Is This Why Tesla Executives Are Fleeing?

Submitted by Kuppy Via AdventuresInCapitalism.com

Is Tesla The New Theranos

I originally started following Tesla as I felt it was a structurally unprofitable business nearing a cash crunch as hundreds of competing products were about to enter the market.

As I’ve studied Tesla more closely, I’ve come to realize that Elon Musk appears to be running a Ponzi Scheme disguised as an auto-manufacturer; where he has to keep unveiling new products, many of which will never come to market, in order to raise new capital (equity/debt/customer deposits) to keep the scheme alive. The question has always been; when will Tesla collapse?

Tesla’s Bullshit Conversion Cycle is the key financial metric underlying this scheme (from @ProphetTesla)

As part of my research on Tesla, I decided to read Bad Blood by John Carreyrou, the journalist who first uncovered the Theranos fraud. It is the story of how Elizabeth Holmes created Theranos and then lurched between publicity events in order to raise additional capital and keep the fraud going, despite the fact that the technology did not work. The key lesson from Theranos for determining when a fraud will implode is that there are always idiots willing to put fresh money into a well marketed fraud - so you need a catalyst for when the funding dries up.

The other salient fact was that most senior employees actually knew that something wasn’t quite right, but feared losing their jobs or getting sued if they did anything about it. Therefore, employee turnover was off the charts but no one was willing to risk their career by saying anything publicly. However, when Theranos started risking customers’ lives, the secret got out pretty fast. This is because most people are inherently ethical - especially when they know that their employer is doing something immoral, like releasing flawed lab results to sick patients. Eventually, some employees felt compelled to become whistle-blowers and started to reach out to journalists and regulators. This started a cascading event.

First, one intrepid journalist took the career risk to write about the Theranos fraud. Then other whistle-blowers felt emboldened to step forward and contact this first journalist, as they also wanted their story told - especially as they had already reached out to government regulators who were too scared to investigate a politically powerful company.

Once a few good articles had been written about Theranos, the dam broke open and the feeding frenzy began. Other journalists, smelling page-clicks rapidly descend on Theranos; more workers spoke out, more incriminating evidence came to light and then there was a sense of voter outrage. Finally, the regulators who were first contacted by the whistle-blowers many months previously, felt compelled to act - at which point the fraud collapsed and the money spigot shut off.

Executives Fleeing Tesla Is A True Bull Market “Up And To The Right”

We’ve already seen the mass exodus of senior Tesla executives. When they say they “want to spend time with their family,” it really means they “want to spend less time in prison.” Next, we have the first whistle-blowers—there will be MANY more. Currently there are at least 3 different ones feeding information to journalists. Using past frauds as a guide, once we get to this point of the media cycle, the fraud usually unravels pretty fast.  Given the perilous state of Tesla’s finances, they are in urgent need of new capital. The question is; who would want to invest new capital when Tesla is now admitting to knowingly selling cars without testing the brakes in order to hit some arbitrary one week production target? When a company admits that it will sacrifice vehicle quality and even risk killing its customers to win a twitter feud and start a short squeeze, regulators must step in. The question is; what else has Tesla done illegally to hit its targets? We know that Tesla long ago passed over the ethical threshold of selling faulty products that have killed people—what other allegations will soon come to light? Elon Musk demanded that Tesla stop testing brakes on June 26. Doug Field, chief engineer, resigned on June 27. Is this a coincidence? Of course not—Doug Field doesn’t want to be responsible for killing people. I think Tuesday’s article will speed up the pace of Tesla’s bankruptcy quite dramatically and I purchased some shorter dated puts after reading it.

Tesla is the fluke stock-promote that found a way to address society’s fascination with ‘green technology’ and the ‘next Steve Jobs.’ Elon Musk eagerly stepped into the role of mad scientist and investors gave him a free pass. It now increasingly seems that everything he’s done for the past few years was simply designed to keep the share price up, keep the dream alive and raise more capital - as opposed to creating shareholder value. Along the way, customer safety has been ignored in order to hit production targets and appease the stock market. In addition to not testing brakes, a recent whistle-blower has accused Tesla of installing over 700 dangerously defective batteries into Model 3 vehicles.

I suspect there will be many more allegations as whistle-blowers come out of the woodwork. It really is the Theranos of auto makers. I suspect it will all end soon. Theranos and Enron both collapsed within 90 days of the journalists getting up to speed. The reporters now know the right questions to ask and Tesla will be out of cash by the time they are all answered.

Stock Promotion In Overdrive Lately. What’s Elon Trying To Distract People From?

Besides, Elon Musk isn’t even all that innovative. Hitler already tried this same automotive customer deposit scam 80 years ago (From Wages of Destruction)

Disclosure: Long various put spreads and puts. Various strikes and expirations.

Comments

Cryptopithicus Homme Richard Chesler Thu, 07/05/2018 - 15:38 Permalink

Nazi Nazi Nazi everything.

This is the only "history" the sheeple have been taught by their TeeVee.  And their TeeVee has programmed them to accept and adopt macro personality types.  The big tough dumb guy.  The shy guy.  The skinny geeky guy.  The popular girl.  These types can be activated as well to hate-at-will against the political opposition, ie patriots.

In reply to by Richard Chesler

bshirley1968 JRobby Thu, 07/05/2018 - 17:51 Permalink

If all the clouds swirling around this company were over any other company, then that company's stock would be in ashes about now.  Faulty systems causing crashes and deaths, plant fires, make shift tent production lines, execs fleeing like rats on a......, CEO doing crazy tweets about bankruptcy, an electric car company marketing "flame throwers", analyst that visit the plant warning customers to stay away, MAJOR law suit in the works over the Solar City insider trading or bonds and stock, and on and on it goes.

