Tesla CFO's Unexpected Exit - Shortseller

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 unexpected departure of Tesla's CFO. This departure adds to the list of sudden and unexplained departures of Tesla CFOs. One possible explanation for this trend is Elon Musk's alleged dishonesty and involvement in securities fraud. It is speculated that Musk may not want CFOs who can honestly manage the company's finances, as his personal compensation relies heavily on their results. It is also suggested that the latest CFO may have decided to leave after accumulating a significant amount of money from the company and wanting to enjoy it freely instead of being behind bars.

Another reason for the CFO's resignation could be linked to the revelation of a massive consumer fraud regarding the range of Tesla's cars and Musk's alleged theft of company assets to build his own house. Both of these issues are currently under investigation by the Department of Justice. Additionally, in May, a German publication revealed a safety cover-up by Tesla, which may have also contributed to the CFO's decision to resign. Regardless of the specific reasons, it is believed that Musk will face consequences for his actions.

In July, Tesla reported its Q2 earnings, which once again highlighted the company's status as a low-margin car manufacturer that needs to continuously reduce prices to maintain delivery volume. Musk indicated on the conference call that the price-slashing would continue, as seen in August in China. Instead of discussing the report in detail, the commentary includes a few tweets that provide insights into the situation.

Tesla recently announced that it will open its U.S. charging stations to cars from other manufacturers, who will adopt Tesla's connector and charging protocol. This move may cost Tesla more in lost auto sale profits than the potential profits from charging, as competitors will also adopt the protocol without paying Tesla for it. The commentary questions the validity of any increase in Tesla's stock price attributed to this development.

The commentary goes on to highlight the increasing competition Tesla faces in the electric vehicle market. Many other companies 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 competition from various models in different segments. The competition is not limited to electric vehicles, as traditional car manufacturers are also entering the market with their own electric models.

The commentary draws a comparison between Tesla and Blackberry, suggesting that Tesla is becoming obsolete in the market as newer and better versions of electric vehicles emerge. The author believes that Tesla's market share will be taken by competitors, leading to a significant decline in Tesla's stock price.

The NHTSA has initiated a recall of Tesla's "Full Self Driving" feature, and investigations are being conducted into Elon Musk's involvement in fraudulent promotional videos. The potential liability for Tesla in terms of refunds could amount to billions of dollars. The commentary also questions Tesla's claims about proprietary battery technology and highlights the company's reliance on external suppliers for batteries.

In conclusion, the commentary provides an overview of Tesla's current challenges and the increasing competition the company faces in various aspects of its business. The author suggests that Tesla's stock price will decline significantly as its shortcomings become more apparent.

Source: Stanphyl Capital

FutureCar Staff