Let’s Take A Deep Dive Into Jim Chanos’ Tesla Short Seller Stance

JUL 7 2018 BY EVANNEX 171

DISSECTING JIM CHANOS’ SHORT SELLER ARGUMENTS ABOUT TESLA

All innovative companies attract negative press coverage, but the tide of anti-Tesla scare stories and misinformation has reached such preposterous proportions that it has become a story in itself (remember, colleagues, we’re supposed to report the news, not make it). It’s widely believed that much of the mud, especially the articles that focus on financial and stock-market topics, originates with short sellers, who have collectively bet some $12 billion against the California carmaker.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Charles Morris. The opinions expressed in these articles are not necessarily our own at InsideEVs.

From left to right: Tesla Model S and Model X (Image: Franfurter Allgemeine)

Perhaps the best-known and most articulate of the short sellers is Jim Chanos, a hedge fund operator who distinguished himself by calling attention to Enron’s shenanigans back in 2000. Chanos has made no secret of his disdain for Tesla, or his interest in profiting from its demise. Chanos figures prominently in Matt Taibbi’s 2014 book, The Divide: American Injustice in the Age of the Wealth Gap. A recent series of posts on the Tesla Motors Club forum argues that Chanos and other shorts are following a tried-and-true playbook that they’ve used to attack other companies in the past.

Enter Galileo Russell, a young independent stock analyst, who became something of a hero among Teslaphiles when Elon Musk granted him a lot of quality time on a now-famous conference call. In a new video, Russell answers Chanos’s bearish arguments about Tesla point by point.

Above: Galileo Russell takes on infamous Tesla short Jim Chanos (Youtube: HyperChange TV)

Chanos is no mindless naysayer or anonymous comment-section troll. “He has a reputation for being one of Wall Street’s best and sharpest short sellers and for good reason,” says Galileo. “His hedge fund Kynikos Associates [the name comes from the Greek for “cynic”] has a track record that has crushed the market.” Furthermore, Chanos has been “very vocal and public and transparent about his short of Tesla for years – he’s done a ton of interviews on CNBC and Bloomberg explaining his short rationale, so this gives me a ton of material to really understand what his thinking is.”

Galileo has “a ton of respect” for Chanos, but thinks “he is wrong on this trade.” In this video, which is worth watching all the way through, the exuberant young pundit answers the diehard bear’s long list of anti-Tesla arguments one by one.

From left to right: Tesla’s CTO JB Straubel, CEO Elon Musk, and Design Director Franz von Holzhausen (Image: Mercury News)

Chanos and others have made much of Tesla’s supposedly high rate of executive departures (“rats leaving a sinking ship”). However, according to Galileo, “He has cherry-picked the names of 39 Tesla executives who’ve left over the past two years.” Tesla has 37,000 employees. The average tenure of departing execs has been about 4.6 years – not far off the 5.3-year average term of execs at the largest US companies. Mr. Russell also reminds us of a certain group of leaders who haven’t jumped ship, and don’t seem likely to: CEO Elon Musk (15 years with the company); CTO JB Straubel (14 years); CFO Deepak Ahuja (10 years) and Senior Design Director Franz von Holzhausen (8 years).

Is Tesla “structurally unprofitable,” as Chanos claims? Maybe, but so was a certain other growing tech company called Amazon. Is Tesla indulging in creative accounting by not including its R&D expenses in gross margins? Nope – unlike legacy OEMs, most of Tesla’s R&D goes for future products. Tesla’s accounting isn’t deceptive, says Galileo – it’s just more like that of a tech company than a traditional automaker.

Above: Tesla Killer? Audi e-tron’s launch date just got delayed because Audi’s CEO was arrested for his alleged role in Dieselgate (Source: Engadget)

Galileo goes on to address several more of Chanos’s anti-Tesla points: coming competition from the legacy automakers (almost no one in the EV industry takes this threat seriously – Big Auto has made it abundantly clear that its main agenda is to hold back the tide of electrification, not join it); delays in rolling out Autopilot, the Semi and the Roadster; and even a far-fetched notion that Elon Musk is planning to step down as CEO.

In every case, Mr. Russell marshals detailed facts and figures to support his rebuttals. Even if you’re a Tesla skeptic, you’ll be forced to admit that this is a virtuoso performance by an extremely well-informed and insightful analyst.

===

Written by: Charles Morris; Source: HyperChange TV

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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171 Comments on "Let’s Take A Deep Dive Into Jim Chanos’ Tesla Short Seller Stance"

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Why should any confirmed ‘Short’ get any coverage here when we know their opinions are self serving BS?

Well, short interest is only a tiny fraction of the total number of TSLA shares (37M / 169.79M = 21%), so there are five times as many self-serving longs out there, giving their BS opinions in the press and elsewhere. I count quite a few on this site, actually.

It’s an ev site, duchebag! What’s your excuse of being here?

Isn’t the pejorative appellative you applied to him reason enough?

Is it really pejorative if it’s true?

I have driven EVs exclusively (including Teslas) for the past five years, and I hope they succeed. That includes Tesla as a company. However, this site could really use more unbiased voices. It has become quite detached from reality—worse than Green Car Reports, though not nearly as bad as Electrek.

As much as it pains me to say this, I somewhat agree.. People are entited to their opinions (and pro versus con discussion is generally good, IMHO) – It rapid degrades into name calling, troll baiting, etc. (A living example of Godwin’s law, or perhaps Hanlon’s raizor in action)..

Using data, numbers, and facts to back up some claims (including Tesla financial and production data) would help. I can’t really tell if the shorts or the longs are just making noise to reinforce their positions (as money is involved), and we’ve completely left the realm of reasoned discussion and just raw emotion to push the stock up and/or down.

As I’ve said, the Q2 earnings call is likely to be ugly, and the July sales numbers are going to be very positive. Somewhere in the middle of all that is reality.. It’s really a glass half full/half empty sort of situation, IMHO

Opinions are fine, constant bashing in one direction and no support shown whatsoever for any other evs are not. It’s quite clear what his mission is and I’m not buying his bs about owning or driving evs.

Tesla short interest is the largest in the entire stock market.

It is rare to see posts that are so completely wrong as yours.

Wow!

“….there are five times as many self-serving longs out there, giving their BS opinions in the press and elsewhere”

Since you never give any “opinion” about Tesla or its cars which isn’t B.S. — even your chosen screen name, “Seven Electrics”, is B.S. — it’s certainly understandable that you’d like everyone to believe that all opinions expressed about Tesla are equally B.S.

Fortunately, most of us do care about the difference between truth and lies, between facts and B.S., even in what’s now called the “post-truth” era.

The truth serves us Tesla “fanboys” quite well. We have no need to lie. Too bad about serial Tesla bashers like you. Nor do I need to be an investor — neither short nor long — to be a fan of the one company doing far more than any other to push the EV revolution forward.

I’m not seeing a single fact in the above, number of total shares, versus shorted shares, no references to Tesla 10-Q, etc, not even discussion about the video – just lots of noise about”fanboys” and attacks around a screen name. Again, more facts, more data to backup discussion, and alot less attempts to desparage a person’s motives…

Please

Because Chanos IS bright and generally, spot on.
I think that he has allowed his ego to get in the way.

