Valeant short selling bets on Tesla


(James Drake) #1

Short seller Fahmi Quadir, bet against the drugmaker formerly known as Valeant Pharmaceuticals around its peak in 2015, is now betting on a dramatic drop in Tesla Inc. shares

Is this worrying to anyone? This is an exceptionally sharp woman and at such a young age is yet to be disproven. When Tesla comes onto FT I want to go for it, I have a huge affinity for Tesla but I don’t want to be blinded by my admiration for it and ignore any shortfalls.

Thoughts

https://www.bloomberg.com/news/articles/2018-10-09/short-seller-who-foresaw-valeant-crash-now-bets-on-tesla-falling


(Alex Sherwood) #2

Interesting! Quadir’s great, I’d recommend the ‘Drug Short’ episode from Netflix’s Dirty Money series if anyone’s not familiar with her.

The legendary David Einhorn’s another short seller who’s shorting Tesla at the moment - cue banter on twitter.

What Elon’s trying to do with Tesla is obviously insanely difficult (especially while he’s CEO of SpaceX etc. too) but he’s clearly done the maths & figured out that it’s possible to make it work. I can see the logic in her thesis but her predictions don’t look like a certainty..


(Harry) #3

Good link :slight_smile:

I think first up, a lot of whtvshe says is accurate. It is in a difficult position and has been for a long time. It’s priced for growth and therefore very volatile and vulnerable to bad news.

She’s taking a short term view (you don’t stay short for long!) and in her own words this is a ‘low conviction’ play. Somewhat opportunistic perhaps, and she might be correct and cash out in profit.

In the long term though, I think Tesla is a company that has a lot of cutting edge innovation and disruptive tech. If they can stay profitable for long enough I think they’ll come good. It’s risky for sure but I personally think they’ll crack it, Musk has so much at stake with this and has been in these situations before with both Zip2 and eBay/x.com, which I think will make a huge difference.


#4

Tesla could have around $900M+ of debt to pay off within the next 5 weeks. I imagine that’ll hit them quite hard.


(James Drake) #5

Dirty Money is something I’ve seen before and have it on in the background at the moment which is what reminded me of her :slight_smile:


(James Drake) #6

The issue with their tech is that plenty of it is open source and patent free for others to use.


(Dave Smith) #7

I’ve said on here before I think Tesla is way overvalued, I don’t think it will fail completely, and I think shorting them them is too risky. But it wouldn’t surprise me if they dropped a lot

I watched a video on youtube the other day where an engineering company completely stripped a Model 3 and examined the components. They basically said Tesla had the best motor, battery and battery controller on the market. But the car body itself is way too complex and expensive to build compared to other seasoned car manufacturers.


(Harry) #8

Yes agree in terms of software. I think their real value is in their battery technology, which isn’t open source.

I view Tesla as a battery hardware company currently, their vehicles are just their route to market. Battery in vehicle, battery in home, and industrial battery plants. My opinion :slight_smile:


(Dave Smith) #9

Panasonic make their batteries


(James Drake) #10

I think Tesla wins long term because of millennials and gen-z. Every influencer, every youtuber, streamer etc see’s Tesla as THE car to own. Kids don’t really brag about their mercs or BM’s anymore ha


(Harry) #11

I understand what you are trying to say here, but it is a bit like saying Apple doesn’t make/design the iPhone. Do they make it all in house? No. But they are co-designing the battery as custom, rather than using a pre-packaged one.
Example: https://electrek.co/2018/11/13/tesla-battery-cells-improved/


(Dave Smith) #12

Interestingly Panasonic have announced a partnership with Toyota to produce batteries. In theory they shouldn’t be able to use any of Tesla’s intellectual property without permission so they can’t just copy the batteries.

I wonder how good the toyota ones will be? My main reason for doubting Tesla is I think other manufacturers are going to catch up quickly on the tech, then use their superior car building knowledge to build equivalent cars cheaper

I don’t doubt Tesla will survive, I just doubt they will become one of the world biggest car manufacturers, but they are already priced as if they were one of the biggest


#13

Are gen-z actually going to own cars?


(James Drake) #14

Of course they are. Very different than now but ultimately still cars in a way in which we know


(Alex Sherwood) #15

I’m not sure, I’m optimistic that they’ll (we’ll) be riding in fleets of autonomous, shared vehicles but someone still has to make the cars.


(Dave Smith) #16

I’m not convinced people want to ride in autonomous shared cars, that’s just taxi’s for anti social peope :smiley:


(Alex Sherwood) #17

I’m imagining them being shared in the sense of multiple people using the same vehicle, rather than people who you don’t know being in it at the same time as you. So you get the best of both worlds :grin: with the risk of some potential downsides too of course.


(Kenny Grant) #18

Not for long, I suspect the agreement with Panasonic is just a stop-gap.

Interesting how volatile this stock is - opinions seem to vary wildly on whether Tesla will survive. I think if they get through this year, they’ll be pretty difficult for established car makers to beat, mostly because of Musk’s attitude to established industrial practice (proven out at spacex) - it’s most definitely not business as usual, and is taking very big risks and will continue to do so, but I’d be surprised if Musk lets it fail at this point.

Tesla stock is on sale at the moment - down 12% in the last day :slight_smile:

This is a really good question. I haven’t owned a car for decades - if you live in a large city there is little need, and the population will be moving to cities. I suspect other markets like China and India though will prove lucrative for some time with an emerging middle class, and of course everyone will use transport, it’s just a question of who owns it (perhaps car companies will eventually become transportation companies and lease out or even manage taxi fleets).


(James Drake) #19

It’s still not on my Freetrade? Thats the same for everyone right? I keep saying stuff about US Stock and some screenshots of people getting US Stocks.


(Kenny Grant) #20

They’re in testing with a few people today, think they’ll come to everyone soonish (in a week?).