4 Short Sellers Explain Why They Target Tesla – But Don’t Try to Do this at Home

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Share on RedditPrint this pageEmail this to someone

The bloodletting among Tesla shorts has become legendary.

Tesla has been shorted for years by some very smart money betting the overvalued shares will tank any moment. At the end of March, short interest was 31.4 million shares. This short interest amounts to 26% of the “float,” which is the number of shares available to trade (shares outstanding minus restricted stock). This is huge!

Yet, at $308 a share, the stock brushes up against its all-time high, giving Tesla a market capitalization of $50 billion, just shy of GM’s $51 billion. But they don’t even compare. In March, GM sold 63 times as many cars in the US as Tesla. Over the past eight years, GM earned $47.1 billion; Tesla lost $2.7 billion.

With this valuation, Tesla has been a logical short. But the bloodletting among Tesla shorts has become legendary. So the Los Angeles Times asked these four short sellers why they’d venture into this trade:

  • Mark Spiegel of Stanphyl Capital Management.
  • David Rocker, formerly of Rocker Partners.
  • Mark Yusko, founder and CIO at Morgan Creek Capital Management.
  • Anton Wahlman, former stock analyst who now writes about the auto industry (he said he currently holds no position on Tesla).

And here are seven of their reasons for shorting Tesla:

1. Negative Cash Flows

“If you can’t make money selling a $100,000 car to rich people, how are you going to make money selling a $45,000 car to normal people?” Rocker told The Times. He was referring to the upcoming mass-market Model 3.

“I’m saying they’re going to lose money on every Model 3 they build and sell,” Spiegel said. Based on Tesla’s Q4 2016 earnings report, he figured the combined average selling price for non-leased Model S and X is about $104,000 and the combined average cost of building them about $82,000.

The Model 3 will be smaller, more basic, and with a cheaper battery. There is also hope Tesla can produce several hundred thousand per year, thus getting better prices from suppliers and bringing per-vehicle production costs down. Alas…

“You can cut the price of a car in half, but you can’t cut the cost in half,” Wahlman warned.




2. Competition from the Big Guys

Electric vehicles are still only a tiny fraction of total new vehicle sales in the US. Tesla sold about half of them. In March, according to Autodata, Tesla sold 4,050 vehicles in the US, similar to Porsche. All automakers combined sold 1.56 million new vehicles. This gave Tesla a market share of 0.26%.

But the EV market is growing rapidly and all global automakers have jumped into the fray. Here are some pure EVs already available in the US to compete with Tesla:

  • Ford (Focus Electric)
  • GM (Bolt)
  • Fiat Chrysler (500e)
  • Honda (Fit EV)
  • Hyundai Ioniq Electric (“soft launch” for now)
  • Nissan (Leaf)
  • BMW (i3)
  • VW (eGolf)
  • Mercedes-Benz (B-Class)

And here are some of the pure EVs coming to the US market soon:

  • BMW X3 (2019)
  • Audi e-tron SUV (2018)
  • Aston-Martin RapidE luxury sedan (2018)
  • Porsche Mission E sports car (2019)

“Tesla faces a formidable set of competitors, and they’re coming in with guns blazing,” Wahlman told The Times.

“Once the market is flooded with electric vehicles from manufacturers who can cross-subsidize them with profits from their conventional cars, somewhere around 2020 or 2021, Tesla will be driven into bankruptcy,” Spiegel said.

Bankruptcy would require that investors refuse to fund Tesla’s negative cash flows. If it keeps getting new money, it won’t go bankrupt. It’s that simple. So when will investors walk away? More on that in a moment.

“I’m not in the ‘Tesla’s worth zero’ camp,” Yusko said. “But I definitely think that anyone buying at [recent] prices could cause a meaningful impairment to their financial health over the next few years.”

3. Tesla’s vanishing tax credits

The federal tax credit of $7,500 that EV buyers currently get is limited to 200,000 vehicles for each automaker. Once that automaker hits that point, tax credits are reduced and then phased out.

Of all automakers, Tesla is closest to the 200,000 mark. Under its current production goals, the tax credits for its cars could start declining in 2018. This would give competitors, whose customers still get the full tax credit, a major advantage.