This misses the bigger picture. Tesla’s bonds are currently selling for 88 cents on the dollar. Billions of dollars of these are held by sophisticated institutional investors that enthusiastically lined up to buy them. Do you think you can short sell a bond? You cannot. Do you think these investors are anti-Tesla? They are not. Do they want to take a loss? They do not. And yet the bonds have tanked and these investors have lost hundreds of millions of dollars, despite these bonds being worth *more* than Tesla’s common stock. At a value of 0.88, these pro-Tesla original investors have, no doubt with regret, priced in a serious risk of bankruptcy, or, equivalently, a larger risk of partial default on bond repayments. Just like the price of these junk bonds, short selling is a *symptom*, not a *cause*. It is an *effect* of the state of Tesla: the train wreck of a balance sheet, the irrational longs, the hype machine, the state of competition, etc., but foremost: the price of the stock. You can have the world’s best company, executing perfectly on every level, and still have a stock which is priced too high. As to why most Tesla… Read more »

Seven Electric said:
“…Do you think you can short sell a bond? You cannot…”
————-

100% wrong… as are several other points made in your comment.

There are historical examples of large institutional stock short positions resulting in epic realized short looses… Jim Chanos will soon (I predict sometime in late 2018-Q3) be joining that club with his TSLA short position assuming he has not somehow collared his TSLA short position.

Enron gave Chanos street credibility and Tesla will take it away… so goes the market… it’s eager to take away that which it gave.

The market does give, and take away; ’tis true. For the last decade, it has been giving Tesla almost unlimited funds, for example. A bull market is a rising tide which lifts all boats.

Seven Electric said: “You cannot short a bond…”
———

That being the case (which it is not) you need let the guys at Investopedia know they need to correct this:

“Is it possible to short sell a bond?… it is possible to short sell a bond…” source:
https://www.investopedia.com/ask/answers/04/070904.asp

With the exception of Treasuries, bond liquidity is quite poor. You can buy a CDS, but that doesn’t affect the price of the underlying bond.

In Tesla’s case, there is a small amount of short liquidity (~5%), but it was used up long ago. There is no additional liquidity available for traders. That’s dwarfed by normal trading volumes–especially after Moody’s downgraded Tesla’s credit rating.

And we all remember how Moody’s could be influenced by MONEY in 2007. Anther company that shouldn’t exist.

@Seven Eletrics said: “In Tesla’s case, there is a small amount of short liquidity (~5%)…”
———-

Liquidity is relative… anyone willing to take a big enough spread bet against Tesla bonds can find a Tesla bond holder willing to accomodate that bet… as has already been done with Tesla bonds.

It’s telling that, rather than issue more bonds, Tesla has mortgaged the Fremont factory to raise cash instead. That speaks to the lack of appetite among investors to buy more Tesla bonds.

@Seven Electric said: “It’s telling that, rather than issue more bonds, Tesla has mortgaged the Fremont factory to raise cash…”
———-

I don’t know of a single public company that uses bond financing exclusively… what public company does not also use mortgage financing? … but according to @Seven Electric when Tesla does what is very ordinary it is somehow “telling”… lol.

Shocker: Public company mortgage financing (using the company’s capitalized assets as collateral) is super normal.

If mortgages were preferable to raising money on the capital markets (which Tesla has done many times), or issuing bonds (which was done before the mortgage), Tesla would have taken out mortgages first, not last. It’s an option of last resort, because rates are sky high.

The delusion on this forum is incredible.

@Seven Electrics said: “…Tesla would have taken out mortgages first, not last…”
————

Lol….

Tesla initially did some dept financing before 1st bond financing round… thereafter interlaced the two… a very normal thing for a public company.

@Seven Electrics- You speak of “The delusion on this forum”… but seems that your need to find faults with Tesla has rendered you delusional…your seeing the normal as somehow abnormal… is that not by definition “delusional”?

Or you could just say “I was completely wrong. You can short bonds.”

How embarrassing!

Eleventy Pretend Electrics is patting himself on the back for successfully dragging the discussion off topic.

The topic being the astounding amount of what this article calls “the tide of anti-Tesla scare stories and misinformation”, of which Eleventy is an enthusiastic participant.

Of course he wants to change the subject!

This is an Evannex “article.” Misinformation, indeed.

Yep, still maintain there no liquidity in corporate bonds.

However, what I did not know is that there is still no real CDS market for Tesla: https://www.google.com/amp/s/www.barrons.com/amp/articles/tesla-will-investors-want-to-buy-insurance-on-its-bonds-1524487324

The financial crisis really did a number on CDSes, I guess.

Seven, please define what you call “Liquidity!”

One if our Clients tried to sell their house, but took them into the 3rd Agent, and over 18 Months! Yet at the same time, other houses around them sold in 1 Week to 2 months!

Even “Shorting” stocks requires Willing Players to Borrow them from.

Isn’t “Liquidity”, based on the number of willing players that think they can “Make out Like a Bandit?”

Basically, all the Crap News about Tesla, scaring players, makes it harder to find them, but some can see through all this “Crap!”

It seems your interest, and Chanis interest, is to Hamner the Needle hard enough to bend it out of alignment with any sort of reality, not just “Move the Needle!”

What a worthless comment. A rising tide. So why haven’t GM and Ford gone up 1000% during this Bull Market?

Both the Dow and S&P are up 300% in the current bull market, but tech stocks always rise in multiples of the general market. That’s why you don’t see GM and Ford up as much as Tesla; they don’t have Elon pimping them, and are not regarded as speculative stocks. Furthermore, they already started out at very high valuations, and have less growth upside.

Oh, that’s easy! The Tide is Electric, & Powered by Tesla! Also, you need to be “Plugged in” to “Ride This Tide!”
😌

…and how tides affects vessels of different draft is yet another topic of mystery to “7 Electric Toothbrushes”

I would very much like to short the Bond due in 2025 (either directly or via CFD). Unfortunately I cant.

Especially telling is no discussion of what the ultimate sales numbers will be for the model 3. Conservative estimates: 1.2 to 1.8 million. But, it could go as high as 5 million, especially as Tesla’s R&D spend gets realized in the product. The product is under continuous improvement under Musk as are all his products.

I did a spit take when Mr. Chanos said the Model S was 7 years old. He clearly follows Tesla like America follows the Blackburn Rovers F.C.

He got lucky on Enron, now the epic fraud in the market comes from himself.

The Model S prototype was unveiled in 2009. So really, it’s nine years old.

And yet a decade later not a single car maker has a Model S competitor for sale.

A decade of failure to compete in the market.

That’s because Tesla has lost an incredible amount of money on it. No automaker is in a rush to imitate that.

Quite the contrary Seven. BMW lost their shirt on the i3, building the Leipzig facility and pouring almost a billion dollars US into the program. $460 million alone on the plant. And the i3 has sold miserably.

Then we have VW with $48 billion in battery contracts and Byton and many others with multiple billions USD in capital backing of one sort or another.

