
Tesla is just months from a total collapse, says hedge-fund manager - mudil
https://www.marketwatch.com/story/tesla-is-just-months-away-from-a-total-collapse-says-hedge-fund-manager-2018-03-27
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smaili
> 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
That does not invalidate his points about Tesla's profits, Model 3 delays etc.
He might be right about that Tesla is overvalued.

~~~
loceng
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
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.

~~~
panarky
_> 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._

A company's valuation is determined by expectations for the future.

~~~
vanattab
That is exactly my point! There is no reasonable expectation for the future
that would justify investing the current valuation.

~~~
wellboy
Except that Tesla is the currently the strongest player to take the biggest
market in history, autonomous driving with electric cars and Ford isn't.

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patentatt
"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"

~~~
some_random
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.

~~~
eip
> 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
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
Or Ford could shrink to 1/120th of its current size.

------
eloff
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
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
Some people have gotten refunds months late, others have gotten refunds almost
instantly. I think they’re just disorganized.

------
alkonaut
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
> 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
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.

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

------
wellboy
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
TSLA is -8.5% today... and back to 2014 levels.

I think his hedge fund is just fine.

~~~
wellboy
-8.5% on one day is a very weak signal. Next week it's up 8.5% again.

~~~
nopriorarrests
...and as of today, it's -25% in a 3 weeks. Not a weak signal anymore.

~~~
wellboy
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.

------
chollida1
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.

~~~
bob_theslob646
It could also mean that people are selling(writing) options because there is
above avg. volatility and can demand big premiums....

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myko
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
Ask a Delorean owner

~~~
mikeash
I don’t think that’s too informative. Tesla has sold a couple of orders of
magnitude more cars than Delorean did.

------
bobosha
Jim Chanos echoes a similar sentiment

[https://www.cnbc.com/2017/12/14/jim-chanos-we-think-tesla-
is...](https://www.cnbc.com/2017/12/14/jim-chanos-we-think-tesla-is-worth-
zero.html)

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

~~~
paxy
Because any article about Tesla/Elon Musk is guaranteed to generate clicks.

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cryptoz
> 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_
> 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
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
>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.