About 370,000 folks put down a refundable $1,000 deposit on Tesla’s Model 3, perhaps figuring they’d get the $7,500 tax credit. But as it stands, many won’t. Rocker thinks that this is going to be an issue. The refundable deposit “commits them to nothing,” he said. Those that don’t get the tax credit may just ask for their money back and buy an EV that is still eligible for the credit.

4. The Question of patent protection

Tesla has made its patents available to all comers, thus lowering its patent protections against competitors. Also, the key part of an EV, the battery, is produced by suppliers; they, and not Tesla, own the intellectual property. This is true for all automakers. But Tesla might still be closely guarding crucial trade secrets that are not patented.

5. Musk’s distractions from his day job

Musk has a lot of irons in the fire: Tesla, SpaceX (with which he wants to build a colony on Mars or something), solar-panel installer SolarCity which Tesla bailed out last year; projects ranging from artificial intelligence to tunnel digging; venture capital activities….

“He’s all over the map, from tunneling to flights to Mars to solar roof tiles,” Rocker said. These announcements have the effect of boosting Tesla’s stock: “It’s ‘Let’s get the acolytes excited. Implant in the brain! Let’s buy Tesla stock!’”

But it’s mightily distracting for a CEO to be involved in all these projects at the same time, the short sellers said. They also mentioned that top executives continue to leave Tesla, including CFO Jason Wheeler in February, which is a further distraction.




6. Execution risk

“Investing is all about possibility and probability,” Yusko said. “Is it possible that Tesla will produce 500,000 cars in the next two or three years? Yes. Is it probable? No.”

Tesla has missed many deadlines and goals, and quality problems cropped up in early production models. As Tesla is trying to make the transition to a mass-market automaker, execution risk will grow since mass-market customers are less forgiving.

7. Investor fatigue

Having lost money in every one of its 10 years of existence, Tesla asks investors regularly for more money to fill the new holes. In March, it got $1.2 billion. In May last year, it got $1.5 billion. Tesla will need many more billions to scale up production and to digest the losses. Tesla has been ingenious in this department. But when will investors get tired of it?

“We’re awfully close to the point where people wake up and realize these guys are seriously diluting our equity” with new stock and convertible bond issues, Yusko said. According to The Times, Yusko “is looking for the moment when the true believers begin to lose faith.”

But the true believers haven’t lost faith yet, which has been brutal for short sellers. The stock’s ascent has defied their razor-sharp logic, despite major sell-offs in between. Someday, some of them will be on target. Until then, the simple fact is that a stock that is irrationally overvalued no longer faces rational limits and can therefore become even more irrationally overvalued. This principle doesn’t hold forever, but it holds long enough to cause maximum pain. So don’t try this at home.

“It’s either one of the great Ponzi schemes of all time, or it’s all going to work out,” mused Mike Jackson, CEO of AutoNation, about Tesla’s share price. “It’s totally inexplicable,” he said. But it’s not inexplicable at all. Read…  What Tesla’s “Inexplicable” “Ponzi Scheme” Valuation Says about the Stock Market




Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Share on RedditPrint this pageEmail this to someone

  63 comments for “4 Short Sellers Explain Why They Target Tesla – But Don’t Try to Do this at Home

  1. gonzales27
    Apr 24, 2017 at 9:30 pm

    This article is on the money

    • CrazyCooter
      Apr 25, 2017 at 10:53 pm

      This article highlights what is wrong with investing.

      If investing is not about value – finding useful purposes for excess capital – then what the hell is money for other than paying bills and eating out?

      The whole system is deeply broken and a whole generation has no idea what is going on because they just don’t read history.

      But, that makes me sound old.

      And I am not.

      It really is common sense – but so goes the herd.

      Regards,

      Cooter

  2. Gershon
    Apr 24, 2017 at 9:42 pm

    Fundamentals stopped mattering in 2008. Now there is only the Fed with its deranged money-printing and inside information for its financier accomplices.

    Restore honest markets and sound money. End the Fed.

    • Jaco
      Apr 25, 2017 at 2:16 am

      The Fed as its known today is dwindling and wont be around forever according to General Qiao Liang of the PLA.

      https://wealth.goldmoney.com/research/goldmoney-insights/americas-financial-war-strategy

      • Gershon
        Apr 25, 2017 at 8:12 am

        No fraud lasts forever. When the 99% finally wake up to the financial warfare being waged against them by the oligarchy’s chief instrument of plunder, the Federal Reserve, then these fraudsters might finally be hauled in front of an honest judge. Until then, we’re screwed.

