When will it be time to short Tesla?

This article popped up on my feed on the weekend:

More hilarious facts about Tesla from a hedge fund manager who’s short the stock.

All companies in a capitalistic system need to earn profits and those profits need to be attractive relative to the amount of shareholder capital employed. Tesla has never earned an annual profit. Along with digital currencies and Unicorns, Tesla appears to be caught up in a gold-rush-fever type of emotional response, both from a “they will take over the world” and a “they will save the world” combination of hopes, instead of their owners looking at the numbers …

… As anyone with automotive experience knows, profit margins are far higher on bigger, more expensive cars. Therefore, the faster Tesla makes Model 3’s, the more money they will lose.

I’ve been saying this for a while now. Elon Musk is the biggest fraud the world has ever seen. He recently approved an increase in his annual salary to $5 billion per year, more than every other CEO of a top fortune 500 company combined.

And this is the problem that I have with shorting Tesla stock – the timing.

Yesterday afternoon after a big lunch of Normandy oysters, barbeque pork ribs and grilled vegetables I laid myself down on the couch and watched The Big Short. I’ve seen it a few times but I always enjoy it. I was reminded of the fact that before the 2008 crisis hedge fund manager Michael Burry bet against the mortgage backed securities. He made his bet in 2005 which turned out to be two years too early, meaning he had to pay high monthly premiums.

Not only that, when the banks realised what was happening they refused to value the securities accurately, essentially making the entire system fraudulent. I am sure that one of the main reasons that they did this was a deep unwillingness to acknowledge the ugly truth. If Burry was right then they were wrong and being wrong has consequences.

Back to Tesla. The company is a giant fraud built on a pile of sand, but the entire green economy is exactly the same. Windfarms do not make money. Solar panels do not make money. Recycling garbage does not make money. All of these things, and many more, (lets not even talk about wave farms), lose money.

If people have bet big one way they don’t want to know that it is bad. Worse than that, they will continue to throw money at it right up to the point when it falls off a cliff. So if you were to bet against this market, by shorting Tesla stock for example, you’re not just betting against market forces; you’re betting against global delusion.

Of course it will happen. The market will crash. If anything this is an even bigger opportunity than the 2008 financial crisis. There is far more taxpayer money invested in this green energy bullshit.

But when to bet against it, that is the question. It is a fraudulent market already, let alone when people deep in it begin to wake up to the fact themselves. You could be paying a lot of monthly premiums before it all goes bad.

10 thoughts on “When will it be time to short Tesla?

  1. Chris

    Elon Musk gets paid the legal minimum wage in California. Because of the long hours he works, that came to $49,000 in 2017. If he could set his salary at $1, he would.
    He does, however, have the most generous stock option package in the history of the world. But in order to get those options, he has to grow Tesla into a company the size of Amazon over the next 10 years. With actual profits. There’s a series of milestones you can look up if you care to.

    In order to meet those milestones, Tesla would need to be selling 4 million cars a year by 2017, and making a healthy profit on each car. $700 billion market cap and at least $14 billion per year in profits. And all the subsidies will have expired long before then.
    If he can’t deliver, he doesn’t get the stock options.

    So your statement about Musk’s annual salary if off by a factor of 100,000.

    Tesla doesn’t make a profit because it is following the Amazon expansion model. Plow all your cash flow back into expansion so you make a statutory loss, thus avoiding paying tax, until you are far enough ahead of your competition to put them out of business. It isn’t business, it’s war.

    Musk will either fail spectacularly or succeed spectacularly. He’s betting it all on black. But he’s not a snake-oil salesman, he doesn’t have the skillset.

    Like

  2. Jerry

    Add Organic food to the fraud list.
    One of these days, the space ships are going to stop bringing the inorganic materials to earth that regular systems use.
    They choose to stop a natural/ no antibiotics pig trial because the animals were suffering. Also suspect they didn’t want to be brought up on charges of animal cruelty. But I also suspect their concentration/ housing rate was too high, leading to failure.

    Like

  3. TechieDude

    “In order to meet those milestones, Tesla would need to be selling 4 million cars a year by 2017, and making a healthy profit on each car… And all the subsidies will have expired long before then.”

    We’re now in Q2 of 2018. Last quarter he delivered just shy of 30,000 cars. You sure about that year?

    The model 3 is late, and appears to be woeful. His other cars are really for virtue signalling rather than any utility, since you can buy a damn nice F-type jag, BMW, or Merc for the same or less money.

    Like

  4. When the company gets short on cash on hand, and they go shopping for new investors. Equity dilution. Musk’s biggest problem is that he’s trying to do too many things at once, even if you believe his products have an economic future. He’s trying to build a lot of cars, launch re-usable space vehicles, develop PV home solar systems, and continue to build out a national infrastructure of chargers. I think he’s even trying to get into high-speed transportation.

    Assuming he’s got the right players in place to handle each one of those projects, they all need regular large infusions of cash. It only takes one slip for all the balls to come crashing down in that juggling act.

    Like

  5. Pingback: In The Mailbox: 04.24.18 : The Other McCain

  6. David Moore

    “Not only that, when the banks realised what was happening they refused to value the securities accurately, essentially making the entire system fraudulent. I am sure that one of the main reasons that they did this was a deep unwillingness to acknowledge the ugly truth.”

    They thought Bury was the sucker when they took his money. The dawning reaslisation that they were the suckers must have been harsh.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.