Mark Spiegel talks Tesla at Kase Learning webinar on short selling
Overall Thesis
Mark Spiegel at the Kase Learning short-selling webinar (Sept 23, 2018), hosted by Whitney Tilson. Two specific timebound forecasts: TSLA 90% lower within 12 months, and a 'busted growth story' valuation collapse by mid-2020. Position moved from 2020 to June 2021 puts.
Narratives
Tesla checks every box for a short: promotional/lying CEO, terrible business model, encroaching competition, no real bull case. Q1 2018 S/X already down double-digits both sequentially and YoY before luxury EVs arrive. Model 3 reservations running out — the all-wheel-drive backlog gone so fast that new orders ship in 3 days. Build-vs-buy for a would-be acquirer: ~\$5B for a clean-sheet state-of-the-art EV program vs \$60B+ debt-laden Tesla with hundreds of thousands of promised free-lifetime supercharger sessions as a liability. Position rolled from January 2020 to June 2021 LEAPs — bet is Plan A fast bankruptcy OR Plan B valuation collapse to ~\$0 equity as luxury EVs hit showrooms and the auto-multiple resets.
Key Arguments
- S/X unit sales down double-digits sequentially and YoY in Q1 2018 — the higher-margin backbone is shrinking before luxury EV competition arrives
- Audi e-tron (~\$8K cheaper than cheapest Model X), Mercedes EQC (~\$18K cheaper), Porsche Taycan (2019), Jaguar I-Pace already in showrooms
- Rear-wheel-drive Model 3 backlog is gone; even all-wheel-drive Model 3 orders now ship in 3 days — demand story is over
- Tesla factory has lowest productivity and worst quality of any major car factory; reporters hidden from the tent in the back that's hand-building cars
- DOJ + SEC investigations likely make a registration statement impossible without disclosures that would themselves collapse the stock
- Over \$10B debt + ~\$20B of long-term purchase commitments (mostly Panasonic) = \$30B+ of liabilities underwriting any acquirer
- \$5B clean-sheet EV program from a deep-pocketed buyer (~2K engineers × 3 years + state-of-art factory) replicates everything Tesla has with none of the liabilities — the build-vs-buy math wipes out equity value
- Model 3 reservation number of 420K almost certainly fabricated — Musk literally picked 420 for his own reasons, same as the take-private tweet price
- Floats dominated by Baillie Gifford, Fidelity, T. Rowe Price — the PMs have no answers for basic mechanical questions (e.g. why cylindrical cells vs prismatic)
- Over 10 senior executive departures in the last year leaving millions in unvested stock behind — pattern only previously seen at Enron and Valiant per Chanos