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.

Comments

FireBrander Sun, 05/06/2018 - 19:57 Permalink

Tesla has presold 500k M3's...at $1k profit per car that's $500M... $2k per car, a $1B...last number I found Telsa is 10B in debt..oh, if he gets production to 6k a week, it will take 83 weeks to fill the orders! YIKES!

If you bought one today, and he gets production to 6k soon, you're literally looking at two years before delivery!

Anyone know the net profit on an M3?...numbers I used were high industry averages..Hyundai clears an average of $900 per car. 

Leakanthrophy FireBrander Sun, 05/06/2018 - 20:35 Permalink

Don't hold your breath on that.

TSLA is going to match the average waiting period for a car in a socialist country, back in the good old days of USSR.

 

But where are the Hollywood jews and other California hipsters trying to look smart in their Teslas?

Maybe they're saving the money for the incoming sexual assault lawsuits.

 

Hollywood actress Trieste Kelly Dunn leaked Sex Tapes

https://celebrity-leaks.net/trieste-kelly-dunn-leaked-sex-tapes/

 

In reply to by FireBrander

rtb61 Creative_Destruct Mon, 05/07/2018 - 03:32 Permalink

Nah, it's the real fun interesting stuff, a real panic in the hedge fund short market, it's looks like they are going to be screwed over by the banks. They start buying, forcing limits on the shorts and the shorts have to buy, as the banks are buying and the Tesla stock rebounds, massively to cripple major shorts, bankrupting many, hence the current panic.

Not that they wont attack the Tesla share price again, of course they well but the banks can rip and tear through the hedge fund accounts, not because of bad financial judgement of the hedge fund but because they over leveraged and are now extremely vulnerable and hence attack, run up the stock, rip through the finances of the shorting hedge funds and then drive the Tesla stock price back down again, not that's how you make big money in capitalist societies, major stock manipulations.

I would hate to be a hedge fund shorter right now, especially the corrupt ones because from the current fiscal noise, they went to far, shonky borrowing and questionable short transaction and some problematic public deceits to back their over extended position. Never trust the big banks, if they can make more money screwing you over they will and right now they can.

In reply to by Creative_Destruct

jcaz FireBrander Sun, 05/06/2018 - 21:02 Permalink

He hasn't "presold" shit.

He's sold 500K of $1000 reservations- most of those dupes still believe that they're going to get a $35K car with a $7500 tax credit- FAIL.

When these dupes finally figure out that this isn't going to happen, they'll want their $1000 back-  FAIL.

Starting to realize why the SEC is getting very interested in Tesla?

Hyundai makes $900 per car because they sell a bazillion cars-  Tesla loses money on every 3 they build, and will until they can scale, which at the current rate will never happen;

Musk is playing a game that he will never win.   And it's starting to show on him.

In reply to by FireBrander

RAT005 FireBrander Mon, 05/07/2018 - 01:48 Permalink

You got a lot of thumbs up, maybe I'm the one behind on my data.  I thought Tesla was loosing a a little on every car and trying to make it up on volume.  Of course, even that price includes some $8k of gov. subsidy per car.  If there was some upside maybe the ends justifies the means but instead you get the weight and environmental efficiency of a Cummins 3/4 ton diesel without any ability to haul a backhoe or a few cows.  The batteries alone cost the same as gasoline per mile compared to a 30 mpg sedan.

In reply to by FireBrander

GreatUncle FireBrander Mon, 05/07/2018 - 05:52 Permalink

We have a saying a bird in the hand is worth more than 2 birds in the bush.

You could say the same about a Tesla.

As a pun on the bird in the bush ...

A couple of millennia ago a tesla ran out of control crashed into a bush and caught fire the observer of the burning bush was Moses - and so the myth of the Tesla was born.

In reply to by FireBrander

brushhog Sun, 05/06/2018 - 20:01 Permalink

Tesla is almost like the united states of car companies. Its value is based more on its ability to borrow than any real productivity or even a positive balance sheet. Of course, Tesla does not have an army to more or less force investors to lend so I dont expect that model to work out for them in the long term.

LetThemEatRand brushhog Sun, 05/06/2018 - 20:19 Permalink

I do see some similarities.  Many people here (and elsewhere) hate Musk and Tesla because they benefited from tax dollars, but the same could be said for many of the biggest companies in America especially defense contractors.  America exists because it combines socialism and capitalism in a formula that could work if the fucking bankers/oligarchs were not so greedy.  Love it or hate it, Tesla innovated in a major way, much like America did.  Musk lands rockets on floating pads; he built a recharging network that allows him to sell $100K cars to tech savvy consumers who think it's fun to blow away supercars at the stop light; he made electric cars cool.   He may be a douchebag, but he is an American innovator.

In reply to by brushhog

LetThemEatRand Utopia Planitia Sun, 05/06/2018 - 21:55 Permalink

I'd rather throw money at American rockets that can land on a floating platform, and electric vehicles that techno guys spend big money on, versus missiles and billion dollar boats that kill people which is where far more of my money goes. But no one is asking me.  The guy I voted for (Trump) thinks missiles and billion dollar boats are the way to go.

In reply to by Utopia Planitia

Cabreado Sun, 05/06/2018 - 20:06 Permalink

Musk is smart enough to be scared shitless about Tesla, hence the behavior... but apparently not smart enough to realize he'd better protect his reputation before it bleeds into SpaceX...

