Business

Stanphyl Capital At The Art Of Short-Selling – Tesla Inc. (NASDAQ:TSLA) Still A Zero [SLIDES]

Mark Spiegel of Stanphyl Capital on why Tesla Inc. (NASDAQ:TSLA) is still a zero – a presentation from the recent short-seller conference hosted by Whitney Tilson last week. See the 156 page slide deck below.

tesla inc tsla elon musk short squeeze

Elon Musk’s bizzare tweets over the past few days is likely to help the share price, but the future is uncertain and the market is closed now, but check some of them out below and decide for yourself (note there are more which can be found on Musk’s twitter feed, below is just a few).

The next Henry Ford or Donald Trump? We will let readers decide that one!

Now some excerpts from the PDF

Tesla short thesis in short

3 Broad Reasons Why The Equity in Tesla Is Worth “Zero”
• Tesla’s financials are horrible and worsening even BEFORE massive competition begins arriving later this year

• Tesla has no “moat” of any kind and in fact now possesses trailing technology in all facets of its business

• 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

Tesla and capital raises

“TSLA does not need to ever raise another funding round” -Elon Musk, February 2012
Subsequent Equity & Unsecured Debt Financings:

September 2012: $195 million

May 2013: $913 million

February 2014: $2 billion

August 2015: $652 million

May 2016: $2 billion

March 2017: $1.4 billion

August 2017: $1.8 billion

Soon: Many more billions (if the SEC allows it and anyone gives it to them)

The Gigafactory and Panasonic partnership

But what about electric car batteries? TSLA’s a “battery company,” right? And what about the “Gigafactory”?
• Tesla’s battery cells are made by Panasonic

• Panasonic’s so-called “investment” in the Gigafactory is really a capital lease of its equipment to TSLA

• TSLA uses a small cylindrical cell that- because it’s expensive to assemble into packs- has been obsoleted by new, larger format cells; no other major auto maker even wants to use them

• Panasonic happily sells those larger cells to Tesla’s competitors

•  Because of Tesla’s locked-in purchase commitments to Panasonic, it may now be paying significantly more for batteries than its competitors

Model 3 Math

• A base Model 3 would cost Tesla at least mid-$40,000s to build, so it can either sell them at a gigantic loss starting @ $35,000 or— as it’s doing now @ $49,000— mandate a larger battery + other options and thus price them into a much smaller market segment.

• In fact, Tesla recently acknowledged that it won’t make any $35,000 Model 3s until at least late 2018/early 2019, and I predict they won’t build more than a tiny handful at that price, just to claim they “did it.”

• Bernstein estimates that <30% of current Tesla owners with Model 3 reservations completed their orders when invited to do so; forums indicate that the percentage among non-Tesla owners is much lower.

• Besides a massive number of Tesla forum posts indicating that the Model 3 is a lemon, its touchscreen-only interface means operating it is the dangerous equivalent of texting-while-driving

Tons of competition for Tesla in EV market (listed in slide deck)

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 TSLA will be intense. Here’s the competition TSLA faces in electric cars…

PDF here 378276606-Tsla-is-Still-a-Zero-From-Kase-Learning-s-Short-Selling-Conference-Presentation

 

More from the conference here

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