Tesla CFO's Unexpected Exit - Delving into the Causes

author: FutureCar Staff    

Stanphyl Capital recently provided commentary on their short position in Tesla Inc (NASDAQ:TSLA) for the month of August 2023. The main highlight of August was the sudden departure of Tesla's CFO, which is not the first time such departures have occurred at the company. One possible explanation for this pattern is that Elon Musk, the CEO of Tesla, may be a pathological liar and securities fraudster. It is speculated that he may not want CFOs who are not "in plain sight" to run the books honestly, as his personal compensation depends on their results. The latest CFO may have decided to leave after extracting a significant amount of money from the company, or due to the ongoing investigations by the Department of Justice into allegations of consumer fraud and asset theft by Musk.

In July, Tesla reported its Q2 earnings, which once again highlighted that the company is now operating as a low-margin car company. To maintain delivery volume, Tesla has been continuously slashing prices, and Musk hinted during the conference call that this trend will continue. The company's "energy business" accounted for just 6% of revenue in Q2 and operates in a highly competitive, low-margin industry. 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 the potential charging profits it may gain.

Competition in the electric vehicle (EV) market has intensified, and Tesla is no longer leading in terms of product edge. Many competing cars now offer comparable or better real-world range, better interiors, similar or faster charging speeds, and higher quality. Tesla ranks poorly in reliability surveys and faces stiff competition from multiple EV models from various manufacturers. In the high-end electric car segment, the Porsche Taycan outsells Tesla's Model S, while other upcoming models from BMW, Mercedes, Audi, and Lucid Air are expected to outperform Tesla's offerings.

Stanphyl Capital has long believed that Tesla is similar to Blackberry, a company that was once a pioneer but eventually became obsolete in the face of newer and better versions of its products. The firm predicts that Tesla's market share will be eroded by competitors, leading to a significant decline in its stock price. Additionally, Tesla's "Full Self Driving" feature has faced scrutiny from the National Highway Traffic Safety Administration (NHTSA) and has been subject to recalls. The potential refund liability for Tesla could be in the billions of dollars if a class action lawsuit proves that the cars were purchased solely based on the promise of "full self-driving."

Tesla's claims of proprietary battery technology have also been debunked, as the company purchases batteries from Panasonic, CATL, and LG. If new-format 4680 cells become available, Tesla may face competition from other manufacturers who can supply these cells. Stanphyl Capital provides links to Tesla's competition in various areas, including cars, autonomous driving, battery cells, and storage batteries.

Overall, Stanphyl Capital maintains its short position in Tesla and believes that the company's stock will be reevaluated as the market realizes its weaknesses and the challenges posed by competitors.

Source: Stanphyl Capital

FutureCar Staff