        • Kf6vci
          May 2, 2017 at 11:57 pm

          These people are the dog – and the Whitehouse is the tail. Take the BIS. Q: you think the Swiss cops have the right to go in there? Ha!

          All this phony talk about “congressionally mandated” this or that. https://archive.org/details/pdfy–Pori1NL6fKm2SnY

      • r cohn
        Apr 25, 2017 at 8:44 am

        China does not even allow its currency to trade freely and has instituted capital controls.Without these policies , capital would flow out of China like water from the Oroville dam last winter
        In addition China has clamped down hard on any promised democratic reforms and faces a number of separatists movements

      • Robert
        Apr 26, 2017 at 7:06 pm

        Tell General Qiao Liang tht his people started it 800 years ago when the founder of the Yuan Dynasty, Kublai Khan, forced paper money on the people. That said, China would also be the logical solution (for central bankers’ spewing unlimited new fiat to the extent that new debt can be crammed down their citizens’ throats- for that is how it is done, hand in hand with Congress) by making the laughlingly named “security strip” in money out of gold instead of Mylar.

    • Maximus Minimus
      Apr 25, 2017 at 12:15 pm

      Short selling in the time of Central banking – a good title for a book. Just don’t do it.

      • Erle
        Apr 25, 2017 at 7:03 pm

        Shorts have been flensed. Short interest through ETFs are at a nadir.
        Perhaps it is now time to go short?

    • CrazyCooter
      Apr 25, 2017 at 10:55 pm

      Oh no, I assure you they matter.

      It is what wakes the Fed up at night, in cold sweats.

      Timing that to make money – best of luck – because in these situations they lucky win and the unlucky lose.

      Find another avenue for your savings, capital, or labor.

      Regards,

      Cooter

  3. akiddy111
    Apr 24, 2017 at 10:51 pm

    Amazon (the relentless grower) had a $50B Market Capitalization in late 2007 and it got smacked down hard along with everyone else.

    Today, Tesla’s $50B Market Capitalization looks a lot less robust to me… and it will get clobbered royally along with everyone else.

    With the S&P 500 at a P/S ratio of 2.06 as of close, it looks like stock valuations are at the gates of euphoria once again.

  4. KONSTANTIN ks
    Apr 25, 2017 at 1:50 am

    (Not American; not stock specialist) but I suppose that still someone might acquire it!

    • r cohn
      Apr 25, 2017 at 8:48 am

      Not a chance.
      Unless Tesla can come up with a superior battery,it will be a competitive disadvantage once the companies such as Toyota,BMW and Daimler,embrace the electric car

  5. anchor
    Apr 25, 2017 at 4:18 am

    A lot of your negatives are spun positives.
    Tesla is owner operated with a vision for a better planet not just an in / out CEO.
    All of the other big car maker players were busted for emission violations hence cheating to make cars enviro friendly.
    Tesla has an ecosystem for electric off grid self sustainability for the future not a laggard in old fossil fuel cartel.
    Support for the Tesla model is only one election swing away.

    • Apr 25, 2017 at 7:34 am

      Now here is a True Believer. It’s heartwarming … the earnestness of it all. How did Musk do it? He’s a genius in that department.

      • Chris
        Apr 25, 2017 at 7:55 am

        Snake oil salesmen have been around longer than people had the ability to write. Musk deserves credit for his showmanship but reality will settle in … eventually.

        • TJ Martin
          Apr 25, 2017 at 9:38 am

          Oh … I dunno .. L.Ron Hubbard and his successor David Miscavige have been getting away with it … for decades

        • alex in san jose
          Apr 26, 2017 at 2:10 am

          But Musk is gonna save the world!

          On even-numbered days, your car will run on highpoppalowrum and on odd-numbered days it’ll run on lowpoppahighrum.

      • Gershon
        Apr 25, 2017 at 8:28 am

        Does Musk wear a black turtleneck or sport a pony tail? That means he’s some kind of visionary genius…I think I’ll put my life savings into buying up Tesla stock because I believe in that vision thing….

        • Maximus Minimus
          Apr 25, 2017 at 12:21 pm

          Just wait until this bubble bursts. Tickets to Mars will be in short supply.

      • Matt
        Apr 25, 2017 at 10:13 am

        A lucky, well-connected genius.