UpChuckLiberals navy62802 Sun, 05/06/2018 - 21:11 Permalink

You can easily say that about solar and wind also.  I've nothing against electric cars but I DO love my road trips and an electric ain't gonna do it no matter how much they believe in sparkly rainbow unicorns.  Plus electricity has to come from somewhere and it won't be a solar panel at night and odds are not from a bird/bat killer either.

In reply to by navy62802

numapepi Sun, 05/06/2018 - 20:27 Permalink

Why do you suppose these hit pieces against Musk are cropping up around the web?

Tesla is materially the same company as before. Making antiquated cars using 1800's technology to make rich people feel better about their hoggish consumption.

What this is really about is Space X. Space X has had a string of successes and now plans on building the BFR. If Musk pulls that off he will be ahead of every country on the planet and will be able to make us, single handedly, a space faring species.

I don't think the elite WANT us to be a space faring species so they will destroy the man. It was acceptable when Space X was a plaything of an uber rich man, like the failing Virgin Galactic and also ran Blue Origin, but now it is becoming a threat to total dominion of the human race by the Rothschild dynasty. That cannot and will not be tolerated.

So we see an attack piece on Musk every third story...

quesnay numapepi Sun, 05/06/2018 - 21:05 Permalink

You are over-thinking it. It's just "belief fatigue". It's easy to forgive loses necessary to get started in the beginning, because people believe in the vision. But every year the loses keep growing, competition catches up and it becomes harder and harder to believe that Tesla will ever become profitable. People start to lose faith. After 15 years it's hard to blame them.

In reply to by numapepi

booboo numapepi Sun, 05/06/2018 - 21:53 Permalink

“Space faring species”

right, that shit will get old likity split, like a dreamy vision of going camping until the mosquitoes and deer flies drive you batshit crazy and you can’t just drive home. Now where in the Fuck are you going on your little space venture? I’ll tell you, literally nowhere fast but even at light speed you will be long dead like a million fucking years dead before you are remotely close to getting anywhere interesting. It’s called “space” for a reason. Shove 10 Sycophants in a tin can and see how long they last, it would turn out to be the first death match in space, spam in a can, space tards hurtling through a vacuum never to be seen again.

 

In reply to by numapepi

JLarryL booboo Sun, 05/06/2018 - 22:12 Permalink

Colorful description, and you make a good point. I've thought the first deep space mission with a crew would just stop communicating with earth. Dementia caused by radiation.

Humans are far from having a sizeable physical presence in space. Scott Kelly reported some very disturbing physical symptoms from just his time on the ISS.

We were raised on science fiction, which has endless portrayals of humans in space. How bitterly disappointing to realize that, in reality, the expectations we had were severely overblown, and that the Star Trek timeline was absurdly optimistic. And it's maybe worse, as you say. Physics suggests a species like ours will NEVER be able to travel, say, to another star. Which is not to say there are no space faring species, but I expect they would have lifetimes far longer than ours and a far different physical make-up.

In reply to by booboo

JLarryL numapepi Sun, 05/06/2018 - 21:58 Permalink

If Musk really is being targeted by the Rothschilds, then he's probably toast.

The failure of SpaceX would be a bad thing, but the end of Mars human travel ideas would be a big plus, not a minus. Or do humans think their civilization is so advanced that it should now spread beyond earth and the moon?

It would be one thing to build rotating orbital platforms as an opening achievement. But Mr. Musk and followers want to start colonizing worlds.

Robotic exploration of the solar system has been a glorious achievement, but it has been done under a strict regime of care to not contaminate alien worlds. We don't know anything about the unusual forms alien biology might take or where it might have found a home, so we must move through space with care.

Mr. Musk proposes to land humans on Mars, instantly contaminating that world and reversing decades of conscientious work by our space program. On what grounds does he desire this? Nothing but his own enormous ego that wants to "retire" on Mars.

And this is what will ultimately undo him: His monstrous ego, which I'd guess is partly a by-product of being pummeled as a kid for being overbearing. I've thought this is something that many of his squeaky tech followers could relate to. But on the outside they rather oddly resemble a bunch of old school conquistadores, running off to trample on what they don't understand.

In reply to by numapepi

the Savage JLarryL Sun, 05/06/2018 - 23:05 Permalink

Far from being a target of the Rothschilds, I would imagine Musk is doing their bidding, perfectly!  Musk effortlessly distracts his captivated cult while the Rothschilds New World Order slowly spins the next gears into place, furthering the NWO agenda while no one pays attention to them.  Is there a better way for the Rothschilds to indoctrinate the millenials than to use a tool like Musk?

Landing humans on Mars, seriously!?  We can't get a human 500 miles beyond Earth's orbit for chrissakes...If Musk was serious about space exploration, we'd first land an exploration / settlement team on the moon.  Since that can't be done either, he may as well propose something as ludicrous as Mars.  If Musk can, in any way, perpetuate the deception of our space program, there will be no shortage of resources to help him.

As for Tesla, at some point you have to wonder how Tsla has avoided bankwuptcy after 15 yrs of losses.  Yeah, taxpayer dollars...which are controlled by the fed...and the fed is controlled by?

In reply to by JLarryL