7 ms·

Tesla is just months from a total collapse, says hedge-fund manager

51 points by mudil 9y ago

patentatt 9y ago
"Thompson manages $25 million" Does that even count as "hedge-fund manager" these days? Although, I gotta hand it to him, this does seem a bit absurd: "As a reality check, Tesla is worth twice as much as Ford ... yet Ford made 6 million cars last year at a $7.6 billion profit while Tesla made 100,000 cars at a $2 billion loss"
- wellboy 9y ago
  You need to factor in future profits, where Tesla is the strongest player for electric cars, autonomous driving (the first multitrillion dollar market) and benefits of the Musk ecosystem (Boring company, SolarCity, Hyperloop) Ford isn't really one of the car companies that looks like it will remain relevant in 10 years time.
  - patentatt 9y ago
    Maybe it's more accurate to say that Tesla is the strongest for electric car technology development (and mindshare?), but is the weakest at manufacturing cars? Whereas a player like Ford may be excellent at manufacturing cars (personal opinions aside) but is not perceived to have the same electric car technology. Maybe the battery capacity alone is the differentiator? If Ford wanted to start rolling out electric cars, they'd need a lot of batteries, and from what I understand Tesla may be the front-runner in high capacity, low price batteries. That is, until the requisite rare-earth metals are monopolized by a hostile (economically or otherwise) nation and squeeze rent-seeking profits from the electric car boom (fad?).
    - wellboy 9y ago
      That's an accurate description. Though acquiring the best electric car and autonomous driving technology is probably a magnitude harder than ramping up manufacturing. Manufacturing also isn't easy, but it also isn't super hard compared to electric cars and autonomous driving. Dozens of car companies have managed to do it, while none have managed to build electric cars and AD well yet.
      - notfromhere 9y ago
        Tesla has shown itself to be really bad at scaling manufacturing, even when it has large backorders for its cars.
        wellboy 9y ago
        Probably because they are a new company and want to innovate on manufacturing to make it 5x better than the industry standard like with everything they do.
        patentatt 9y ago
        Well, fanboyism aside, if that's the goal, and it no-doubt is, then it appears that they are currently failing at that goal, objectively speaking. That might change in the future, but for now, it's just not reality. Give 'em credit for trying, but a rational market doesn't really reward trying as much as succeeding.
      - patentatt 9y ago
        But Tesla didn't 'invent' electric cars, or electric motors, or motor controllers, or batteries, etc. I'm sure they have put lots of R&D effort and money into their implementations and execution of these things, but the fundamentals are pretty basic stuff that's been around for a while. At least since the Prius, or the GM electric car in the 90's, or any of the much earlier stuff. I'm not an expert in the area, but I am not aware of a game-changing implementation that Tesla has made, is there one? Like, did they make electric motors better in some fundamental, un-reproducable way? That would be a 'moat' they could use to stave off competitors. Or is their battery tech a game changer? From my lay perspective, it appears that their battery manufacturing capacity (i.e., gigafactory) may be, but the battery tech itself is more or less industry-standad stuff. I guess the big question is what is their competitive advantage compared to Ford, GM, Honda, Toyota, etc.? I ask that not as an attack, but a genuine question to ponder. Nissan has the Leaf in production today, they have all the tech necessary to develop and manufacture and bring to market an electric vehicle. What's stopping them from launching a 'Tesla-killer' under their Infinity brand aimed at the same market as Tesla? It appears nothing is, at least nothing technological. It's probably just a product-market fit question, and as soon as the market for a high end electric vehicle is big enough (thanks to Tesla) then they probably will. And at that point, what Tesla is just another car manufacturer, but one that seems to suck at manufacturing and bringing cars to market. Those kinks may be ironed out, but in the long term it seems that they should be expected to settle into a position as one of many car maker options, where consumers choose a Tesla for similar reasons as one would choose any other car. So, from that perspective, the valuation seems spurious. Is the play all about self-driving cars? Is the promise of self-driving cars the only thing behind Tesla and Uber? Then again, I ask what advantage these players have, if any. The incumbents may be slow, but do you really think Toyota, GM, Ford, etc. aren't working on this stuff too? They are. Every major car manufacturer has a self-driving car program in the works. Heck, Mercedes has been