        Similar genius auto cult gurus (Tucker, DeLorean, Bricklin) didn’t have a stock bubble to ride, or were prevented from issuing stock at all. That seems to be the major difference.

        In spite of Chrysler’s early 80’s bailout and AMC’s ignominious demise, the post-war American auto industry was politically powerful, and thus able to squelch the upstarts. Fast-forward to 2007; GM was on its political knees compared to the now-mighty banks, Ford was tapping high-interest credit cards, and Chrysler was madly reapplying her face for the downgrade from a German whore into an Italian one. Musk was able to take advantage of politicians desperate to keep Americans on their hopium. It was pure luck of timing and connections.

        I’ll give him points for understanding that “electric” and “green” needed to show brightest in the word cloud, rather than “motorcycle” and “three-wheeled” like the hopeless and hapless Elio. “Anna May! Git yer helmet! We’re gon’ tuh git a new cuhr!”

        Where Elio is today’s Geraldine Elizabeth Carmichael with less glitter, Musk is just a 21st Century DeLorean with a prettier face and dumpier body. The only difference is that he managed to catch the U.S. government at a far-more-desperate moment and thus the ability to issue unlimited stock.

        Unlimited stock + unlimited hopium = shooting star. Granted, some make landfall, leave a terrific impact, and the odds don’t matter as long as you still get to dream of what you’re going to do when your ship comes in.

        In the end, it’s all crack.

        • Kent
          Apr 25, 2017 at 11:31 am

          That was a fun read. Thanks.

        • Dan Romig
          Apr 25, 2017 at 12:18 pm

          A DeLorean would have worked with a mid-engined V8, IMO. According to Wikipedia, Road and Track listed its 0 to 60 mph @ 10.5 seconds.

        • JZ
          Apr 25, 2017 at 4:44 pm

          Can NOT agree more.

      • Tom
        Apr 25, 2017 at 3:49 pm

        Everytime one of those rockets make a successful vertical landing…worth another billion in investments…people so tired of short-term quarterly heist, refreshing to see at least an attempt to make a brighter future for mankind…which is why he didn’t hoard patents…no Tesla stock myself, but I hope he pulls it off…

      • CrazyCooter
        Apr 25, 2017 at 11:02 pm

        Wolf,

        E.O. Wilson wrote:

        Will we solve the crises of next hundred years? asked Krulwich. “Yes, if we are honest and smart,” said Wilson. “The real problem of humanity is the following: we have paleolithic emotions; medieval institutions; and god-like technology. And it is terrifically dangerous, and it is now approaching a point of crisis overall.” Until we understand ourselves, concluded the Pulitzer-prize winning author of On Human Nature, “until we answer those huge questions of philosophy that the philosophers abandoned a couple of generations ago—Where do we come from? Who are we? Where are we going?—rationally,” we’re on very thin ground.

        https://en.wikiquote.org/wiki/E._O._Wilson

        Fancy PhD talk for – humans are idiots on average, but genius at an individual level.

        Regards,

        Cooter

    • TJ Martin
      Apr 25, 2017 at 9:35 am

      ” …..owner operated with a vision for a better planet ”

      Oh really ?

      That an interesting viewpoint considering the fact that Musk is in the depths of corporate cronyism cuddling up with the very person and administration damned and determined to destroy every aspect of this planet to the benefit of Big Oil and the Wealthiest to the detriment of all else

      Also in my opinion to be honest from all outward appearances it appears as if Musk is more interested in escaping this planet rather than having a ‘ vision ‘ to make it any better . Using TESLA cars and SunX not to benefit the planet … but rather to fund his own personal goal of abandoning the only mothership worth calling a mothership . Planet Earth . Once again this is just this one man’s opinion.. but to quote the Bard ( Randy Newman )

      ” I could be wrong now … but I don’t think so ”

      In conclusion methinks calling you a ‘ True Believer ‘ may be a bit of an understatement .

    • Meme Imfurst
      Apr 25, 2017 at 12:08 pm

      “Tesla has an ecosystem for electric off grid self sustainability for the future not a laggard in old fossil fuel cartel.”

      What solar cells on the roof? Do you thing power is free, even solar power? Yes, lets get some environment friendly rare earth materials at the expense of the environment that is polluted and poisoned by mining them.