These cars are not that great.....by a damn sight.  If this boy wasn't a government poster child for all the millennials to fawn over and hope to be like someday, he would have been done long ago.  Must keep the sheeple imagining that the "dream" is still alive.

In reply to by JRobby

Buckaroo Banzai bshirley1968 Thu, 07/05/2018 - 21:04 Permalink

"Theranos and Enron both collapsed within 90 days of the journalists getting up to speed."

90 days??? Anybody with an IQ above room temperature who actually bothered to pay attention figured out years ago that Tesla could never succeed as a mass-market auto maker. What's really happening, is the media kikes have been given the green light to take Tesla down because the pump is over, and it's time for the dump to commence.

Of course, Musk threatening to start a Jew-bashing media accountability service didn't help his cause, but at that point he was just lashing out as he knew the writing was on the wall-- if I may use a Hebrew metaphor.

In reply to by bshirley1968

glenlloyd J Pancreas Fri, 07/06/2018 - 00:34 Permalink

About the Astroglide...yes, if that's the first thing that came to mind.

As for Tesla, this will be a messy proposition since a bankruptcy would not impact liability for product already sold, that is unless you can prove it was a ponzi and force them to buy back the cars, which I think would be difficult unless there are issues of selling dangerous products. There's a change a case could be made for that because of the battery issues being claimed, but this is why I say it will be very messy, and Elon will not be able to just walk away from it easily.

Nice thing is with Tesla gone one of the icons of the green movement will be gone and we won't have to listen to all that tripe anymore.

At that point I plan on asking all the Tesla owners I see around town how they like their car now, since the company that built it is gone and you're shit outa luck on keeping the bitch going. Congrats for throwing away money on that POS.

In reply to by J Pancreas

OverTheHedge Buckaroo Banzai Fri, 07/06/2018 - 01:10 Permalink

A conversation with an alternative energy afficionado recently was interesting: apparently Tessla was never meant to make a profit, and not even to make cars particularly. The whole point and purpose of Tessla was to force mass-auto-manufacturers into building electric cars, and that seems to have been a success.

Depressingly, I am actually considering a second-hand electric car, as it could save me €3,000 a year in fuel costs, and more importantly make me independent of questionable fuel supplies, should Greece ever leave the euro (no dollars, no fuel for evil, default-ridden bankrupt nations). Looking at something like a 3 year payback.....what could possibly go wrong?

Edit: it will probably be something mundane like a Nisan Leaf - absolutely NOT anything with Tessla association, and absolutely NOT new.

In reply to by Buckaroo Banzai

DoctorFix OverTheHedge Fri, 07/06/2018 - 05:27 Permalink

Well, in some states in the USA, last time I checked, they wanted to TAX you further for using that shiny electric car because they couldn't screw you out of tax revenue from fuel sales.  So the "savings" evaporates!  What they want are the animals to be using mass transit and thus herded from their cow-pen homes to the slaughter houses in the cities.

In reply to by OverTheHedge

tmosley cosmyccowboy Thu, 07/05/2018 - 20:38 Permalink

That is what I thought for a while, but people kept using it as the accidents piled up. Then they suddenly just STOPPED. Didn't trail off. Autopilot wasn't remote deactivated nor has there been an announcement to my knowledge of an update to the software that fixed the problem. They just stopped. Then Musk started talking about saboteurs.

Hate him all you like, but this looks like a setup. Each passing day without a further incidents makes it more likely.

In reply to by cosmyccowboy

AbbeBrel HominyTwin Fri, 07/06/2018 - 04:38 Permalink

Come on you haven't been paying attention. "@elonmusk I really think the 2018.21.9 update was a step backwards for AP safety. The increased nags made it so I simply didn't use AP anymore because even with hands on the wheel it still would nag." And Mr. Musk's response:

@elonmusk "Sigh. This is crux of matter: can’t make system too annoying or people won’t use it, negatively affecting safety, but also can’t allow people to get too complacent or safety again suffers. Latest update should have a positive effect on latter issue especially."

In reply to by HominyTwin

not dead yet tmosley Thu, 07/05/2018 - 22:45 Permalink

How do you know they stopped? Could it be that the world press thought Tesla crashes weren't in vogue anymore and moved on to other sensationalism? If there was a saboteur Musk would be working closely with the NTSB instead of stonewalling them. Tesla admitted the saboteur they are now suing only had access to the manufacturing side of the company and yet you posited he must have caused many of the accidents. Or is the simple answer the best one where the Tesla drivers are very cautious and remain aware when using the autopilot.

In reply to by tmosley

not dead yet BidnessMan Thu, 07/05/2018 - 23:01 Permalink

Engineering and science brought to you courtesy of the American taxpayer. It was NASA that created the technology, the supplier base, and the experienced scientists and engineers that the private sector now uses to make rockets of their own. There are quite a few outfits out there building rockets and looking to get the space business. As with every business Tesla is in there is competition that is growing. If Jeff Bezos calls in a few markers his Blue Origin could end up with Space X business. When Space X first went looking for government business they were told to piss off. Musk went on an epic public rant and bingo Space X got contracts. I don't know if it passed or got ditched but awhile back there was a proposal in CONgress that Space X be given all the governments business.

In reply to by BidnessMan