Fund Manager's Email To Clients: "Tesla, without any doubt, is on the verge of bankruptcy"
According to MarketWatch, who interviewed Thompson, Tesla is just months away from a total collapes. He says Tesla's price hike is an absurd and it's the story that drives the price of the stock (TSLA). Eventually financials should win.
He says it will be hard for Tesla to find funding in the face of the following mounting problems.
First, there are delays with delivering the mass-market Tesla Model 3. In fact, here is what prevents Tesla from producing Model 3 vehicles faster.
Second, the sales of Model S and Model X are declining. If you look at the Monthly Plug-in Sales Scorecard from Inside EVs, you will see that the Model S sales are indeed declining in 2018. Besides number of factors it's probably also the rising competition from Nissan Leaf, Chevy Bolt and others. Making EVs is becoming fashionable now.
Third. TSLA stock has an extreme valuation according to Thompson. Therefore, he assumes that Moody's is likely to downgrade TSLA.
UPDATE: Moody's just lowered its corporate family rating on Tesla to B3 from B2 and changed the outlook to negative from stable.
And finally, Thompson invites us to a reality check. He says "Tesla is worth twice as much as Ford, yet Ford made 6 million cars last year at a $7.6 billion profit while Tesla made 100,000 cars at a $2 billion loss. Further, Ford has $12 billion in cash held for ‘a rainy day’ while Tesla will likely run out of money in the next 3 months. I’ve never seen anything so absurd in my career."
According to MarketWatch's Shawn Langlois, who interviewed Thompson, the apparently tried to reach out to Tesla and the company, the article says "declined to comment on Thompson's views."
TSLA Stock Dives
Few days ago there was a horrific accident and a post accident fire involving Tesla Model X. Here is the post-accident video. Today NTSB started an investigation to see if Tesla's Autopilot was engaged during the fatal crash. TSLA stock dropped 8.22 percent closing at 279.18.
Disclosure: The author of this story has no stocks and no stock positions.