working on it since at least the late 90's when they brought to market the first radar-assisted cruise controls. I don't mean to shit all over Tesla here, as surely their existence has sped up the development and public perception of electric vehicles in a major way. And I get the Musk fanboy-ism, he's totally cool and his portfolio of companies is equally totally cool (even though, contrary to perception, he did not in fact 'found' Tesla, Martin Eberhard and Marc Tarpenning did, Elon came in at the series A round of funding). And their cars are totally awesome, and that's something to admire. But as far as their current market valuation, from a totally dispassionate analysis, it seems irrational. Long-term it's hard to see them as justifying a valuation at multiples that much higher than the incumbents. I just don't see the logic. But maybe it doesn't have to be 'logical,' maybe financial markets aren't entirely rational, and maybe that's OK.
  - gottabkidding 9y ago
    Ford was founded in 1903. It’s 115 years old. They seem to be doing okay so far...
    - some_random 9y ago
      Devil's advocate; Past performance doesn't necessarily correspond to future success. Typewriter manufacturers were still doing pretty well in 1960. That said, IBM certainly did well in that particular transition.
      - nopriorarrests 9y ago
        In auto industry, past performance matters a lot. You do not see new car companies popping up left and right, because profitable manufacturing at scale is insanely hard, and profit margins are not that great. So companies who acquired that knowledge tend to stick around. Unseating them is tricky, as Tesla M3 scale up illustrates.
    - wellboy 9y ago
      Only that they would have gone bankrupt if it hadn't been for the government in 2008 when it was around 105 years, next to a few other large car manufacturers.
- some_random 9y ago
  It makes a bit more sense if you think about Tesla's valuation as a bet on future potential. Ford will probably stay at about the same size and make the same kind of money, at least for the foreseeable future. Tesla on the other hand is more of a gamble, who could end up being extremely big if things pan out for them. And at least right now, investors seem to think that Tesla will become wildly successful eventually. Will that actually happen? Who knows.
  - pure_ambition 9y ago
    Keep in mind that new car sales in the US are at their lowest since 2010, and not getting any higher, so if anything there is also a possibility that Ford might make less money in the future.
  - eip 9y ago
    > Tesla on the other hand is more of a gamble, who could end up being extremely big They would have to get 60X bigger in terms of output to get where Ford already is and has been for a long time.
    - pwinnski 9y ago
      So 120x to justify their current stock price. Do people really think that Tesla will grow 120x larger with 100% probability? Or 240x larger with 50% possibility? That seems irrational to me.
      - underwater 9y ago
        Or Ford could shrink to 1/120th of its current size.
  - vanattab 9y ago
    "It makes a bit more sense if you think about Tesla's valuation as a bet on future potential." In my opinion that's a very small bit that can't possible justify the current price. If I was going to justify investing Tesla today I would have to make the case to myself that my ROI on Tesla would be better then my other possible ROI I could get else where. Let's say I am hoping for a very reasonable 6.5% return, based on rule of 72 I would expect the value to double in ~ 11 years. Assuming Ford grows at a similar rate over the next eleven years Tesla would have 4x the market cap as Ford currently does. I just don't see how you could expect to invest at the current levels and expect a reasonable return. Even if Tesla perfectly executes for the next 11 years there is no way it would be worth it's current evaluation let alone have room for a decent ROI.
wellboy 9y ago
This top manager seems to miss that Musk can raise a couple of billion whenever he wants. How did he get to manage his own fund if he doesn't even get that.
- nopriorarrests 9y ago
  TSLA is -8.5% today... and back to 2014 levels. I think his hedge fund is just fine.
  - wellboy 9y ago
    -8.5% on one day is a very weak signal. Next week it's up 8.5% again.
    - nopriorarrests 9y ago
      It broke to the downside after trading sideways for two years. Taking their financial position and M3 delays into account, it is not a good move. Limits their capital rising options.
    - nopriorarrests 9y ago
      ...and as of today, it's -25% in a 3 weeks. Not a weak signal anymore.
      - wellboy 9y ago
        It's a bit of a better signal, but still not that significant with the dow jones also being down 25% over the last several weeks.
  - ricardobeat 9y ago
    I'm sorry, how are these related? After this slump, TSLA is still up ~1400% since the time that hedge fund started (2010).
    - 9y ago
nopriorarrests 9y ago