What about Porsche’s multi billion dollar stake in Rimac? Ford’s claim of $11 billion towards eV’s by 2022? Volvo saying every model with be at least partly electric by 2019?

I’m sure readers here could extend my examples to dozens more. And countless billions on the line.

To say that no one is making multi-billion dollar bets to follow Tesla’s lead is totally having your head up your exit orifice.

Today, given the regulatory environment in China and the EU, and advances in battery technology, new EV investments make sense, especially when done prudently. They did not in 2009. BMW is an excellent example with the i3, as was mentioned above.

As far as I cant tell, the i3 is a financial disaster mostly because the ‘i’ program was never actually meant to be a pure electric program. The i3 seems to be a by-product of the planned i5 fuel cell vehicle, which was supposed to have much larger sales than the i3, but got scrapped when it became clear that there is no market — with giant sunken costs.

STINKHOLE LOL CONNECT THE DOTS ON CLEAN AIR WAKE UP EARTHLINGS

Preacher did not invest “multiple billions” in Rimac. Maybe $50m.

“Tesla has lost an incredible amount of money on it.”

As Ronald Reagan said: “There you go again.”

Tesla has certainly invested a lot of money in swiftly ramping up their production. According to Nix, Tesla’s assets have increased faster than its debt, so that money certainly has not been “lost”!

No. If you look at Tesla’s balance sheet, assets are only a few billion ahead of liabilities, and the difference is made up for in cash from the last bond sale. Tesla has no net assets in land, plants, etc. In fact, they just mortgaged the Fremont factory.

Care to share some numbers from the last 10-Q?

Liabilities already include bond obligations, and assets already include cash.

Any attempt to adjust again for bonds or cash would be double counting.

Nix seems to be strongly dedicated to facts and the truth. Fact checking Nix’s statements shows them to be based solidly on actual facts and figures, almost 100% of the time.

Even in this so-called “post-truth” era, many of us still do care about the difference between truth and falsehood. Pretty clearly, Eleventy Pretend Electrics, you’re not one of us.

@Seven Electric said: “The Model S prototype was unveiled in 2009. So really, it’s nine years old.”
———-

The BMW 5 Series been in production since 1972… so if including prototype unvail it’s nearly a 50 year old car… wow!!!

Well, the point is that the Model S has never seen a complete overhaul (only tweaks here and there), which indeed makes it somewhat old — and it shows in how the newer tech in Model 3 gives it an edge in a number of areas.

Still, counting the prototype phase is obvious BS.

Yes, it has never seen a complete overhaul. But it has gotten more than a few tweaks. In fact major parts of the vehicle are no longer the same as when it first came out. Some components have been upgraded multiple times. If they had all been done all at once, car makers would have called it a major overhaul.

New front end
New seats
RWD switched to AWD
New motor(s)
New battery packs
New Autopilot hardware
New battery coolant system
New wheels
New headlights.
etc…

That’s a lot of changes to cosmetics and components, that you’d typically see in new model years — but there are no significant changes to the body; the interior layout and controls; or newer technology in the power train. The sort of changes you usually see in new generations of an existing car, typically release every seven years or so. It’s the sort of changes people would like to see in the Model S, so it doesn’t feel obsolete compared to the Model 3.

seven electric nails it: the bond price is a very clear signal for a high risk of bankruptcy perceived by the market. The tremendous losses of Tesla ar not FUD spread by shorts, but realities reported by Tesla. Its true that Amazon also wrote losses for some years, but never in this dimension. The argument “Amazon also made losses, so losses are not a problem” does not take into account the amount of losses. They where small with Amazon, but they are dramatic and ever increasing with Tesla.

Tesla’s assets are increasing faster than its debt. Your assertion here is just more FUD, with which you seem to be intimately familiar.

Again, this is just a lie. Educate yourself. Liabilities grew as fast as assets (well, ever so slightly more) last year. Net assets primarily cash and inventory. Balance sheet here: https://www.nasdaq.com/symbol/tsla/financials?query=balance-sheet

That link shows exactly what I’ve been saying. It shows that Assets – liabilities growing steadily over time from:

.9 Billion
to
4.2 Billion

You folks keep pretending that Tesla is going bankrupt, but in reality they just keep building net assets over time.

True – but don’t forget the 2.8 billion dollars raised in common stock since 2015. Unlike capital raised via bonds – this doesn’t show up as liabilities. It accounts for most of those net asset increase. It isn’t from operations.

The line from these guys is that all that $2.8 Billion dollars was “burned” Their meme is to pretend that Tesla has nothing to show for all that $2.8 Billion. Like it was blown on a night out drinking with nothing to show for it.

My position is that Tesla has ASSETS to show for that $2.8 Billion dollars. You seem to be simply confirming my position with your comments.

And they rightfully don’t show up as liabilities, because companies never have to pay back investors for buying shares. The shares themselves are what investors get for their $2.8 Billion.

@PP
Its clueless to compare assets / liabilities etc. (especially as long as there are equity raisings, as HH points out!).
There is a metric that summarizes the success of a business, taking into account changes in assets / liabilities etc.:
gaap net profits (the “bottom line”).
And this is just horrific for Tesla.
Another interesting metric are operative cash flow, which as equally horrific.

Gagaga — You have forgotten to account for future ROI.

What you have done is the equivalent of saying that all farming is a horrific money loser, because if you only count up how much it costs to clear the land, plow the fields, plant the seeds, water the crops, and harvest the crop, it all adds up to a whole lot of losses!

It is only when the crop is delivered to market and sold that the whole enterprise of farming becomes profitable. Meanwhile, Tesla has been building ASSETS (a field full of growing crops that could be sold to someone else to take over).

Tesla is in the process of bringing the crop to market, with going through the initial sales ramp up for seeds they planted and tended through a long new product development process. And they have multiple other crops they have also spent to plant that are still maturing that they will also bring to market.

I’m sorry you are too short sighted to understand when the ROI comes in bringing new products to market.

sorry, but you dont understand accounting (as – sorry again – most of the Tesla Bulls…).
A farmer plowing, planting etc. does not generate (temporary) losses, but either investments or (rather, in this case) working capital. Neither is accounted for as losses (only temporary negative operative cash flows).

LOL!!! Are you trying to claim that it takes no fuel to plow, seed is free, and paying workers is free, etc?

Or are you just getting WAY too pedantic in your wild attempt to completely ignore the point of an analogy (thus proving you don’t understand the concept of analogies)?

If you are just being intentionally dumb, try to get it through your thick skull that Tesla’s timeline from R&D on a product until full ROI is measured in years (just like all car makers), and what you guys complain about as losses IS ACTUALLY TEMPORARY NEGATIVE CASH FLOWS until ROI.

Tesla spends money to make money, just like farmers do. It is just over years not a single season. It is an analogy.

@Nix,
cool down and read something on basic accounting (I am a professional in the field btw).

