chanos: while the famous Enron nemesis remains certain that Elon Musk's resignation and Tesla's doom  are just a matter of time, others have been increasingly aggressive about their skepticism, so much so that Tesla is now the most shorted stock in the US market, much to Elon's volatile chagrin.

Yet while most shorts believe there is at least some value in Elon Musk's car company, Mark Spiegel of Stanphyl Capital Management is convinced that when the dust settles, Tesla will be "a zero" (whether or not Musk will be "bankwupt" is another matter). He made this clear rather early on, in fact on the front cover, of his 156 page slideshows that he delivered at the Kase Learning short selling conference.

While we present the whole powerpoint below, here is the exec summary and some of the bigger picture observations:

3 Broad Reasons Why The Equity in Tesla Is Worth “Zero”

  1. Tesla’s financials are horrible and worsening even BEFORE massive competition begins arriving later this year
  2. Tesla has no “moat” of any kind and in fact now possesses trailing technology in all facets of its business
  3. A “bet on Elon” is a bet on someone who can’t be trusted -he has a long track record of making hugely misleading statements

A snapshot of the company's current financials:

A look at Tesla's financial "scale":

But the key investment - or rather its opposite - highlight of Spiegel's bear thesis is the same one we noted last week in Tesla's "Other" Biggest Risk, namely the armada of electronic vehicles coming down the pipe, many of which are newer, more advanced, and generally cooler than Tesla and have the financial backing of auto giants which have billions in positive free cash flow which can fund the EV design and production process for years if not decades, a luxury the cash bonfire that is Tesla does not have. Here's Spiegel:

A massive number of long-range electric cars will soon be on the market, often at prices subsidized by profits from their makers’ conventional vehicles, an option Tesla doesn’t have. Additionally, here in the U.S. Tesla’s $7500 tax credits will expire in late 2018 while competitors will just be starting to use theirs, so pricing pressure on Tesla will be intense. Here’s the competition Tesla faces in electric cars…

And then there is the biggest risk of all: Tesla's constant need for more, new capital, which so far investors have been all too eager to provide to Tony Stark.

All this and more, including a debunking of Tesla's "battery advantage" moat, its existing supercharger station "headstart", Tesla's autopilot safety record, its lac of preparedness to service its fleet, and much more in the full presentation below.