Whitney Tilson’s email to investors discussing Tesla Inc (NASDAQ:TSLA) bling; my shade on HBS, McKinsey and BCG; how the bankers were greedy; and Musk’s leaked email doesn’t impress.
1) You can order Funding Secured and other Tesla bling at https://thestablegenius.store/ or https://evacuationboy.myprintful.com/. Great stuff!
Stone House Capital Partners returned 4.1% for September, bringing its year-to-date return to 72% net. The S&P 500 is up 14.3% for the first nine months of the year. Q3 2021 hedge fund letters, conferences and more Stone House follows a value-based, long-long term and concentrated investment approach focusing on companies rather than the market Read More
2) In my email on “How Tesla's greedy bankers ripped Tesla’s face off,” I wrote about Tesla’s:
woefully inexperienced 34-year-old CFO, Zach Kirkhorn, whose background includes Harvard Business School and McKinsey – what could be worse??? (As an alum of HBS and another elite consulting firm, Boston Consulting Group, I speak from experience!).
This led a couple of folks to ask: “may I ask why your negative stance on HBS and McKinsey/BCG? On this side of the pond these are considered elite institutions?”
They are indeed elite institutions that attract some of the smartest, most capable people. But they also attract FAR more than their fair share of egomaniacs whose hubris gets them into a lot of trouble (I speak from personal (hard) experience as well as EXTENSIVE observation and countless case studies). Kirkhorn seems like Exhibit A here. At age 34, maybe he’s up to the job – one of the most challenging I can imagine. But I’d bet my last dollar that he’s not…
3) Re. that same email, some readers didn’t think that the bankers were greedy or that Tesla got its face ripped off. Nobody knows the details and, yes, it’s true that selling calling spreads as part of this type of financing is common. But it is NOT common for the bankers to exercise the shoe (May 3) THE DAY AFTER the deal was priced (May 2). A proper (i.e., long-term, not short-term greedy) would have waited longer to make sure the stock and converts didn’t need support (which they ended up sorely needing!).
As for whether Tesla got a bad deal because they got taken advantage of or were just in a desperate position – well, pick your poison... Probably some of both…
Musk's leaked email doesn't impress
Musk likely got hit with a margin call last week, so in a desperation move to head off another one, he wrote a vague email to employees, filled with puffery, that he knew would be immediately leaked to try to pump the stock.
His pumps used to work so well, but investors are finally on to his endless lies so his latest pumps (Model Y reveal, Autonomy Day) are falling flat...
He's Anton Wahlman on why he doesn't buy Musk's latest pump:
I'm Not Charged Up About The Leaked Elon Musk E-Mail That's Helping Tesla Stock
Tesla is bouncing back from Thursday morning's 3.4% loss as I write this, rallying after a leaked internal e-mail from CEO Elon Musk said the company had received "over 50,000 net new orders" for the current quarter. He also wrote that the firm could break its previous quarterly record of 90,700 deliveries. However, I'm pretty skeptical.
Read the full article here by Anton Wahlman, The Street
Tesla Valuation Model: Are Investors Stuck in Reverse?
Never let it be said that I won't present the bull case on Tesla. Here's what ARK just posted.
I'm sure you'll be shocked - SHOCKED, I tell ya - to hear that they're doubling down. The prior bull case of the company selling 1.7 million cars in 2023 is now their BEAR case (seriously).
Reminds me of somebody I know after Valeant had been cut in half... Too long to be wrong, as the saying goes...
I agree with them, however, that if Tesla does, in fact, have a huge robotaxi fleet on the roads by 2021 (to be conservative, ARK says!) and sell 1.7 million cars in 2023, this stock will go up a lot.
This is no longer a story stock (as much as Musk still tries). It is trading (and will continue to trade) on its fundamentals. While I don't think it's likely, if demand picks up and the company returns to profitability, the stock WILL go up.