A farmer pays wages for ploughing etc. pp. but this money is NOT accounted for as losses, but as investment (if it is more long-term) or inventory / working capital (if it is more short term).
The accounting rules are designed for this, to reflect a realistic image of the state of a business – beyond those effects. If a company reports losses, that means, that it has a real problem. If it reports losses since 15 years, ever strongly increasing losses, that means, that it has a huge problem, that it has no viable business model.
A start up might run on losses for a while (if it develops a product, without making significant turnover) but Tesla is no more a startup in this sense.

Oh good god. It is an analogy. Stop being a pedantic child.

Do you know the definition of an analogy?

a wrong analogy

Nothing wrong with the analogy. The only problem is in your failure to treat it as an analogy. I bet when you are told to pull your head out of your backside, you take that literally too, and head for your proctologist to schedule surgery.

When you issue new shares, as Tesla does continually, your assets grow faster than your liabilities. This has nothing to do with profits and losses.

Tesla has raised $9.4b from selling shares. They’ve lost 5b of that. The rest (4.4b) is the amount assets exceed liabilities and claims against subsidiaries.

Tesla issued more shares in Q2, mostly to departing employees (9% layoff). I’ll guess $500m worth, enough to offset most of their Q2 loss. So that 4.4b above will only drop a little this quarter.

They haven’t “LOST” that 5B, they have invested into future products with future ROI. This includes the Model 3 that 3rd parties estimate will generate $80-120 Billion in sales in the first 5 years of full production. Also, ROI for what they have already invested into the Model Y, Roadster, Semi, Solar Roof Along with continued ROI for what they invested into bringing the S/X to market as S/X continue.

You short-sighted folks always get this wrong. You pretend like the instant an investor puts money into a high growth manufacturing business with long new product lead times, and lengthy product lifespans, that the profits should come instantly!! That is childish thinking. Heck, even the Underwear Gnomes understand there are 2 steps before profits!!!!

But hey, you are at least inching forward and FINALLY admitting that assets exceed liabilities!!!!! You nutters keep claiming the opposite, that Tesla is just sinking more and more in debt, when that is factually false. They are accumulating assets faster than they are accumulating debt.

and what are these “assets” ?
I assume, that SolarCity – acquired for 2.6bn USD, is still booked as “asset” with this same value. An ever loss making and cash burning daughter company, that is silently about to be winded up. Actually a negative value.
Loss making factories?
Loss making service centers?
Enron too had many assets on its balance sheet.

What is the real value of an asset, that does not generate profits?
What is the real value of solarcity? Do you think, Tesla could sell solarcity for 2,6bn?

If you are claiming to know all about Tesla, and yet you have to come to ME and ask what their assets are, you’ve already disqualified yourself.

I’m not your researcher. If you don’t know the answer, go find out BEFORE you claim to know about Tesla’s assets.

Then you would actually know where the future ROI is for each property. And you would also know the 7 mistakes you made in your post. Correcting your falsehoods would be a full time job.

Also it appears that you have wrongly conflated the amount of money that Tesla has raised from selling shares, with the number of stock options they have issued.

Issuing stock options is NOT income, and does not count as raising funds!! Your numbers on their face are incorrect. It looks like you have even tossed in Warrants into your numbers.

Only shares issued as IPO Equity or Post-IPO Equity go towards raising money. The numbers you count as money coming in that was supposedly “lost” is even incorrect, on top of you not knowing the difference between loss and investment in future ROI.

Nix, I’m not conflating anything. I’m talking about shares Tesla issues when employees EXERCISE their stock options and BUY shares through the ESPP. Tesla issues new shares and receives cash, just as when they sell shares to the general public via a secondary offering.

This has nothing to do with the income statement.

Tesla accelerated option vesting for the people they laid off. I expect them to issue a lot more shares than normal because of this. That’s why I said they could raise as much as 500m.

Your numbers include UNEXERCIZED stock options.

No, exercised options and ESPP only. And possibly some RSUs. 500m is just my guess of the upper bound. It could come in closer to half that. Without the layoffs it’d be around 100m, but Q2 will see a spike in both the amount of options exercised and the average strike price.

Accounting for the programs is arcane, so I’m sticking to rough estimates.

No, you’ve not only included unexercized stock options, and all unexercized RSU’s, you’ve included unexercized Warrants.

I’m sorry you don’t know where the bogus data you cut and paste off of Seeking Alpha and Business Insider actually comes from.

“Tesla has raised $9.4b from selling shares. They’ve lost 5b of that.”

When you say that Tesla “lost” money, then you’re writing gibberish. It’s not lost, it’s invested.

It’s not merely that you’re wrong, it’s that you demonstrate such a fundamental lack of understanding that I see no point in reading any more of your comments on the subject of Tesla’s finances.

Loss is an accounting term. Period. Tesla lost more than 5 billion of the 9.4 billion shareholders invested. That takes no “understanding”, it’s right there on the balance sheet.

I’m sorry if this fact makes you feel bad, but it’s still a fact. Tesla may have economic value that far exceeds its book value. Most companies do. But it’s impossible to have a coherent discussion if you misuse terms like profit, loss and investment.

So is ROI.

Learn how it ROI is calculated over multiple years.

The perceived risk of bankruptcy is clearly influenced by FUD — though of course we do not know by how much exactly.

Also, while I’m not familiar with this sort of thing, intuitively a 12% loss in bond prices doesn’t exactly scream “high perceived risk of bankruptcy” to me. If the risk was perceived as *high* (as opposed to minor), I would expect prices to plummet to a fraction of the original price.

Just one thing though. Tesla has been guiding to those losses quarter after quarter. They never said they will make a profit next quarter and then ended up showing a loss. The few times (2 or 3 times) they guided to a profit in the next quarter, they did show a profit. So if you trusted Tesla’s guidance to a loss, then why wouldn’t you trust Tesla’s guidance to a profit??? Also Many years ago when Elon was asked about when they will be permanently profitable, he said that will be in 2020 when their mass market car will go in production. they moved the schedule up by a couple of years and then fell behind by 6 months. So reaching profitability of coming close to that in Q3 2018 does not sound that bad.

Heck, Even Elon has said the Stock price is higher that it deseeves to be, more than once, so that is not the problem!

But arguing for failure is to admit we know nothing of Elon, and his drive to succeed!

It is not just Elon that is being threatened, but rather, each & every one of the 37,000, or so, employees!

Another Euro point of view

Why this sudden obsession of Musk & fans about short sellers anyway ? Do they tell BS on TV and in the news ? Well prove them wrong by making level headed business decisions and solid & steady growth in an under promise & over deliver way. That would explode short positions in no time. Complaining about them on twitter after making yourself a goat for predicting the short burn of the century is just a sign of probably being too thin skinned for the job and not understanding how markets do work. To a shark like Chanos all that non sense is a sign of weakness, like bleeding in the water. And by the way this video does not debunk anything, quite a shame as Chanos is of course depicting a way too dark image of Tesla so it would have been quite easy to debunk what he said.