Coincidentally, this was announced 40 minutes ago: Moody's downgrades Tesla debt to B3, fearing liquidity pressure
myko 9y ago
I wonder what a total Tesla collapse would mean for Tesla vehicle owners. I assume they'd be purchased and service centers would remain open, but the aggressive timelines on the Roadster / Semi / potential Model Y would be scaled back.
- patentatt 9y ago
  Ask a Delorean owner
  - deleted 9y ago
    [deleted]
  - mikeash 9y ago
    I don’t think that’s too informative. Tesla has sold a couple of orders of magnitude more cars than Delorean did.
  - DrScump 9y ago
    But the DeLorean engine and drivetrain were produced by others (Peugeot-Renault-Volvo) and were common to many other vehicles. Teslas are of unique design, manufacture, and service.
- golemiprague 9y ago
  Maybe some car company will buy them and make them into their electric car division, especially ones that haven't invested that much into electric cars and now feel a bit behind. The only thing is, it is not like Tesla got any special technology, Tesla is more of a marketing scheme, but branding and marketing certainly worth something, not sure how much though.
- Analemma_ 9y ago
  Tesla's creditors might be persuaded to take a haircut depending on how much they believe in Musk and his plan, but it all depends on the exact circumstances if and when it happens.
chollida1 9y ago
Well unless I'm reading wrong the top options in terms of open interest are the Jan 2019 P50 Jan 2019 P100 Jan 2019 P200 all puts, all well out of the money, so yeah, lots of people are hedging on a severe downturn within the next year. Having said that, Short interest is right around its average over the past year, so I guess you can infer that investors are sick of getting their face ripped off by shorting the stock and are willing to pay option premiums to get short exposure.
- ebikelaw 9y ago
  The open interest at 50 is remarkable. Someone should make a market below 50 to find out how those are distributed.
- bob_theslob646 9y ago
  It could also mean that people are selling(writing) options because there is above avg. volatility and can demand big premiums....
eloff 9y ago
He's been a long-time Tesla short-seller, so this may well be just seeing what he wants to see. It doesn't mean he's wrong, but if Tesla sees themselves running out of money in 3 months they must have a plan lined up already. No company that size would just ignore the issue this late in the game - they'd be raising money from sale of stock, which they don't seem to be doing, or from selling bonds, which they don't seem to be doing. My guess is that means they have private funding lined up to cover the shortfall (if indeed he's right in the first place that they will run out of money in 3 months - which I don't think we should take at face value.)
- ealexhudson 9y ago
  That's all true. Equally, people cancelling Model 3 orders have found getting their money back taking many months - it does seem like they're managing cashflow very tightly. I would find it unlikely they don't have a plan in place, too. They desperately need to get supply up and moving though...
  - mikeash 9y ago
    Some people have gotten refunds months late, others have gotten refunds almost instantly. I think they’re just disorganized.
- ac29 9y ago
  The most recent bond sale I can find was less than 2 months ago: https://www.bloomberg.com/news/articles/2018-01-31/when-it-comes-to-tesla-car-bonds-buyers-simply-can-t-get-enough https://www.bloomberg.com/news/articles/2018-01-31/when-it-c...
  - eloff 9y ago
    And it was heavily oversubscribed. It doesn't look like Tesla will have difficulty raising more capital in the near term then.
- nopriorarrests 9y ago
  >they must have a plan lined up already Coincidentally, people who should be responsible for such plan promptly left the company last month. Tesla’s VP of Finance, Susan Repo, has left to become CFO of another company, Bloomberg News' Dana Hull reported late Tuesday. The departure comes less than a week after Tesla’s chief accountant Eric Branderiz left the company for "personal reasons," the company disclosed on March 7. http://markets.businessinsider.com/news/stocks/tesla-stock-price-slides-after-second-finance-exec-leaves-company-is-less-than-a-week-2018-3-1018699013 http://markets.businessinsider.com/news/stocks/tesla-stock-p...
smaili 9y ago
> Thompson manages $25 million and his Tesla TSLA, -0.42% short is the fund’s biggest position. To be fair, he’s been betting big against Tesla for years, which, of course, means he’s endured some brutal stretches. Unless I'm missing something, what this article really means is nothing new to see here...?
- t3rmi 9y ago
  That does not invalidate his points about Tesla's profits, Model 3 delays etc. He might be right about that Tesla is overvalued.
  - CodeWriter23 9y ago
    Meh. Tesla has been within days of bankruptcy before.
  - loceng 9y ago