      Musk relies on the grid for power, and that is made possible by fossil fuels primarily (including gas). Even if you count damns as a source, there is still an environmental cost.

      So please, lets not make this into a Polly Anna miracle. If perpetual motion was viable, it would be stock listed too.

      • alex in san jose
        Apr 26, 2017 at 2:16 am

        There’s a saying: “A solar cell can’t make another solar cell” – solar cells are semiconductor devices made in HUGE factories with HUGE power inputs, cleanrooms, all that. If it glitters and is high-tech, it runs on coal or oil.

        I’m gonna make some real enemies now and say that I’ve felt for over a decade now that nuclear power is the same kind of boondoggle. If you count all the material, refining, etc track what it takes to get a watt of nuclear power, including what it takes to get rid of (how? shoot it into space? It gets stored somewhere) of the spent fuel, it takes about 1.2 watts of fossil fuel to make that watt.

  6. Dan Romig
    Apr 25, 2017 at 5:31 am

    If one wants to go to a casino and play roulette, this may be a better option (pun intended) to gamble.

    A May 5th $305 Tesla Put has a $9.15 bid and $9.65 ask price based on April 24th close at $308.03. So if you think Tesla will dip below $295 in the next ten days, you’re in the money.

    • Dan Romig
      Apr 25, 2017 at 5:47 am

      OK, you’re only in the money if Tesla does dip below $295. I think it should, but I will not make this bet.

      • roddy6667
        Apr 25, 2017 at 11:05 pm

        Markets can remain irrational longer than you have money. Musk fanboys can remain irrational long after the shorts expire.
        It will be so much fun when Musk’s delusional empire crashes. Who will be the next poster boy for corporate welfare?

        • alex in san jose
          Apr 26, 2017 at 4:42 pm

          I don’t know if it’s making the national news, but Tesla is apparently a horrible place to work, from engineer down to the guy who sweeps the factory floor. Unions are actively kept out, hours are long, pay is low, and everyone’s treated as a sinful ingrate if they’re not overjoyed to be working for the Great Visionary.

      • fajensen
        Apr 27, 2017 at 6:41 am

        Maybe it is better to pay more for a longer duration?

        Look for game-able patterns. If we look at Stock Price with Earnings annotated on it, it was a good idea to short before earnings 9 out of 11 instances over the last 3 years.

        Only this last time did the shorts *really* have their clocks cleaned, except they should have Plenty of funds left over from Dec 2016.

        All in All, this looks like a good trading stock, plenty of volatility to mine and a behavioural pattern too. Wee!

        See:
        http://www.nasdaq.com/symbol/tsla/stock-chart?intraday=off&timeframe=3y&splits=off&earnings=on&movingaverage=None&lowerstudy=volume&comparison=off&index=&drilldown=off

  7. michael Engel
    Apr 25, 2017 at 6:05 am

    Is Tesla car a failed British sport car shell + few batteries ?
    Every car mfg. can do it and is doing it on a small scale, in order
    not to commit so much to a doubtful segment, to take too
    much risk. They spread it, they diversify.
    They don’t go for 100% invested in EV.
    Besides, when I hear product names like Edison, Newton, Einstein
    weather it’s a car, or IBM software, it turn me cold.
    I am not an UBER all man, quite the opposite !

  8. unit472
    Apr 25, 2017 at 8:26 am

    OTOH there is Paul Elio and his auto company. While there is no shortage of expensive autos in the US there is a real shortage of inexpensive autos that an average American can afford without a 7 year payment plan.

    Elio is offering a basic auto not unlike those tiny BMWs and Fiats made after WW2. With a list price around $7500 and offering 84 mpg it seems to me that the Elio is the car America NEEDS not Mr. Musk’s fancy electric vehicles. So why can’t Elio begin production?

    • fajensen
      Apr 28, 2017 at 3:48 am

      Simples: There is several Americas but only a few Americas that matters.

      One “America” needs the 7 year payment plans for something to financialize into fancy structured investment vehicles, and another “America” does not need those 84 mpg destroying the “value” of 30 years military adventures to keep that Oil under US control.

      If one reduce debt, one destroys money. If one reduce consumption, one destroys “growth”, both are deflationary, deflation is death so “Americans” must consume and borrow and get involved in stupid tribal wars 4ever!