Another Euro point of view

Talking to myself, I know. Actually someone who made a convincing case for Tesla 3 days ago on CNBC is Jim Cramer, so not a Tesla bull. He said to successfully short a stock you need sellers, with Tsla there are no sellers. People hold on to their stocks. He also said, as long as your 10 year old kid, says “look dad, a Tesla !!” and dreams to own a Tesla later then it is perhaps also too dangerous a short. Way more convincing that this Amazon comparison (total BS to compare those totally different companies) and argue that there is no executive turnover at Tesla (yes of course there is and then what ? It Tesla can keep on attracting talent then I guess its OK).

Sign that Jim Chanos is in trouble…

When @Another-Euro-point-of-view is starting to soft question the Jim Chanos TSLA short narrative.

That’s not questioning the short narrative. It’s questioning the sanity of TSLA longs. The market always corrects eventually.

@Seven Electrics said: “That’s not questioning the short narrative….”
————

Seems to me that is exactly what @Another-Euro-point-of-view is doing by pointing out CNBC Jim Cramer big reversal sentiment on TSLA.

Entertaining recent Jim Cramer TSLA comment:
https://m.youtube.com/watch?v=32Hhjs0l8FA

Cramer didn’t reverse on TSLA; he’s always maintained it’s impossible to value the stock because the buyers are irrational. The fact that nobody is selling does not invalidate the short thesis regarding Tesla as a company (the sellers don’t influence whether Tesla can make sufficient Model 3s, for example); rather, it merely speaks to how crazy the buyers are.

@Seven Electric said: “Cramer didn’t reverse on TSLA…”
————-

If this is not an example of one of several Cramer TSLA revers then perhaps Cramer is speaking in secret code and I don’t have the decode book:

“Cramer: Tesla’s stock still has more upside
6:47 PM ET Tue, 19 June 2018
Jim Cramer and technician Carolyn Boroden use stock charts to investigate the recent action…” source:
https://www.cnbc.com/video/2018/06/19/cramer-teslas-stock-still-has-more-upside.html

Give us your fearless predictions for q3&4 losses.

I predict a 700m lots in Q2. As noted above, they’ll fund most of that loss by selling new shares of stock, so shareholder equity will barely decline

Boy 7 Electric Toothbrushes must be in deeeeep!😜

Another Euro point of view

I think Chanos & shorts has some valid points but all in all when a short is getting too crowded it is becoming quite dangerous and that is Tesla situation now. Also I think that shorts are trying too hard and that undermines their credibility. Now despite all the positive in favor of Tesla, lately it seems that there are no difficult situations that Elon does not manage to make worse with his communication “skills”. So I would be worried on both sides of the trade, crazy eager shorts and Elon starting to run amok.

Russel didn’t argue they is no executive turnover. He argued it’s nothing out of the ordinary.

Just as North Korea and Iran tell their people that all problems are the fault of America, and Donald Trump blames the news media, so Musk also needs villians to blame. The fanatics eat that propaganda up like butter.

Another Euro point of view

Yes it’s a classic, I happen to often travel to Russia for business and (controlled) media there do work quite like that but in way more subtle way than Musk. Now they have 100+ years of experience at it.

“I happen to often travel to Russia for business and (controlled) media there do work quite like that…”

So, you work for a Russian troll farm? Well, that explains your Tesla bashing!

I know you are involuntarily retired, but given these flush times, I would encourage you to spend less time bullying and more time networking. You’re never too old for a fresh start.

You seem to “know” a lot of things which are not true. 😉

“The fanatics eat that propaganda up like butter.”
________________
Butter? Yech!

It’s interesting that with what the shorts have done to previous companies, like employee harassment, spousal harassment and telling lies to your religious community, it has to be asked why haven’t specific individuals been BANNED from the Market, if not doing jail time.

Another Euro point of view

Yes, also I expect making tin foil hats would be a much better business idea than flame throwers.

Well, maybe Tesla should think about making fire extinguishers.
I recommend carrying one in your car.

Another Euro point of view

Tesla making fire extinguishers ? Not sure, with NTSB crash investigations still going on we would get an endless stream of bad taste jokes from the short sellers and they are annoying enough with the short burn of the century jokes.

One extingsuiher for Teslas and if that’s fair then gas cars should have 4 or 5…one in each seat. Since they burn up 4 or 5 times more often.

I carried a fire extinguisher in my Triumph Spitfire back in the day. They’re useless against lithium battery fires, though.

Handheld fire extinguishers are useless against *any* fire, once it gets large enough. They are useful for nipping a fire in the bud, before it has fully caught. I have serious doubts a fire extinguisher would often help against fire originating in the power train, no matter whether it’s battery or combustion…

“…why haven’t specific individuals been BANNED from the Market, if not doing jail time.”

It is indeed shocking just how much naked, obvious stock manipulation occurs on a daily basis, without attracting the attention of the SEC or the Justice Dept.

I remember when Jon Stewart interviewed Jim “Mad Money” Cramer on “The Daily Show”, and literally reduced Cramer to a quivering apologetic mess over his self-admitted stock manipulation.

Jon Stewart is my hero; it’s a tragedy he gave up doing “The Daily Show”!

Well, if it was “only” stock manipulation, it would be a SEC case. If there is actual harassment, it should be a criminal justice case…

“Why this sudden obsession of Musk & fans about short sellers anyway ?”

There’s nothing “sudden” about it; the anti-Tesla FUD campaign has been raging for years. Only a serial Tesla basher like you would mischaracterize loathing this campaign of sheer B.S. and Big Lies as an “obsession”. What’s an obsession is how serial Tesla bashers will post the same FUD over and over and over and over, no matter how thoroughly and how often it’s completely debunked and disproven.

If anyone needs a reminder of just how biased your own “opinions” are regarding Tesla investments, “Another European…”, here’s one of your more memorable comments:

“How will hubby explain to wifey that their hard won cash just blew up in smoke buying Tsla stock… That may lead to divorce, that to children with substance abuse issues etc.”

https://insideevs.com/vw-ceo-blasts-tesla-low-sales-losing-millions/#comment-1348778

Another Euro point of view

And ? Stock is down 10% since that comment and I still think it is dangerous to be invested in a story stock in a late bull cycle. Musk just said it: “We now are a real car company”. It happens that real car companies trade at price earnings (PE) ratio of 10 (max.). Meaning a 1 billion profit gives a 10 billion valuation. That is less than 20% of current valuation. Probably yet another missed opportunity to remain silent. Now as long as losses are reported the story stock mode can keep on so no worries.

Making a profit won’t suddenly evaporate the story behind the stock. The story is the large expected revenue growth, which won’t suddenly change once they are making a profit…

Have you read https://insideevs.com/tesla-short-sellers-media-crusade/ ? It answers your question: short sellers (both their positions, and the FUD they are spreading) are making it harder for Tesla to borrow money for further investments, thus obstructing their ability to accelerate the transition to sustainable transportation. No wonder EV supporters are unhappy about that.

The Fairfax example discussed in the article also makes it plenty clear that a company can become a target for attacks by shorters for no fault of their own — so blaming it all on Tesla itself makes no sense.

Amazon 1998-now was growing into a new market space and has taken ownership of it.

Is Tesla a tech company or a car manufacturer? That is the 52.74 billion dollar question.