    Tesla being lead by a person with lots of past success including getting ready to setup a colony on Mars - you probably can stretch out the risk a little further than compared to say, most anyone else. There are a lot of people, including those with wealth, who will want to see Tesla succeed even if that requires certain unusual measures for a public company; I doubt it will come to this.
    - vanattab 9y ago
      I mean I get what your saying and I agree that Elon's reputation and past success should skew the risk equation a little in Elon's favor. But the risk question is not "being stretched a little" is been completely thrown out. There is absolutely no logic to why a company that produced 100,000 cars/year for a total loss of 2 billion is worth 2x a company that produced 6,200,000 cars/year with total profits of 7.2 billion. (That is not even mentioning the 12 billion in cash reserves held by Ford). I love Tesla/SpaceX/Elon as much as the next millennial but I would not touch Tesla stock with a 10ft pole.
      - 9y ago
cryptoz 9y ago
> Tesla, without any doubt, is on the verge of bankruptcy Haha! "Without any doubt". Okay, sure, Mr. Future Predictor. He gives it 4 months. This is silly doomsday insanity, Apple-will-be-bankrupt-soon kind of hilarity. Tesla's not going away and certainly will not be bankrupt. This dude thinks that the entire financial world will abandon Tesla completely - but that's just not true. Tesla could raise as much money as necessary for as long as necessary and Elon knows it. This guy doesn't because he's old and curmudgeonly and stunk in his ways without at all understanding what drives people and investments today.
- Analemma_ 9y ago
  > This is silly doomsday insanity, Apple will be bankrupt soon kind of hilarity. Apple is probably not a good comparison here. Apple was about three months from bankruptcy when Steve Jobs came back, and his pulling it back from the brink is regarded as a once-in-a-lifetime turnaround success. If Tesla's situation is as dire as Apple's was, that is not a good sign. Note also that before he had time to introduce things like the iMac and iPod, Jobs had to stop the bleeding by brutally slashing unproductive businesses. I don't see Tesla doing anything like that.
  - cryptoz 9y ago
    I was referring to Modern Apple, post-2016 Apple, not Apple from nearly 30 years ago. I am not referencing that moment in time, I am referencing a very strong company with huge cash reserves and a dedicated wealthy fanbase along with fawning investors, both private and public. > I don't see Tesla doing anything like that. Of course not, that would Actually bankrupt the company. What Tesla must do is what they say their plans are: ramp up production and bring new product categories online. They will succeed, and if there are short-term cash issues they will be resolved. Tesla is a $10T play. Elon wouldn't let it die in 4 months because of some silly, relatively small cash issue getting in the way.
    - eip 9y ago
      >I was referring to Modern Apple, post-2016 Apple The difference is Apple prints money. And Foxconn is arguably the best there has ever been when it comes to manufacturing. Tesla burns money. The only similarity is their cult leaders.
pure_ambition 9y ago
The "hedge-fund manager" in the article is a nobody who manages $25M. Not sure why MarketWatch thought his commentary mattered...
- paxy 9y ago
  Because any article about Tesla/Elon Musk is guaranteed to generate clicks.
bobosha 9y ago
Jim Chanos echoes a similar sentiment https://www.cnbc.com/2017/12/14/jim-chanos-we-think-tesla-is-worth-zero.html https://www.cnbc.com/2017/12/14/jim-chanos-we-think-tesla-is...
alkonaut 9y ago
If there is any substance to a rumor, then there has to be someone that can offer some insight that doesn't stand to make millions from spreading a false or exaggerated rumor with the exact same contents. > Thompson manages $25 million and his Tesla short is the fund’s biggest position. I don't doubt there is something to this - but how the hell does a hedge fund manager shorting this very stock become someone to interview and publish in the matter? Does anyone know what marketwatch does to make money, is it accept money to let people manipulate stocks like this?
- daxorid 9y ago
  > Does anyone know what marketwatch does to make money They are one of the largest mainstream financial sites, partnered with CBS and owned by Dow Jones. This is a very odd question.
  - alkonaut 9y ago
    There is no way a serious mainstream news outlet can publish news based on rumors from a single person that has a personal financial interest in spreading false news or exaggerated rumors. If they do it for free then they are giving away their credibility. And if they take thousands of dollars for a piece like this - then they are selling their credibility. I don’t know which would be worse.
- CodeWriter23 9y ago
  So hoping Musk pulls a Porsche on him. http://www.nytimes.com/2008/10/31/business/worldbusiness/31norris.html http://www.nytimes.com/2008/10/31/business/worldbusiness/31n...