  9. Gershon
    Apr 25, 2017 at 8:26 am

    “It’s either one of the great Ponzi schemes of all time, or it’s all going to work out,” mused Mike Jackson, CEO of AutoNation, about Tesla’s share price.

    Tesla is emblematic of the global speculative mania enabled by the Fed’s financial crack cocaine mainlined to its favored gamblers. It is without a doubt the biggest Ponzi scheme in human history, but the central bank money printers can keep the fraud going with their limitless money-printing for a lot longer than the rational investor can stay solvent shorting this financial house of cards.

  10. Paulo
    Apr 25, 2017 at 8:26 am

    This article reminded me of the small airline owner I once worked for. He had this madcap plan of rebuilding Beech 18s into 12 passenger aircraft . He claimed he had buyers from all over the world and he took every phone call as a firm commitment to buy. He was going to revolutionize the small aircraft market. One day I said to him, “You know, I’ve worked in the business for quite awhile…and for people who have been in this business for over 40 years. They all wern’t stupid, you know. I would think if it was all so obvious, some original designers/engineers would have done it.”

    The ‘innovator’ was very angry with me, ( I was his manager), for ‘not being on board’, and for ‘just not being able to see the big picture’. I knew my days were drawing to an end at this company.

    The ‘innovator’ even had vanity license plates for his personal and work vehicles. Anyway, after hemmoraging our company cash flows for years, the day of the big flight tests occured. (Just the few flight certifications cost hundreds of thousands of dollars, which was a helluva-a-lot of money for our little company). The testing went on for a few days, and one day a glum engineer walked into the staff room and mentioned the stretched aircraft actually performed worse and hauled a smaller load than the original design. I turned to some pilots having lunch and said, “Well boys, I think my days are numbered here. I think I’ll go back to university”. :-)

    About 5 years later the original and only modified aircraft crashed on takeoff. No other versions were ever built and all the rights and patents gathered dust in the hangar. Another five years passed and one day I noticed the owner driving around town with regular license plates on his truck. The once thriving company has just two aircraft and a few part-time employees. The owner is hanging on to retirement, which never seems to arrive for him.

    I have no idea how he pays the bills?

    That is what I always think about when I read articles about Elon Musk being such a visonary. I always think, “Everyone else isn’t stupid”.

    By the way, I am retired and often drop my prawn traps where the revolutionary new aircraft crashed in 180 feet of water. :-)

    There are articles on crystal fuel source investment opportunities, too. I read one this morning.

    • JZ
      Apr 25, 2017 at 4:49 pm

      Paulo, I’d like to remind you the difference.

      If it works out, your manager and Elon both get rich.
      If it fails, your manager can NOT retire and Elon walks with accumulated wealth transferred during the process.

      I repeat, those people who took risks themselves wins my respect even they ultimately turned out wrong.

      People like Elon and those that gets bailed out in 2009 are privatize profit and socialize risks. These are NOT wealth creation folks, these are wealth transfer folks.

  11. r cohn
    Apr 25, 2017 at 9:02 am

    TSLA is a stock market play and NOT a fundamental play.It is difficult if not impossible to borrow TSLA stock without paying exorbitant fees and without facing the prospect of an involuntary buy-in.
    It can trade much higher ,even though fundamentally ,it is worth zero

  12. Michael Fiorillo
    Apr 25, 2017 at 9:12 am

    Any physicists or engineers who can tease out the total energy, carbon dioxide and embedded costs of an electric vehicle versus internal combustion?

    My understanding is that Tesla’s/EVs have far higher potential/embedded energy because of their batteries, when including the costs and externalities related to mining rare earth metals. Then there’e the fact that the wastes are externalized elsewhere, at the point of carbon-based electricity production.

    Interesting to see how this plays out…

  13. RD Blakeslee
    Apr 25, 2017 at 9:24 am

    Speaking of revolutionary aircraft, I see a new “flying car” is being touted:

    https://www.thesun.co.uk/motors/3309723/futuristic-flying-car-that-could-be-available-for-purchase-this-year/

    I entered the U.S. Patent Office in 1957 as a junior examiner. The patent files and Popular Mechanics clips were copious – “flying cars” (sometimes Amphibious as well!) were coming, big time.

    Most prototypes that were actually built crashed, eventually.

    Just look at the picture of the vehicle in the article. Ask yourself: Used as an automobile, what would its unguarded propeller do to some poor soul who got to close to it in the crosswalk?

