Tesla CFO's Mysterious Exit - What Really Happened

author: FutureCar Staff    

Stanphyl Capital recently released their commentary for the month of August 2023, discussing their short position in Tesla Inc (NASDAQ:TSLA).

One of the major news items from August was the sudden departure of Tesla's CFO. This departure adds to a series of sudden and unexplained departures of Tesla CFOs. One possible explanation for this trend is Elon Musk's questionable character, as he has been labeled a pathological liar and securities fraudster. It is suggested that Musk may not allow his CFOs to run the books honestly, as his personal compensation depends on their results. It is speculated that the latest CFO may have decided to resign after accumulating a large sum of money from the company and wanting to be free to spend it. Another theory is that the resignation may be linked to investigations by the DOJ into a massive consumer fraud regarding the range of Tesla's cars and Musk's alleged theft of company assets to build his own house. Additionally, the CFO may have quit due to a safety cover-up revealed in May. Regardless of the reasons, it is believed that Musk will face consequences for his actions.

In July, Tesla reported its Q2 earnings, which further solidified its position as a low-margin car company. To maintain delivery volume, Tesla has been forced to continually slash prices, a trend that Musk hinted would continue. The report received mixed reactions, with some experts expressing skepticism. Tesla's "energy business," which accounted for only 6% of revenue in Q2, is in an extremely competitive, low-margin industry. Moreover, Tesla's decision to open its U.S. charging stations to cars from other manufacturers may cost the company more in lost auto sale profits than it gains from charging profits. Tesla's stock price increase attributed to this move is seen as unfounded. Furthermore, Tesla's product edge has diminished, as many competing cars now offer comparable or better features. Tesla's rankings in reliability surveys have also declined, and it is no longer the top choice for many EV buyers. Competitors such as Hyundai, Kia, Ford, Cadillac, Nissan, Audi, BMW, Mercedes, Chevrolet, Volvo, Polestar, Porsche, and BMW are offering superior electric vehicles.

Stanphyl Capital believes that Tesla is following the same path as Blackberry, a company that was once a leader in its industry but was eventually replaced by newer and better versions of its product. Competitors such as VW Group, Hyundai/Kia, Ford, GM, Stellantis, BMW, Mercedes, BYD, Toyota, Nissan, Honda, and Chinese automakers are gradually taking away Tesla's market share and causing its stock price to decline. The NHTSA has initiated a recall of Tesla's "Full Self Driving" feature, and the company may face massive refund liabilities if a class action lawsuit proves that customers purchased the cars solely based on the promise of full self-driving capabilities. Tesla's so-called "autonomy technology" has been proven to be inferior to competitors' systems. Additionally, Tesla's claims of proprietary battery technology have been debunked, as the company purchases batteries from Panasonic, CATL, and LG. If new-format 4680 cells enter the market, other manufacturers will also have access to them.

Overall, Stanphyl Capital maintains their short position in Tesla and believes that the company's stock will be valued as "just another car company" in the future.

Sources: Stanphyl Capital

FutureCar Staff