51 points by mudil 9y ago

"Thompson manages $25 million" Does that even count as "hedge-fund manager" these days? Although, I gotta hand it to him, this does seem a bit absurd: "As a reality check, Tesla is worth twice as much as Ford ... yet Ford made 6 million cars last year at a $7.6 billion profit while Tesla made 100,000 cars at a $2 billion loss"

wellboy 9y ago
You need to factor in future profits, where Tesla is the strongest player for electric cars, autonomous driving (the first multitrillion dollar market) and benefits of the Musk ecosystem (Boring company, SolarCity, Hyperloop) Ford isn't really one of the car companies that looks like it will remain relevant in 10 years time.
- patentatt 9y ago
  Maybe it's more accurate to say that Tesla is the strongest for electric car technology development (and mindshare?), but is the weakest at manufacturing cars? Whereas a player like Ford may be excellent at manufacturing cars (personal opinions aside) but is not perceived to have the same electric car technology. Maybe the battery capacity alone is the differentiator? If Ford wanted to start rolling out electric cars, they'd need a lot of batteries, and from what I understand Tesla may be the front-runner in high capacity, low price batteries. That is, until the requisite rare-earth metals are monopolized by a hostile (economically or otherwise) nation and squeeze rent-seeking profits from the electric car boom (fad?).
  - wellboy 9y ago
    That's an accurate description. Though acquiring the best electric car and autonomous driving technology is probably a magnitude harder than ramping up manufacturing. Manufacturing also isn't easy, but it also isn't super hard compared to electric cars and autonomous driving. Dozens of car companies have managed to do it, while none have managed to build electric cars and AD well yet.
    - notfromhere 9y ago
      Tesla has shown itself to be really bad at scaling manufacturing, even when it has large backorders for its cars.
      - wellboy 9y ago
        Probably because they are a new company and want to innovate on manufacturing to make it 5x better than the industry standard like with everything they do.
        patentatt 9y ago
        Well, fanboyism aside, if that's the goal, and it no-doubt is, then it appears that they are currently failing at that goal, objectively speaking. That might change in the future, but for now, it's just not reality. Give 'em credit for trying, but a rational market doesn't really reward trying as much as succeeding.
    - patentatt 9y ago
      But Tesla didn't 'invent' electric cars, or electric motors, or motor controllers, or batteries, etc. I'm sure they have put lots of R&D effort and money into their implementations and execution of these things, but the fundamentals are pretty basic stuff that's been around for a while. At least since the Prius, or the GM electric car in the 90's, or any of the much earlier stuff. I'm not an expert in the area, but I am not aware of a game-changing implementation that Tesla has made, is there one? Like, did they make electric motors better in some fundamental, un-reproducable way? That would be a 'moat' they could use to stave off competitors. Or is their battery tech a game changer? From my lay perspective, it appears that their battery manufacturing capacity (i.e., gigafactory) may be, but the battery tech itself is more or less industry-standad stuff. I guess the big question is what is their competitive advantage compared to Ford, GM, Honda, Toyota, etc.? I ask that not as an attack, but a genuine question to ponder. Nissan has the Leaf in production today, they have all the tech necessary to develop and manufacture and bring to market an electric vehicle. What's stopping them from launching a 'Tesla-killer' under their Infinity brand aimed at the same market as Tesla? It appears nothing is, at least nothing technological. It's probably just a product-market fit question, and as soon as the market for a high end electric vehicle is big enough (thanks to Tesla) then they probably will. And at that point, what Tesla is just another car manufacturer, but one that seems to suck at manufacturing and bringing cars to market. Those kinks may be ironed out, but in the long term it seems that they should be expected to settle into a position as one of many car maker options, where consumers choose a Tesla for similar reasons as one would choose any other car. So, from that perspective, the valuation seems spurious. Is the play all about self-driving cars? Is the promise of self-driving cars the only thing behind Tesla and Uber? Then again, I ask what advantage these players have, if any. The incumbents may be slow, but do you really think Toyota, GM, Ford, etc. aren't working on this stuff too? They are. Every major car manufacturer has a self-driving car program in the works. Heck, Mercedes has been working on it since at least the late 90's when they brought to market the first radar-assisted cruise controls. I don't mean to shit all over Tesla here, as surely their existence has sped up the development and public perception of electric vehicles in a major way. And I get the Musk fanboy-ism, he's totally cool and his portfolio of companies is equally totally cool (even though, contrary to perception, he did not in fact 'found' Tesla, Martin Eberhard and Marc Tarpenning did, Elon came in at the series A round of funding). And their cars are totally awesome, and that's something to admire. But as far as their current market valuation, from a totally dispassionate analysis, it seems irrational. Long-term it's hard to see them as justifying a valuation at multiples that much higher than the incumbents. I just don't see the logic. But maybe it doesn't have to be 'logical,' maybe financial markets aren't entirely rational, and maybe that's OK.
- gottabkidding 9y ago
  Ford was founded in 1903. It’s 115 years old. They seem to be doing okay so far...
  - some_random 9y ago
    Devil's advocate; Past performance doesn't necessarily correspond to future success. Typewriter manufacturers were still doing pretty well in 1960. That said, IBM certainly did well in that particular transition.
    - nopriorarrests 9y ago
      In auto industry, past performance matters a lot. You do not see new car companies popping up left and right, because profitable manufacturing at scale is insanely hard, and profit margins are not that great. So companies who acquired that knowledge tend to stick around. Unseating them is tricky, as Tesla M3 scale up illustrates.
  - wellboy 9y ago
    Only that they would have gone bankrupt if it hadn't been for the government in 2008 when it was around 105 years, next to a few other large car manufacturers.
some_random 9y ago
It makes a bit more sense if you think about Tesla's valuation as a bet on future potential. Ford will probably stay at about the same size and make the same kind of money, at least for the foreseeable future. Tesla on the other hand is more of a gamble, who could end up being extremely big if things pan out for them. And at least right now, investors seem to think that Tesla will become wildly successful eventually. Will that actually happen? Who knows.
- pure_ambition 9y ago
  Keep in mind that new car sales in the US are at their lowest since 2010, and not getting any higher, so if anything there is also a possibility that Ford might make less money in the future.
- eip 9y ago
  > Tesla on the other hand is more of a gamble, who could end up being extremely big They would have to get 60X bigger in terms of output to get where Ford already is and has been for a long time.
  - pwinnski 9y ago
    So 120x to justify their current stock price. Do people really think that Tesla will grow 120x larger with 100% probability? Or 240x larger with 50% possibility? That seems irrational to me.
    - underwater 9y ago
      Or Ford could shrink to 1/120th of its current size.
- vanattab 9y ago
  "It makes a bit more sense if you think about Tesla's valuation as a bet on future potential." In my opinion that's a very small bit that can't possible justify the current price. If I was going to justify investing Tesla today I would have to make the case to myself that my ROI on Tesla would be better then my other possible ROI I could get else where. Let's say I am hoping for a very reasonable 6.5% return, based on rule of 72 I would expect the value to double in ~ 11 years. Assuming Ford grows at a similar rate over the next eleven years Tesla would have 4x the market cap as Ford currently does. I just don't see how you could expect to invest at the current levels and expect a reasonable return. Even if Tesla perfectly executes for the next 11 years there is no way it would be worth it's current evaluation let alone have room for a decent ROI.

