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Over the past year, Elon Musk has waged a bitter war with the short sellers, investors who bet billions of dollars that Tesla will fail.
On Twitter and in interviews, he calls them haters and jolts, who know little about electric cars. He accused them of spreading false information and amplifying negative information about Tesla in the hope of lowering his course. According to Musk, their goal is nothing less than the destruction of Tesla.
George Noble does not fit this description. Director of his own hedge fund, Noble Capital Advisors, he rarely comments on Tesla in public or on Twitter, and comes with an impressive pedigree. He has been following and investing in automobile companies for almost 40 years. He began his career as a car analyst and fund manager at Fidelity in the 1980s.
"I'm not one of those superficial people who tweet rubbish on Twitter," said Noble, 61. "I have followed this area for a long time. I am not a pirate who throws bombs.
There is no doubt that Tesla and Mr. Musk, the CEO of the company, have a lot of critics, especially on Twitter, where some critics deceive the vitriol and unfounded information about the company and its activities. But many who believe that Tesla is destined for a major restructuring – or even a collapse – are investors out of breath. They base their point of view not on the antipathy for Tesla or Mr. Musk, but on unrestrained financial calculations, including its heavy debt and burning cash.
"It's not just Musk," said Mark B. Spiegel, Managing Partner of Stanphyl Capital, which is in a leading position bypassing Tesla. "This is a terrible capital structure, because of the debt, and a disappointing stock price in relation to the demand for the product and the competition".
Spiegel said he spoke to "educate people" about Tesla's finances. "I'm only presenting facts that contradict Musk's claims," he said. "We do not make any reasons to short-circuit anything."
Tesla has not responded substantively to a request for comment for this article.
Here are some of the reasons that skeptics, like Mr. Nobel and Mr. Spiegel, propose for their position.
Unlike Mr. Noble, Mr. Spiegel tweets regularly about Tesla and does not hide his skepticism about society and Mr. Musk. He admits that his fund was "slain" by the rise in the stock price of Tesla in the second quarter, but believes that his short position will eventually pay.
The main reason why Tesla is the shortest stock on Wall Street is its valuation of $ 50 billion. Until the recent decline in its stock, Tesla was worth more than General Motors. But in 2017, G.M. sold 9.6 million cars and trucks and realized a pre-tax profit of $ 12.8 billion. Tesla sold just over 100,000 cars in 2017 and lost $ 2.2 billion.
Mr Noble said that the image of an unprofitable business with a high market value came back to the era of dot-com, when enthusiastic investors pushed up the prices of start-up stocks -ups, without income and without profits.
"It's not that I do not like Tesla," he said. "Cars are cool – the acceleration, the torque." But a troubled and highly leveraged company with a valuation of $ 50 billion, he said, is "one of the biggest bubbles in the market".
REASON 2
The company burns money
The argument against Tesla almost always quotes his finances – which Mr. Spiegel asserts that the fragile state is often overshadowed by the hype on his cars and by Mr. Musk's own tweets and ambitious ideas, such as a electric semi-trailer and its hope to transport people through underground tunnels networks.
With cars priced at $ 70,000 and up, a company that sells over $ 100,000 a year usually makes big profits. But Tesla is still spending more than it consumes, consuming nearly a billion dollars every three months.
Mr. Musk has promised that a sharp increase in sales of the Model 3 sedan in the current quarter would increase revenues enough to make Tesla profitable and provide the funds it needs, but short sellers are skeptical .
Gabe Hoffman, 41, a partner at Accipiter Capital, who has short-circuited Tesla's earnings, tells how much cash Tesla has and could access quickly and in the short term. Due to its lack of liquidity and all its liabilities, "Tesla seems worse than General Motors a quarter before filing for bankruptcy," said Hoffman.
Beyond the key figures, short sellers report other less visible issues. Vincent Wolters, an individual investor who lives in Zurich and has short-circuited Tesla shares, has written detailed reports showing that costs have increased even if it's more cars – the opposite of what automakers are experimenting with. Sales, overhead, and administrative expenses exceeded Tesla's gross profits in the last two quarters, as they manufactured more cars than ever before.
"For me, this does not look like a good long-term business model," Wolters said.
REASON 3
Elon Musk does not inspire confidence
Mark Cohodes, a former fund manager who now invests alone, has decided to reduce the shares in August an interview with The New York Times in which Mr. Musk was described as alternating laughter and tears in describing an "unsustainable" year that had affected his physical and emotional well-being.
The interview took place after the chief executive tweeted that he was planning to take Tesla privately at $ 420 per share and that the "secured financing" had prompted the Securities and Exchange Commission to determine whether it would be necessary for the company to do so. he had misled investors. Two weeks later, Mr. Musk smoked marijuana during an interview broadcast on YouTube.
The head of any business must be disciplined and "perform at a high level," said Mr. Cohodes. But the series of recent events has convinced him that Mr. Musk is "not fit mentally" to successfully meet all of Tesla's challenges. "I consider Elon a tragic person," he added.
The New York Times, citing three people familiar with the thinking of board members, reported last month that some had been alarmed by what they saw as Musk's erratic behavior. But after the reversal of his plan to privatize the company, the independent directors – apart from Mr. Musk and his brother – said, "We fully support Elon as he continues to lead the company into the future."
REASON 4
There are questions about the demand for Tesla cars
For Mr. Noble, the biggest doubt about Tesla is whether consumers actually claim to buy their cars. The company reported that more than 400,000 people have made deposits of $ 1,000 each to reserve the model 3.
"This suggests that every car they make has a paying customer waiting for it," Noble said. "This is the heart of Tesla's story. That's why people buy the stock because it seems like their demand is unlimited. "
But some recent Tesla actions suggest that this might not be the case. On the weekend after Labor Day, he organized a "sales event" at his Fremont, Calif. Plant, allowing deposit-holders to walk among several hundred cars and pick one to buy. Hundreds more have been stationed for weeks on the Burbank and Lathrop fields in California.
On Friday, Tesla sent an e-mail to customers and deposit holders inviting them to test a Model S or X overnight – the type of marketing event that automakers are organizing to increase their sales.
"This inventory," said Mr. Hoffman. "Everything they produce is supposed to be delivered or in transit to the customer. If there is nothing wrong with the demand, why are there all these cars in Burbank? Something is not added.
Asked about the doubts about the inventory, as well as the finances and demand of Tesla, the chief spokesman of the company, Dave Arnold, answered Saturday a sentence: "We will contact you again. soon. "
Italics emphasizing the adverbial form of "short" have been left to interpretation. Sunday night, Tesla had not reacted more.
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