Only a few investors and markets analysts wondered in recent months why a company such as Tesla would be valued at such a high public price while it continuously fails to reach its targets (1). “There’s something wrong there (and) I’m not a fan,” said famed short seller and founder of Kynikos Associates (KA), Jim Chanos in an interview (2) with Schechter in Detroit (USA).
In fact Tesla and SpaceX CEO and founder Elon Musk is an icon for this bull market, he’s the “poster child”, Chanos added. In short, Musk has “succeeded in a public vehicle to keep selling a dream and when the dream was kind of become a little bid mundane he sells you the next dream but he’s raising lots and lots of money,” explained Chanos who strongly believes that since it’s in a capital intensive business, Tesla is definitely struggling and losing money selling its USD 100,000 cars.
“The response now is to tell you he’s got a semi coming out in 2019 and a roadster coming out in 2020 both of those I believe are not true, he would have to have the production lines already approved for those, they’re not approved anywhere that we can find,” the short seller added.
Moreover, Chanos said, the SolarCity acquisition of which KA was short “was going bankrupt” because “they got the market wrong” and “out of the blue Musk decided Tesla should buy SolarCity for USD 8 billion” although SolarCity “was losing USD 300 million in negative EBIT a year before the debt service and depreciation.”
In the end, “Musk basically saved his own equity investment by having Tesla buy him out which I just think is abhorrent,” said Chanos.
As for Tesla’s future, Jim Chanos thinks Elon Musk is gonna leave Tesla within a couple years and move over to SpaceX. “He will start selling stock once he becomes the non-executive chairman and my own view is he’ll just sort of leave it to his number two and he’ll be able to say later that was fine when I left it,” said Chanos.
That’s the message from the latest cover of the Rolling Stone magazine as Musk “is getting the world ready for the lateral move over SpaceX, (and) he’s gonna hit the parachute before the shareholders do,” warned Chanos.
(1) Tesla’s Production vs. Tesla’s Targets, Bloomberg.
I think it’s unfair to compare the two, but it is what it is. pic.twitter.com/yx0k71D0YT
— Walter White House (@christiankinney) 14 mars 2018
(2) Jim Chanos: Short Selling Investment Strategy and Philosophy, Investors Achive, 3/4/2018