    • fajensen
      Apr 27, 2017 at 6:43 am

      Google: “Russian Driving”, now imagine adding flying cars and we might have a good case for shorting insurance.

  14. Kent
    Apr 25, 2017 at 9:26 am

    Most folks have little idea how much the government, at all levels, drives change in the country. We work hard to maintain the myth of the private sector being the driver of prosperity. However, private sector actors can only accept so much risk.

    That having been said, I suspect Tesla is a government program with the intention of building the technology and infrastructure necessary to convert the world away from petro driven vehicles.

    That can’t be done as a direct government program. It wouldn’t be acceptable to much of the population. But having it appear to be a private endeavor with investors, not taxpayers, taking the risk is all-American.

    I would bet there are a number investors with Cayman Island and Panamanian addresses with unknown funding sources always willing to step in and crush shorts.

    So it would be a government sponsored Ponzi scheme. Down the road, once the technology and infrastructure is in place, Tesla will be allowed to wind down and traditional manufacturers will be able to step in and move EVs forward. Tesla investors will take a hit.

    But the government and a few investors will have accepted the costs of the risk necessary and we will have great stories of plucky entrepreneurs.

    Purely speculation of course.

    • Apr 25, 2017 at 10:38 pm

      Ha! I’ve been thinking the same thing. Musk isn’t as smart as is made out and he sure as hell isn’t South African. Just listen to his accent…a soupcon of Canadian but definitely N American. But he sure *talks* a good game. Nothing more.

    • Graham
      Apr 27, 2017 at 9:07 am

      “it would be a government sponsored Ponzi scheme”

      Well, a FED sponsored scheme, with us sponsoring the FED.

      The FED is buying (shares/bonds) companies with the profits of renting our money to us, so we now have an unelected cabal of bankers owning our big ‘chosen’ corporations.

      When the market is crashed they’ll wipe out/buy their competitors. It’s the logical conclusion of all central banking: “All your stuff belong to us”.

      These corporations, Apple, Tesla etc therefore can never fail but expect their product to become progressively worse with time. Already Apple – having deleted magsafe and ports caused me to switch to Lenovo, I can imagine many other people forced to do the same.

  15. akiddy111
    Apr 25, 2017 at 10:47 am

    I remember back in the summer of 2007 when i was shorting a shoe maker called Crocs. It had a $5 Billion Market Cap at the time.

    I was relentlessly ridiculed for giving my Crocs short thesis on both the Yahoo Finance stock chat section and the Silicon Investor section – to the point that i quit using them.

    Crocs had a sort of cult following at the time. Longs were gushing about the uniqueness of the resin in the shoe, the unrivaled comfort etc.

    I’ll add by saying that i feel there were a lot more amateur stock pickers around 10 years ago compared to today.

    That herd mentality is dangerous. I saw it with gold bugs about 5 years ago. Those people were hardcore. There was huge interest in gold mining stocks around that time on places like Seeking Alpha, etc.

    I witnessed that mentality too on the Mish website just before the elections. Almost all the posters were Trump fanatics. They ran me out of there in a hurry.

    Poor Mish was rallying everyone in the final days to to go out and vote Trump. I think he has cooled a little on the guy since then.

    Anyways, the cult that accompanies Tesla today is like that surrounding the $5000 (today’s money) Apple Mac back in the 1980’s. Tesla will have stiff competition too.

    Heck, even Porsche saw it’s Market Cap drop below $10 billion in November 2008.

  16. Apr 25, 2017 at 10:52 am

    All articles about the future of transport systems miss a fundamental point:

    Our collective prosperity has allowed us to have wheels,

    wheels have not created that prosperity.

    Yet the vast majority (whether Musk or anyone else) have a fixation that as long as we keep on the move, our industrial economic wealth will provide for us into infinity.

    Yet our entire industrial infrastructure is predicated on a simple principle:
    The conversion of Explosive force into rotary motion.

    Without that, our civilisation ceases to exist, and only one force, oil, provides the means by which that can happen

  17. Kasadour
    Apr 25, 2017 at 12:56 pm

    You have to wonder just exactly how deeply invested the FED is in the overall “free” market, going from clumsy monetary policy like QE, to more sophisticated, opaque implementations, the FED should be in pretty deep by now.