wellboy 9y ago

This top manager seems to miss that Musk can raise a couple of billion whenever he wants. How did he get to manage his own fund if he doesn't even get that.

nopriorarrests 9y ago
TSLA is -8.5% today... and back to 2014 levels. I think his hedge fund is just fine.
- wellboy 9y ago
  -8.5% on one day is a very weak signal. Next week it's up 8.5% again.
  - nopriorarrests 9y ago
    It broke to the downside after trading sideways for two years. Taking their financial position and M3 delays into account, it is not a good move. Limits their capital rising options.
  - nopriorarrests 9y ago
    ...and as of today, it's -25% in a 3 weeks. Not a weak signal anymore.
    - wellboy 9y ago
      It's a bit of a better signal, but still not that significant with the dow jones also being down 25% over the last several weeks.
- ricardobeat 9y ago
  I'm sorry, how are these related? After this slump, TSLA is still up ~1400% since the time that hedge fund started (2010).
  - 9y ago

nopriorarrests 9y ago

Coincidentally, this was announced 40 minutes ago: Moody's downgrades Tesla debt to B3, fearing liquidity pressure

myko 9y ago

I wonder what a total Tesla collapse would mean for Tesla vehicle owners. I assume they'd be purchased and service centers would remain open, but the aggressive timelines on the Roadster / Semi / potential Model Y would be scaled back.