Ford, with $42B in sales in 1Q18 vs. TSLA’s $3.4B has a market cap $10B less.

I don’t think 10 years from now TSLA is going to be sitting at the big boy’s table.

They can and will quadruple their sales, but that will put them at the Mazda level of sales.

And I think Tesla is going to have a hard row to hoe next decade when Toyota, Honda, Jeep, Hyundai, Kia, Mercedes-Benz, VW, BMW, Audi, Volvo, Jaguar start selling better EVs than Tesla’s offerings.

TSLA’s main “moats” are the battery investments and supercharger network. At $10,000 per charger, $5B will put 500,000 more chargers on the road.

So wrong. Look at what SpaceX did to the entire space launch industry. Tesla has the biggest brains. The game is already over.

You need two history lessons:

1. Amazon.com didn’t start showing a consistent profit, let alone a strong one, until about 2-1/2 years ago. How quickly people forget that!

2. In every disruptive tech revolution, some of the market leaders at the end have been new companies. In every disruptive tech revolution, some of the former market leaders fail and go out of business.

Of course, that doesn’t guarantee that Tesla will emerge as a market leader, but the belief that legacy auto makers will crush Tesla… ummm, when they get around to it, one of these years… is as short-sighted as Eastman Kodak thinking they could wait until digital cameras were competitive at consumer prices before they started making and selling them!

Tesla hasn’t disrupted anything yet, they’re selling ~300 cars a day in the US still. Whoop-de-do. As for Amazon, they never had to carry a crippling balance sheet to achieve their market growth, it was all organic, building from success to success (plus being able to price-beat everyone including WalMart didn’t hurt). Thing is about trying to compare Tesla to digital camera makers is that the film camera makers — Canon, Nikon etc –transitioned to digital just fine. Phones getting good cameras was the true disruption here. As an owner of a Gen I Leaf 2015-2018 and a Gen II Leaf as of last month, I just don’t see Tesla’s long game transition into a truly disruptive auto manufacturer. When I get tired of my Gen II (paid $15,800 for it btw, thanks to great gov’t subsidies) next decade, like I said above I expect to see a wide variety of BEV offerings, the question [as I see it now] is who won’t have a great EV in 2025, not who will (as is the case here in mid-2018). I hope Tesla is still around then, but if they’re not that won’t be any big loss since they’re not really… Read more »

I would be better off financially if I used tax loopholes too.

Per “At $10,000 per charger, $5B will put 500,000 more chargers on the road.” $10,000 per charger? Where did you get THAT Figure?

(my butt TBH) $5000 for parts for something you’re buying 500,000 of doesn’t seem that outrageous : )

Sure, at *some* point, we can probably expect legacy makers to catch up and offer competitive EVs. But by that time, Tesla will likely have carved out quite a significant market share — and considering the extremely strong brand, I don’t see them suddenly losing that share again just because others have finally caught up…

You always hear these comparisons to Amazon – and they are pretty much always false.

Most important – Amazon was never “structurally unprofitable”.

Pretty much around 5 years after being founded, Amazon had a profit/loss that hovered around 0, changing from quarter to quarter.

But more importantly – Amazon had positive free operating cash flow just 5 years after being founded and has increased that ever since. That are the huge differences. For the longest time, Amazon was not profitable – true – but unlike Tesla it also wasn’t unprofitable. And due to their positive operating cash flow, they haven’t needed the capital markets to fund their growth very soon after being founded – again unlike Tesla. Even if Tesla achieves positive operating cash flow at the end of this year – there is no-one even including Elon Musk who believes Tesla can fund their planned growth without going to the capital markets.

https://www.recode.net/2017/5/15/15610786/amazon-jeff-bezos-public-company-profit-revenue-explained-five-charts

Tesla has a better book value, today, than Amazon.

AMZN = $31.6B, TSLA = $4.4B unless those tents have solid iridium floors

Only a fool would not want to fund the fastest growing auto company in the world.

you want to fund the company, buy a bond issue. Shareholders buy for a share of profits, something TSLA has earned negative $5B to-date

https://ycharts.com/companies/TSLA/retained_earnings

You don’t seem to understand the concept of ROI. You invest money into building out a company and a line of products, and then through the lifetime of the product’s sales, you get your ROI. Currently that ($5B) is in investment into future returns for the following products:
Lifetime ROI on Model S investment
Lifetime ROI on Model X investment
Lifetime ROI on Model 3 investment
Lifetime ROI on PowerWall investment
Lifetime ROI on PowerPack investment
Lifetime ROI on Solar Roof investment
Lifetime ROI on Solar Panel investment
Lifetime ROI on Model Y investment
Lifetime ROI on GEN2 Roadster investment
Lifetime ROI on Tesla Semi investment
Etc, including stuff they haven’t even talked about publicly.

Heavy industries, such as mass producing automobiles, require massive investments in capital. Retail sales companies like Amazon.com, much less so. Yes, Tesla has required a lot more capital to grow than Amazon.com. Duh.

But the real question is about borrowing vs. assets. Since Tesla’s assets are growing faster than its debt, Tesla appears to be financially quite sound… contrary to what the short-sellers would have us believe!

3/17: Assets: $25B, Liabilities: $19B
3/18: Assets: $27B, Liabilities: $22B

https://www.marketwatch.com/investing/stock/tsla/financials/balance-sheet/quarter

Same source, long term trend:

2013: Assets: $2.42B, Liabilities: $1.75B (+$0.67B)
2017: Assets: $28.66B, Liabilities: $23B (+$5.7B)

https://www.marketwatch.com/investing/stock/tsla/financials/balance-sheet

What you have done is to ignore the long term trend, and focus only on the quarterly numbers from the quarterly page to look at the impact of the most expensive quarter in a new product lifecycle, the early ramp-up as sales just start going mass market. This does not represent a trend, it represents a short term quarterly variance that is normal and expected during a new product rollout of this size. You guys keep making the same short sighted mistakes over and over.

And what will 3/19 be? That is your biggest question to answer!

Of course Tesla in the automobile industry needs more capital. But if you say “Duh”, maybe you could comment that to the author of the article, who makes the comparison between Tesla and Amazon, rather than me who simply points out several ways in which it doesn’t apply – same as you.

And besides – Tesla can be financially sounds without being the next Amazon. There is a considerable range in-between. Most “shorts” don’t even think Tesla will or should go bankrupt. They merely think the current stock price is not supported by fundamentals and will correct sooner or later.

Sometimes there is less of a difference in opinion than you might think.

“Most ‘shorts’ don’t even think Tesla will or should go bankrupt. They merely think the current stock price is not supported by fundamentals and will correct sooner or later.”

The problem is not with “most” shorts. If Tesla were only subjected to normal shorting behavior, then we wouldn’t be having this conversation.

The problem is how people motivated by greed are trying to use FUD and conspiracy theories and Big Lies and everything else in the propagandist’s playbook to attack Tesla, to try to discredit it in any way possible. You can see that at work by several of them right in this very thread, and some of them making multiple comments; it’s not like this is an imaginary or rare thing.

