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Behind the video

Whitney Tilson & Mark Spiegel discuss Tesla, Kase Learning seminar, 9/27/18

The thesis, the calls, and the words behind them. Play a quote to hear it in the original video.
Empire Financial ResearchEmpire Financial ResearchSep 28, 2018Watch on YouTube
Overall SentimentBearishStrength: 95%

Overall Thesis

Whitney Tilson calls Mark Spiegel on the day SEC charges Musk over the $420 tweet. Mark puts 80% odds on Tesla bankruptcy filing in the next year and 90% odds the stock trades under $100 within a year.

Narratives

TSLATesla
Strongly Bearish

The SEC just filed fraud charges against Musk over the $420 take-private tweet, no investment bank will raise capital for Tesla given billions in civil-lawsuit liability, Model 3 is a lemon with reliability 4x worse than the next-worst car, and the whole company is dependent on free money in a rising-rate environment. Death-spiral puts at $150 and $100, June 2020 $200 puts, and short common make up the position. Odds of bankruptcy filing in the next year: 80%+.

Key Arguments

  • SEC fraud action against Musk + billions in civil lawsuits means no investment bank will raise capital for Tesla
  • Board is liable under the $420-tweet lawsuits and may not have adequate D&O insurance
  • Model 3 is a lemon — reliability 4x worse than the next-worst car, service centers already overwhelmed
  • Whole nutty market is ending as rates climb; Tesla is 'completely dependent on free money in order to even exist'
  • Plan A is fast bankruptcy from running out of money, Plan B is a busted growth story visible by early 2020 when competitor EVs hit showrooms
  • Comparable: Valiant fell >90% after its initial 50% break — the best time to short valiant was AFTER the Philidor news, by analogy the best time to short Tesla may be right now
  • Strategic buyout, if any, unlikely above $30/share — $10 extremely unlikely even in a buyout scenario

Risks acknowledged

  • Very high short interest puts a floor under the stock (shorts don't all wait for zero to cover)
  • Strategic investor could theoretically inject ~$5B at $15-20/share and spike the stock back to $200

Predictions (2)

BearTarget: $6.67within the next year
Not scoredDetails
Bearin the next year
Not scoredDetails
Analyzed with claude-code-manual | Extraction manual_v1 | Cost: —