- Stanphyl Capital says Tesla is the ‘biggest single stock bubble’ and may go to zero.
- The firm has been betting against Tesla since 2014 and lost more than $1 million shorting the stock.
- Despite a slump last week, Tesla stock remains up more than 50% year-to-date.
Tesla (TSLA) perma-bear Mark Spiegel unleashed yet another brutal assessment of the electric car company and founder Elon Musk, who he called a fraud and a liar. In a February letter to investors, Spiegel said the stock may go to zero.
We remain short Tesla Inc. (TSLA), which I still consider to be the biggest single stock bubble in this whole bubble market.
His firm Stanphyl Capital remains stubbornly bearish, despite losing more than $1 million shorting the stock since 2014.
We’ve lost a lot of money.
Tesla going to zero?
In a viciously worded note, Spiegel listed numerous reasons for his bearish call. He predicts that Tesla’s ‘awful balance sheet’ will return to losing money again later this year and that competitors will quickly catch up.
In summary, Tesla is about to face a huge onslaught of competition.
He points out that Tesla sells 400,000 cars per year while Ford, GM and Fiat-Chrysler sell millions. The existing companies also have a better ‘moat’ with existing production and distribution channels.
Spiegel saves his most damning assessment for Elon Musk himself. Citing the departure of Tesla executives, he says:
They’re likely leaving because Musk is either an outright crook or the world’s biggest jerk to work for (or both).
Elon Musk a ‘pathological liar’
Spiegel also called Musk a liar for flip-flopping on the claim that it “doesn’t make sense to raise money”. And if that wasn’t enough, he believes demand for the Model Y is poor and the Cybertruck is a ‘joke’ of a pickup truck.
Cash-burning Musk vanity project is worth vastly less than its over $130 billion enterprise value and—thanks to nearly $30 billion in debt, purchase and lease obligations—may eventually be worth zero.
Ouch.
Spiegel lost $1 million shorting Tesla
It’s been a painful few months for TSLA bears. The stock climbed 415% from June’s lows last year to February’s $917 high.
Spiegel admitted his firm lost over $1 million betting against Tesla and was forced to trim the position.
[It was] at 20% of the fund, sometimes a third of the fund, and I slashed it back today because [the stock price] is just so decoupled from reality.
At one point, Tesla shorts were down $8.31 billion in 2020 alone.
The TSLA bull case?
While Spiegel sees Tesla going to zero, other analysts still see plenty of upside. James Stephenson thinks strong 2020 deliveries will propel Tesla stock to $2,622 – a 227% increase from the time he wrote the note.
And who can forget Ark’s ultra-bullish $4,000 call? A price target they maintain is a conservative estimate, based on Tesla’s four-year head start on the competition.
Still, Spiegel was cheerful that his short position paid off in February as coronavirus panic struck the markets. The firm said the stock’s decline made for a ‘refreshing change’ and the fund finished 1% higher on the month.
This article was edited by Samburaj Das.
Last modified: March 3, 2020 1:21 PM UTC