We’re not talking about honest shorting. We’re talking about dishonest attempts to manipulate the stock market. We’re not talking about people expressing their opinions, but rather about criminal behavior. I don’t know if what they’re doing is technically illegal or not, but there’s no question that it fits the definition of “crime”, in the sense of a grave offense, especially against morality.

What about when Elon says he sees a clear path to a trillion dollars market cap? When he says he expects to build 100-200k Model 3s in 2017? When he repeatedly says they don’t need to raise capital, them turns around and does it? Or when he says the manual assembly line in the tent is “dramatically better” than their other lines?

What about when he said Powerwall demand was off the hook three years ago and predicted billions in near term sales? Or launched a completely noon-functional solar tile “product”. Or says FSD is two years away for five consecutive years?

Why is it ok for Musk to say crap that would make a carnival barker blush but not ok for short sellers to point out his BS?

While I also don’t think most shorters believe Tesla will actually go bankrupt, Chanos explicitly said in one of the cited interviews that he expects TSLA to go down to 0…

Another Chanos FAILURE to comprehend:
The Jag i-Pace, takes sales away from Jag.
No one want’s a gas engine J-Pace after seeing an i-Pace.
It’s like going to the Apple Store and requesting a rotary phone.

Gas Engines are Done.
Why did Ford abandon gas cars? Because there’s no demand for gas cars.

We all know this guy isn’t stupid, but, that may be his only defense when his Fund Tanks.

I think everyone’s next read from AUDIBLE should be:
The Divide by Matt Taibbi about Canadian insurance company Fairfax Financial.

Just to see the Moral Depravity in the Short Camp.

You have to ask yourself: Will we let criminals run the financial markets?

Of course we will! We do now! Criminals have the same “Rights” to “Free Speech” as everyone! Even when incarcerated! Maybe that is the problem?

Another Euro point of view

About all this sudden noise against short sellers (some of it justified, not saying), I think it’s the result of a big frustration of the short burn of the century not taking place. A good fix for that would not to have announced that short burn to start with. Another thing Tesla longs needs not to forget is that Tesla flawless execution of its plan is already mostly baked in the stock price. So when there are some signs that execution is not exactly flawless , then stock tanks. It’s nothing against Tesla, just normal investor’s day to day portfolio managing.

Seems you got caught up in some kind of bubble. The “noise” has been ongoing for months, right along the FUD from the shorters.

Well of course he is wrong, wrong-headed, and simply incorrect concerning his short position v Tesla. . So how many years has he been on crusade against Tesla 4-5, and how is that going, Tesla up over 1000%. Though they will still have him on the financial channels to tout a short position that is full of holes, and hasn’t been updated. He just repeats the same thing he’s been saying for years over and over again. He has zero credibility, saying Tesla is worth zero, that obviously, is not correct, though no interviewer even challenges his fallacious and unsupported views, since they are either in collusion with him to bring Tesla down, or the owners of their channel is, or they just don’t enough to question, as he is the expert, and after all they are mostly just talking heads. He implies that he has made money on his short position. If that is the case then at some point he covered. So did he come out and announce I’m covering my Tesla shorts, no, because he wants others to loose money shorting Tesla, but he doesn’t want to lose anymore. Probably worth a look from the SEC into… Read more »

What I find particularly amusing about this frothing-at-the-mouth regarding short selling is that, in the long term, short selling is neutral. Someone sells a stock; it goes down. Eventually, they buy it back, and the stock goes up. For every sell there is a buy. It’s neutral in the long term. If anything, it can be positive for a stock, as short squeezes tend to push the stock up by more than went it went down originally.

All of this short seller boogeyman stuff is a diversion calculated to distract from the fundamentals of Tesla as a company. If the stock goes down, it manipulation! When it goes up (as when Elon borrowed money against TSLA to manipulate the stock in the premarket), it’s not. It’s quite the brilliant propaganda play. Thanks for helping to obfuscate reality, InsideEVs.

Another Euro point of view

Moreover I understand short selling are often used by institution which finances Tesla, for example for Tesla bond holders to merely hedge their risk. It must be sad for people to realize that things come up as more complicated than they first thought.

Nobody is talking about bond holders hedging their risk. That is like saying you don’t think there is a problem with drunk driving because your granny gets a sip of communion wine and drives home after church just fine.

The problem with shorters and TSLA is Chanos and his ilk actively pedaling falsehoods in order to manipulate the market. Stop trying to change the topic to investors in TSLA who clearly are not trying to manipulate the market, and are hedging their long term INVESTMENT in TSLA and want to see TSLA succeed.

@Seven Electrics said: “What I find particularly amusing about this frothing-at-the-mouth regarding short selling is that, in the long term, short selling is neutral… Thanks for helping to obfuscate reality, InsideEVs.“
————-

obfuscate:
verb; render obscure, unclear, or unintelligible.

Hmmmm….

Sort of like saying:

“short selling is neutral”

+1 CDAVIS. Of course, you and the rest of us have been listening to seven electrics short analysis of Tesla since he was Three electrics or was that Two? I thought long on short was an oxymoron?

I have never sold or bought a single share of Tesla stock. I just enjoy pointing out the obvious to the blind. I do own two Teslas, so I have some experience with the company.

@Seven Electrics said: “I do own two Teslas, so I have some experience with the company.”
—————

Lol…

You purchased a Tesla and become so certian of Tesla’s faults & certain demise it compelled you to purchase a second Tesla?

You don’t own a Tesla, I think that much is pretty obvious.

Are you a climate change denier? Just asking. Your fabulous lack of education suggests so 🙂

Well then hopefully InsideEvs bans you as the carpet-bombing, serial anti-Tesla troll that always brings up your financial FUD BS as you constantly lie through your D-Bag teeth about “owning” Teslas.

Is it because I never called?

“…short selling is neutral.”

The act of short selling is indeed neutral. The actions of certain long-term short-sellers, in flooding social media with anti-Tesla FUD, is anything but! It’s not the “long” investors in Tesla who resort to FUD. That’s only the short-sellers.

Claiming a false equivalency is another of the false debate tactics of short-sellers.

Also, Eleventy Pretend Electrics, there aren’t a lot of Tesla “longs” who pretend to own Tesla cars when they don’t… as you keep doing.

@Pushmi-Pullyu said: “The act of short selling is indeed neutral…”
———-

Generally it’s not.

Narrow exception is act of short selling to hedge a position (i.e. Short Sell Against the Box) which *may* result in a “neutral” trade/position when your combined net gains equal your combined net loss.

Has anyone ever seen Chanos and 7 E-Toothbrushes in the same room???
Hmmmm….

On the long term it’s neutral — but that doesn’t mean it’s not a problem.

And of course the FUD bombing it begets is not neutral.

On a different note mentioned in this article, I’d take it as a positive if Elon stepped down as ceo and was just on Tesla’s board.

He has accomplished so much and he is still so young. There is so much more for him to do and accomplish. This is the guy I’d like to see and trust our futures in global AI technologies big time. I think he truly has the right understanding and vision in AI.

