Mark Spiegel's presentation on Tesla (TSLA) at the Kase Learning conf on short selling, 5/3/18.
Overall SentimentBearishStrength: 95%
Overall Thesis
Mark Spiegel's Kase Learning short-selling conference presentation arguing Tesla equity is worth zero, driven by worsening financials, collapsing moat, incoming luxury-EV competition, and chronic executive credibility issues.
Narratives
TSLATesla
Strongly BearishTesla equity is worth zero. Q1 2018 financials are catastrophic (GAAP loss of $760M, over $25K lost per car), the competitive moat is collapsing as 14+ luxury EVs from Jaguar, Audi, Porsche, Mercedes, BMW, VW arrive in 2018-2020, the Panasonic Gigafactory is effectively a capital lease (and solid-state batteries will obsolete lithium-ion by the mid-2020s), Model 3 cannot be profitably built at the promised $35K base price, and Elon Musk has a long public track record of misleading statements.
Key Arguments
- Q1 2018 GAAP loss excluding ZEV credits was $760M — over $25,000 lost per car sold
- Negative net working capital of ~$2.3B and Q1 free cash flow of negative $1B
- 14+ luxury EVs from Jaguar, Audi, Porsche, Mercedes, BMW, Volkswagen arriving 2018-2020 at comparable or lower prices, many with interiors well beyond Tesla
- Tesla's $7,500 US tax credit expires late 2018 while competitors' credits are just beginning — pricing pressure will be intense
- Panasonic's so-called Gigafactory investment is a capital lease of equipment back to Tesla; Panasonic will happily sell the same cells to competitors
- Solid-state batteries by the mid-2020s will fully obsolete lithium-ion and Tesla's Gigafactory
- Tesla ranked dead last in autonomous driving by Navigant; three autopilot program leads have departed in ~18 months
- A base Model 3 costs mid-$40Ks to build — Tesla cannot sell profitably at the $35K price it promised; Bernstein says only ~30% of owner reservations converted
- Multiple lawsuits, SEC disclosure issues, and a long history of missed Musk profitability promises compound the 'can't be trusted' thesis
Predictions (1)
Bear
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