patentatt 9y ago
Ask a Delorean owner
- deleted 9y ago
  [deleted]
- mikeash 9y ago
  I don’t think that’s too informative. Tesla has sold a couple of orders of magnitude more cars than Delorean did.
- DrScump 9y ago
  But the DeLorean engine and drivetrain were produced by others (Peugeot-Renault-Volvo) and were common to many other vehicles. Teslas are of unique design, manufacture, and service.
golemiprague 9y ago
Maybe some car company will buy them and make them into their electric car division, especially ones that haven't invested that much into electric cars and now feel a bit behind. The only thing is, it is not like Tesla got any special technology, Tesla is more of a marketing scheme, but branding and marketing certainly worth something, not sure how much though.
Analemma_ 9y ago
Tesla's creditors might be persuaded to take a haircut depending on how much they believe in Musk and his plan, but it all depends on the exact circumstances if and when it happens.

chollida1 9y ago

Well unless I'm reading wrong the top options in terms of open interest are the Jan 2019 P50 Jan 2019 P100 Jan 2019 P200 all puts, all well out of the money, so yeah, lots of people are hedging on a severe downturn within the next year. Having said that, Short interest is right around its average over the past year, so I guess you can infer that investors are sick of getting their face ripped off by shorting the stock and are willing to pay option premiums to get short exposure.

ebikelaw 9y ago
The open interest at 50 is remarkable. Someone should make a market below 50 to find out how those are distributed.
bob_theslob646 9y ago
It could also mean that people are selling(writing) options because there is above avg. volatility and can demand big premiums....

eloff 9y ago

He's been a long-time Tesla short-seller, so this may well be just seeing what he wants to see. It doesn't mean he's wrong, but if Tesla sees themselves running out of money in 3 months they must have a plan lined up already. No company that size would just ignore the issue this late in the game - they'd be raising money from sale of stock, which they don't seem to be doing, or from selling bonds, which they don't seem to be doing. My guess is that means they have private funding lined up to cover the shortfall (if indeed he's right in the first place that they will run out of money in 3 months - which I don't think we should take at face value.)

ealexhudson 9y ago
That's all true. Equally, people cancelling Model 3 orders have found getting their money back taking many months - it does seem like they're managing cashflow very tightly. I would find it unlikely they don't have a plan in place, too. They desperately need to get supply up and moving though...
- mikeash 9y ago
  Some people have gotten refunds months late, others have gotten refunds almost instantly. I think they’re just disorganized.
ac29 9y ago
The most recent bond sale I can find was less than 2 months ago: https://www.bloomberg.com/news/articles/2018-01-31/when-it-comes-to-tesla-car-bonds-buyers-simply-can-t-get-enough https://www.bloomberg.com/news/articles/2018-01-31/when-it-c...
- eloff 9y ago
  And it was heavily oversubscribed. It doesn't look like Tesla will have difficulty raising more capital in the near term then.
nopriorarrests 9y ago
>they must have a plan lined up already Coincidentally, people who should be responsible for such plan promptly left the company last month. Tesla’s VP of Finance, Susan Repo, has left to become CFO of another company, Bloomberg News' Dana Hull reported late Tuesday. The departure comes less than a week after Tesla’s chief accountant Eric Branderiz left the company for "personal reasons," the company disclosed on March 7. http://markets.businessinsider.com/news/stocks/tesla-stock-price-slides-after-second-finance-exec-leaves-company-is-less-than-a-week-2018-3-1018699013 http://markets.businessinsider.com/news/stocks/tesla-stock-p...

smaili 9y ago

> Thompson manages $25 million and his Tesla TSLA, -0.42% short is the fund’s biggest position. To be fair, he’s been betting big against Tesla for years, which, of course, means he’s endured some brutal stretches. Unless I'm missing something, what this article really means is nothing new to see here...?