Also, more of a compliment than a criticism, I think Elon is probably hard to work with , but not to work for. Meaning everybody already knows who the smartest guy in the room is, but maybe he could stand to delegate a bit more. Then he himself could accomplish even more with his visions of things needed done in the world, the universe and
beyond.

@Bunny said: “On a different note mentioned in this article, I’d take it as a positive if Elon stepped down as ceo and was just on Tesla’s board.”
—————-

Problem with that is that Tesla’s success is in big part due to Elon being Tesla’s CEO… not despite it. Imagine any of the current traditional car maker CEOs taking the Tesla CEO position… name which one is capable to better lead Tesla?

Also, Elon interest/mission for Tesla and his role as CEO is more about energy than car making… something that will take some time to be big-picture appreciated… future availability and the source of energy represents a huge human consequential topic… arguably non greater. If don’t solve that then no need worry about future AI.

Bunny — Tesla’s institutional investors vigorously disagree with you. Having Elon step down as CEO was voted on by investors and widely defeated by massive margins.

Good luck with that.
/s

This video was very good, and finally someone brings up the dilemma for ICE manufacturers who would like to break into the EV market: how do they speak highly regarding their EV’s without at the same time explaining why you shouldn’t own an ICE? They’re essentially selling 2 products that directly compete against themselves and Tesla doesn’t have that issue. I don’t see how ICE manufacturers skin that cat and successfully transition to EV’s while at the same time selling ICE. And the 2nd MASSIVE moat that Tesla has built for itself (using the cash “incineration” that Chanos mentions): the Supercharging network. Porsche, Audi, BMW, Mercedes, GM, etc can build whatever Tesla “Killers” they like, but no one has even remotely begun to build a charging network, which is the 2nd equally important half to the long-range battery within the car. 300 mile range in a Porsche is great, except for the fact that you can’t turn around the car on a road-trip without some kind of fast-charging network. Only Tesla has it, and no other company is planning on building one any time soon. (Psst- Chanos, they call that a ‘moat.’) Another point that wasn’t mentioned in the video:… Read more »

Legacy carmakers are reacting to emissions legislation so the automakers aren’t telling you EV is better than ICE, it’s governments forcing them to ditch production of ICE only vehicles. That’s why the legacy carmakers are lobbying behind the scenes for governments to support Diesel again while publicly making EV announcements that are always 2020 something. Do bear in mind that America isn’t the only country on the planet there’s even a continent called Europe where EU member states don’t like VAG lying to them about Diesel emissions through the use of dodgy software. If Chanos wants an easy target he should Short VAG.

Electrification of their fleets doesn’t mean a straight to BEV’s only plan; 48 volt drivetrains, hybrids, and PHEV’s will make up most of models.

Too many people can’t charge overnight and need a quick fill vehicle that’s competitive on price as a traditional ICE. A mass BEV transition may only happen if technology can solve those issues.

When, not if 🙂

Car dealerships where explicitly discussed in the video.

(I think Superchargers too? Not sure about that one, though.)

BTW, Porsche is actually talking about building their own charger network. And I’m not sure we should discount the networks now being created jointly by legacy makers either: depending on how they are set up exactly, they might have the right motivations, just like exclusive networks. (As opposed to the independent networks, focused on profitability only…)

The short position does not mean that the company has to go under (like Enron) for the shorts to profit. Tesla will almost certainly not go under; if the stock price were to decline a lot many many deep pocketed entities would buy new shares thus recapitalizing the company. The short argument is about VALUATION. When Tesla becomes profitable what sort of P/E ratio will the market (ie stock purchasers and sellers) afford it. Car companies tend to have low valuations (Ford sells at 5.6 times earnings, Toyota at 8.5). Ford is making about $8B/ year on $150B sales currently, Toyota >$20B on >$300B sales. In 2019 selling 10,000 cars/week worldwide (too optimistic maybe? That’s 8000 M3/week) Tesla could have sales of $25B (at $50k/car average). How much profit and what valuation the market will put on it is the big unknown. If it is anything close to Toyota (much less Ford) the stock value will have to come down a lot. If it can make $1B it would have to be valued at 50 times earnings to stay at its current value ($300/share price $50+B total). To be valued like Toyota it would have to make $6B to stay… Read more »

yes, this is my thesis exactly. TSLA quadrupling its sales gets it to the Mazda/Audi/BMW level, ~5% market share.

wish I woulda grabbed a LEAPS PUT contract last month when they were on sale, the $200 8/19 PUT dropped to $20, now back to $26. That’s still an expensive bet though, as it had to go to $180 to make any money at expiration.

I don’t believe we will find out soon. Investors would have to lose faith in potential for further significant growth.

As for what the short position means, they is probably more than one hypothesis — but Chanos explicitly said it he expects it to go to 0…

Pretty enjoyable to see the Youtuber with the backwards hat take on the short-seller of steadily increasing girth who hobnobs with the MSM “financial press” and do a pretty fair job of dissecting his position.

Actually, Russel’s analysis is the first one that provided me with additional intelligence. He has all of my respect and I submitted his chanel. Also, this shows the poor condition of the financial industry – really sad if some kid, without any capital at hand, can outperform exorbitrantly paid professionals.

Tom, it’s because the “some kid” can actually take a critical view because he doesn’t have a vested interest in propping up his biased narrative. These “analysts” are absolute jokes- they bounce from talking about McDonald’s to Tesla then over to Bitcoin, then the Cannabis industry, etc. They scour the TMZ-esque financial tabloid headlines and then cobble together their position without any true research, but then act like they’re the smartest folks in the room just because they know how to tie a Windsor knot and can match shoes to a suit color. Never mind that they can change their position on a stock/company practically DAILY without anyone calling ’em out, yet still collect meaningless fees regardless of their severe lack of financial acumen. And they STILL get called to MSN, Fox Business, and CNN to weigh in on their poorly researched, ever-changing opinion(s).

Russel does actually own some TSLA stock (that’s what allowed him to get on the earnings call) — though not a very much IIRC.

I don’t think the analysts generally lack financial acumen. They just tend to lack in-depth understanding of particular markets and/or companies…

Yeah, the point about lack of company acumen was my point- not financial. That’s why I mentioned that they bounce around company opinions, without offering or understanding true depth of the companies they espouse or denigrate.

Shorts are 1/5 of Tesla’s float but are very active. Normally the longs are America, like sleeping giants, scary when they awaken. Here is the pattern of Tesla stock once or twice ayear: 1. Tesla flies by the seat of their pants, taking huge risks for huge rewards. Shorts seize on problems real and imagined and push the stock down, and make ridiculous predictions of Tesla’s demise. 2. Timid longs get scared into selling at a yearly low. 3. The yearly low attracts sleeping giant longs, large and small. They buy giant amounts of Tesla, causing a short squeeze that cleans them out of their positions, forcing them to buy at a loss. Recently shorts lost over 2 billion. 4. Battered survivor bears get mad and invent new ruses, so we go back to 1. again. This is a merry-go-round pattern of emotion I see every year. Some clever traders use it to buy low, sell high every year, like my brother who made a 10x gain on Tesla in 5 years moving from middle class to Multimillionaire, no kidding.