Posted on 03/26/2018 9:39:49 AM PDT by SeekAndFind
Just a few days ago, shareholders of Tesla approved an almost comical pay package for their cult leader CEO Elon Musk that could potentially put $50 BILLION in his pocket over the next decade.
Let’s put this figure in perspective: at $5 billion per year, Musk would make more than every single CEO in the S&P 500. COMBINED.
In other words, if you add up the salaries of all the CEOs of the 500 largest companies in America, it would still be less than the $5 billion per year that Mr. Musk stands to earn.
That’s pretty astounding given that Tesla’s own 2017 4th quarter financial report (page 24) states that Elon “does not devote his full time and attention to Tesla”.
Or more importantly, that under Musk’s leadership, Tesla’s chronic financial incompetence has racked up more than $4.97 billion in operating losses for its shareholders.
Or that the company has been under SEC investigation (without bothering to disclose this fact to shareholders).
Yet they saw fit to reward him with the largest CEO pay package in the history of the world.
This is precisely the type of behavior that is only seen during periods of extreme irrationality when financial markets are at their peak... and poised for a serious correction.
I’ll close this brief letter today quoting John Thompson, Chicago-based value investor and Chief Investment Officer of Vilas Capital Management.
Thompson is one of the few hedge fund managers who has consistently outperformed the market, and his fund is betting big against Tesla. What follows are some passages about Tesla from Thompson’s recent investor updates:
I think Tesla is going to crash in the next 3-6 months. . .
. . . partially due to their incompetence in making and delivering the Model 3, partially due to falling demand for the Model S and X, partially due to the extreme valuation, partially due to their horrendous finances that will imminently require a huge capital raise, partially due to a likely downgrade of their credit rating by Moody’s from B- to CCC (default likely) which should scare their parts suppliers into requiring cash on delivery (a death knell), partially due to the market’s recent falling appetite for risk, and partially due to our suspicions of fraudulent accounting activities, evidenced by 85 SEC letters/investigations and two top finance people leaving in the last month. . .
Tesla, without any doubt, is on the verge of bankruptcy.
The company cannot survive the next twelve months without access to capital from Wall Street Banks or private investors.
We estimate that Tesla will need roughly $8 billion in the next 18 months to fund operating losses, capital expenditures, debts coming due, and working capital needs.
However, it appears that due to past SEC investigations and current investigations (which terrifyingly have not been disclosed by the company), it will likely be difficult for Tesla to access public markets.
According to a recent analyst report, there have been 85 SEC requests for additional information and disclosures in the last 5 years.
This compares to Ford Motor Company’s total of zero over the same time frame. This means that Tesla is pushing many, many boundaries.
When a company is under formal investigation, it is difficult, if not impossible, to raise capital from public markets as these investigations must be made public, which generally craters the equity and debt values.
Therefore, Tesla investors better hope there are a number of Greater Fools in China or elsewhere to keep the company solvent.
At some point, the music stops and there aren’t any open chairs.
No matter how good a social investment makes you feel as it is going up, extreme anger will result if most or all of your money is permanently lost, especially when it is due to false and misleading statements by senior company officers.
This is when the [Department of Justice] steps in and escorts untruthful managements to their new living quarters.
. . . As a reality check, 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 have never seen anything so absurd in my career.
Yeah, but did you see those two boosters land side by side?! Awesome.
Sure, Tesla can’t succeed, but it’s fascinating stuff.
The amount of energy it takes to drag a two ton car down the road is massive. Imagine our power grid trying to cope with half the customers plugging in their electric car every night. :)
But some day electric will work. We just don’t have the tech yet.
bmrk
Quick Tesla, set up another meeting like the one below. Because sometimes one genius isn't enough. You need two geniuses working together.
preston tucker was ruined
DeLorean 2.0?............................
Have been saying this for many multiple months. Musk is a carnival barker who scammed billions from US taxpayers via Obama.
I have been constantly amazed at how the Millenial crowd just revere this guy. And anytime someone points out the obvious about Tesla or things related to Musk and they are completely triggered. Weird.
Not saying Musk hasn’t done some good, he has, especially with Space X, but again, little of his own money have ever been used, almost all of it scammed (IMO) from taxpayers. At some point the day of reckoning will come. Now that Obama is gone, and Hillary is out, that day is now approaching sooner rather than latter.
I have noted that Musk recently publicly said some very complimentary things about Trump. To me, this was a big tell.
I think there’s quite a lot of doubt
who is this dork?
SpaceX can’t be far behind.
All money eventually making its way to DNC.
Too big of a phony space show to fail.
In fact the cars are awesome. Model S 85 is probably the best ride I rode and it is not the best Tesla. Beats everything unless you are into long journeys.
This solar radiation heats the space near Earth to 393.15 kelvins (120 degrees Celsius or 248 degrees Fahrenheit) or higher, while shaded objects plummet to temperatures lower than 173.5 kelvins (minus 100 degrees Celsius or minus 148 degrees Fahrenheit) And any one believing that a Tesla car can hold together for pictures in space is an idiot.
One thing I have to say in Musk’s favor, he’s one of the best ever at building personal wealth.
He’s making more off Tesla than all CEOs in the S+P 500 combined!
And that’s not the only place he makes money. Guy is a wealth machine.
It was my understanding that Musk ie Tesla paid the US Gov loan back in full.
Stupid.
Yes, Musk’s POTENTIAL pay is also absurd. But guess what: If Tesla goes under, Musk doesn’t get paid, so using that money as a basis for saying Musk’s salary will bring down Tesla is nonsensical.
Yes, Must isn’t devoting his full attention to Tesla. But that’s why the crazy high pay: to motivate him to do so.
Yes, not only is Tesla valued at twice what Ford is, but there’s no hope that Tesla will ever build as many cards as Ford. But that’s OK. Anyone discussing Tesla publicly shouldn’t be so jaw-droppingly ignorant as not to realize that Tesla isn’t a car maker; they’re a battery maker. The cars are little more than a showcase for their battery technology.
Undisclosed SEC investigations? Gosh, why don’t you disclose them? Oh, there are past SEC investigations that went undisclosed? Yet Tesla is still around.
I’m not big on investing in Tesla right now. Recognizing that they’re in the business of energy storage, and that’s going to be the 21st century’s breakthrough industry, I don’t think Tesla has bet on the tech that is going to lead the industry. Solar farm power is so much cheaper than rooftop power for applications that don’t HAVE to be distributed (like cars and remote outposts), I don’t see distributed going much BEYOND cars and remote outposts. And for utility-scale power-generation, I believe the market will ultimately belong to capacitors or batteries that don’t need rare-earth metals.
But this makes stupid arguments to stay away from Tesla.
Is Musk ridiculous salary some kind of scam to take the company private?
“Beats everything unless you are into long journeys.”
So does a dragster and they’ve been around a long time.
The writer was quoting John Thompson, who is apparently the Chief Investment Officer of Vilas Capital Management.
He lays out his reasons for thinking that Tesla is on the brink of failure. It appears that without another huge infusion of taxpayer funds and/or private money, they are in serious financial trouble.
Too bad Elon is addicted to govt money
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