Tesla’s Chaotic Sales Strategy Change; Questions For The Bears

Whitney Tilson’s email to investors discussing Tesla temporarily freezing store closures and layoffs in chaotic sales strategy change and questions for the bears thread from VIC.

Tesla Model Y SUV Unveiling

Blomst / Pixabay

1) This is beyond absurd: https://electrek.co/2019/03/08/tesla-freezes-store-closure-layoffs-chaotic-sales-strategy/

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Q4 hedge fund letters, conference, scoops etc

2) Latest VIC posts (read from the bottom up):

507: hkup88 - China Fraud Subsidiary

Does anyone find the whole 8-k confusing.

They are doing a $500m unsecured 1-year loan from a consortium of Chinese banks. They just put $600m in Singapore most likely for use on the China Giga. So that's $1.1b net for a $2b+ facility before even adding in associated working capital and it takes 2 years to build.

  • Why would Chinese lenders do a 1-year unsecured note to a company that's insolvent?
  • Why would they do a 1-year note if it takes more than a year to build it with no mention of how they refinance it into something secured?
  • Is DB really backstopping the Chinese loan (both tranches are $500m)
  • Where does the other half of the capital come from?
  • Why did a $200m tranche of the ABL refuse to play along and extend the ABL?
  • Why would a company in the death throes of a liquidity crisis spend $600m or about half their total cash balance on a white elephant project that has no hope of ever showing a profit and likely won't be completed before the BK?

It's all very confusing. Besides blatant frauds, who secures half the construction money for a project and have the maturity set a year before the project completes?

Even in the nuttiest party of the Miami condo bubble in 2008, these sorts of deals were at least funded mostly to completion...

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2) If they were to do a Chapter 11 bankruptcy, could they come out of it as a profitable mass market company, or would they be relegated to a niche upper end producer (asking this from the bear's perspective)?

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and three kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own 2.5 grams of Gold