t3rmi 9y ago
That does not invalidate his points about Tesla's profits, Model 3 delays etc. He might be right about that Tesla is overvalued.
- CodeWriter23 9y ago
  Meh. Tesla has been within days of bankruptcy before.
- loceng 9y ago
  Tesla being lead by a person with lots of past success including getting ready to setup a colony on Mars - you probably can stretch out the risk a little further than compared to say, most anyone else. There are a lot of people, including those with wealth, who will want to see Tesla succeed even if that requires certain unusual measures for a public company; I doubt it will come to this.
  - vanattab 9y ago
    I mean I get what your saying and I agree that Elon's reputation and past success should skew the risk equation a little in Elon's favor. But the risk question is not "being stretched a little" is been completely thrown out. There is absolutely no logic to why a company that produced 100,000 cars/year for a total loss of 2 billion is worth 2x a company that produced 6,200,000 cars/year with total profits of 7.2 billion. (That is not even mentioning the 12 billion in cash reserves held by Ford). I love Tesla/SpaceX/Elon as much as the next millennial but I would not touch Tesla stock with a 10ft pole.
    - 9y ago

cryptoz 9y ago

> Tesla, without any doubt, is on the verge of bankruptcy Haha! "Without any doubt". Okay, sure, Mr. Future Predictor. He gives it 4 months. This is silly doomsday insanity, Apple-will-be-bankrupt-soon kind of hilarity. Tesla's not going away and certainly will not be bankrupt. This dude thinks that the entire financial world will abandon Tesla completely - but that's just not true. Tesla could raise as much money as necessary for as long as necessary and Elon knows it. This guy doesn't because he's old and curmudgeonly and stunk in his ways without at all understanding what drives people and investments today.

Analemma_ 9y ago
> This is silly doomsday insanity, Apple will be bankrupt soon kind of hilarity. Apple is probably not a good comparison here. Apple was about three months from bankruptcy when Steve Jobs came back, and his pulling it back from the brink is regarded as a once-in-a-lifetime turnaround success. If Tesla's situation is as dire as Apple's was, that is not a good sign. Note also that before he had time to introduce things like the iMac and iPod, Jobs had to stop the bleeding by brutally slashing unproductive businesses. I don't see Tesla doing anything like that.
- cryptoz 9y ago
  I was referring to Modern Apple, post-2016 Apple, not Apple from nearly 30 years ago. I am not referencing that moment in time, I am referencing a very strong company with huge cash reserves and a dedicated wealthy fanbase along with fawning investors, both private and public. > I don't see Tesla doing anything like that. Of course not, that would Actually bankrupt the company. What Tesla must do is what they say their plans are: ramp up production and bring new product categories online. They will succeed, and if there are short-term cash issues they will be resolved. Tesla is a $10T play. Elon wouldn't let it die in 4 months because of some silly, relatively small cash issue getting in the way.
  - eip 9y ago
    >I was referring to Modern Apple, post-2016 Apple The difference is Apple prints money. And Foxconn is arguably the best there has ever been when it comes to manufacturing. Tesla burns money. The only similarity is their cult leaders.

pure_ambition 9y ago

The "hedge-fund manager" in the article is a nobody who manages $25M. Not sure why MarketWatch thought his commentary mattered...

paxy 9y ago
Because any article about Tesla/Elon Musk is guaranteed to generate clicks.

bobosha 9y ago

Jim Chanos echoes a similar sentiment https://www.cnbc.com/2017/12/14/jim-chanos-we-think-tesla-is-worth-zero.html https://www.cnbc.com/2017/12/14/jim-chanos-we-think-tesla-is...

alkonaut 9y ago

If there is any substance to a rumor, then there has to be someone that can offer some insight that doesn't stand to make millions from spreading a false or exaggerated rumor with the exact same contents. > Thompson manages $25 million and his Tesla short is the fund’s biggest position. I don't doubt there is something to this - but how the hell does a hedge fund manager shorting this very stock become someone to interview and publish in the matter? Does anyone know what marketwatch does to make money, is it accept money to let people manipulate stocks like this?

daxorid 9y ago
> Does anyone know what marketwatch does to make money They are one of the largest mainstream financial sites, partnered with CBS and owned by Dow Jones. This is a very odd question.
- alkonaut 9y ago
  There is no way a serious mainstream news outlet can publish news based on rumors from a single person that has a personal financial interest in spreading false news or exaggerated rumors. If they do it for free then they are giving away their credibility. And if they take thousands of dollars for a piece like this - then they are selling their credibility. I don’t know which would be worse.
CodeWriter23 9y ago
So hoping Musk pulls a Porsche on him. http://www.nytimes.com/2008/10/31/business/worldbusiness/31norris.html http://www.nytimes.com/2008/10/31/business/worldbusiness/31n...