    Companies like Tesla aren’t what they appear to be — for example, is Tesla an innovative automobile manufacturer and distributor, or just another outpost for central bank fiat maneuvers? Money goes in one end and comes out the other, and nothing much else, besides FOMO (fear of missing out), is going on over at Tesla. Sad when you think about it.

  18. michael Engel
    Apr 25, 2017 at 1:25 pm

    Kent, you are 100 % correct :
    Mariana Mazzucato
    the Entrepreneurial State.
    Tesla look like Motorola bulky phone, in the late 80’s beating
    Bell Lab.
    The new Tesla is Motorola Razr
    New regulations in China force Mfg. to produce a big portion
    of their output as EV.
    All foreign implants are excluded, cannot participate.
    Basically, they will have to be absorbed, -thank you very much
    for your devoted service, – but things have changed, and you can become wholesalers, from now on, exporting EV to the USA

    De Lorean had a gorgeous wife,always on his side.

  19. John B. Licata
    Apr 25, 2017 at 1:58 pm

    Musk to Goldman…”Fuck the numbers. I want the stock to go up.”

  20. Duane Snyder
    Apr 25, 2017 at 2:40 pm

    Funny story, I tried to short GM in 2002. I sold short shares at $52 and $60 a share between February and March of that year. I bought to cover in April 2002 at $63 a share. I think I covered at it’s height just before it’s descent into bankrupty. I can’t believe I didn’t have more patience for the GM short to pay off but for me shorting stock was always the hardest thing to do. I have much respect for those brave investors who choose that route.

  21. AC
    Apr 25, 2017 at 3:02 pm

    I see a nice opportunity here to sell towing hitches, trailers, large fuel tanks, and 10kW+ prime power diesel generators to the new Tesla owners.

    Basic concept: http://www.commonsenseevaluation.com/2016/08/03/picture-day-redneck-electric-lawn-mower/

  22. Apr 25, 2017 at 4:13 pm

    Is Jim Chanos not short of Tesla?

  23. FluffyGato
    Apr 25, 2017 at 6:47 pm

    I’ve tried shorting TSLA several times via puts (to keep my losses defined). Had a couple winners, but the losses far exceed the gains.

    Lots of short interest makes squeezes brutal.

    And not a good idea to bet against something with so many vested interests.

    That said, shorting TSLA *may* be a winning lottery ticket someday, but it’s not for the faint of heart.

  24. Jim
    Apr 25, 2017 at 8:50 pm

    Is it more likely that Tesla will double in the next 2-3 years or go to $0? If you invested the same amount in each outcome and one occurred you would break even not considering the interest expense to short. The better way to make the trade would be to buy long dated puts and calls deep out of the money. Less capital tied up for each outcome.

    • FluffyGato
      Apr 26, 2017 at 1:51 pm

      Those are good ideas Jim; however, even short-dated options on TSLA are ridiculously expensive. Long-dated ones get eaten alive by time decay.

      The reasoning and logic is sound though.

  25. Gershon
    Apr 26, 2017 at 8:16 am
  26. GON
    Apr 26, 2017 at 3:57 pm

    Alternative view: his mission is to develope electric cars to reduce global warming. He is doing it, competitors want to emulate him. New cars are comming out to the market. Electric is becoming real and it is thanks to him. In the process lot of people will lose their shirts… yes, what a pitty. But worst scams affecting very poor people are going on around the world without all the pub Tesla’s one is having. Cheers

    • Graham
      Apr 27, 2017 at 3:27 pm

      Is his mission also to underpay all of his staff?

      Trouble in paradise..
      http://www.zerohedge.com/news/2017-04-27/clash-results-musk-firing-head-key-tesla-subsidiary-now-it-may-cost-him

      I’m not convinced that he’s the technical genius either, that idea of his of bombing an atmosphere into mars (a planet with no strong magnetic field, therefore no Van Allen belts, therefore full of lethal radiation (and an atmosphere tearing solar wind) regardless) shows a rather naive lack of knowledge that someone of his age should really know.

      So onto the cars: chassis + battery + control + motor.
      It’s hardly rocket science, RC cars have been whizzing about for decades – it’s just down to basic engineering to make full sized ones – no genius required.
      Koenigsegg demonstrates considerably more genius and product in car design and manufacture – and they didn’t need the billions poured in the Elon seems to require to make what is essentially a scaled up model car.

Comments are closed.