Is Tesla Inc. (formerly Tesla Motors) an elaborate ponzi scheme?

Squeeze your shorts wrote:

Tesla CEO Elon Musk tweeted that he is considering taking Tesla private when shares in the electric carmaker hit $420. The news comes as the Saudi government revealed a huge stake in the company.

“Am considering taking Tesla private at $420,” Musk tweeted on Tuesday, adding that he had “funding secured.”

is it legal for Musk to say what he did without halting the stock first? Is he simply baked and inviting countless law suits? Who is providing the massive debt to a company with billions in negative cash flow? At what rate? Can Musk even do this when he is a top shareholders (and stands to reap huge gains) and his announcement creates a massive conflict of interest? If this is even close to true, TSLA bonds (those without a change of control clause) should be sliding.

Or maybe this is just another attempt by Musk to create a short squeeze and "crush the shorts."

Taking Tesla private would take some pressure off Musk to behave, and would free him from having to deliver quarterly earnings reports, which have so far this year shown losses. Musk has said that he expects Tesla to finally show profits in the third quarter of this year.

Some Tesla Math

Incidentally, Tesla has a free-float of 127.5 million shares. At $420 a share, that would cost you $53.6 billion. The company already has net debt of of $8.8 billion and an adjusted net leverage ratio of 13 times. Were it to be bought in a management-led LBO, a back-of-the envelope calculation would give it a leverage ratio of over 90 times, worse on a trailing 12-month basis. You can't run a company on math like that.

Taking it private allows this con artist to hide from the SEC and Wall Street analysts and the rating agencies. So he can do his commingling of debt and fake income between his two dead companies and his one profitable one, without scrutiny.

It’s a house of cards my friends...and it’s going to collapse.

It doesn't really hurt anyone

other than the VC guys and Musk if it collapses after going private. Shareholders are big winners. And whoever buys the assets will probably continue making great cars.

But bankruptcy seems far-fetched. It's more likely that Musk will be the richest man in the world one day.

And whoever buys the assets will probably continue making great cars.

Econ 101 Reminder: Price is where supply meets demand.

Currently, Musk/Tesla loses money "making great cars" (each and every one), even with huge subsidies, etc.

Whoever ends up stuck with this junk (e.g. bank foreclosure), is not likely to continue operating at a significant loss.

Used Car Salesman Musk wrote:

Taking it private allows this con artist to hide from the SEC and Wall Street analysts and the rating agencies. So he can do his commingling of debt and fake income between his two dead companies and his one profitable one, without scrutiny.

It’s a house of cards my friends...and it’s going to collapse.

Tweets yesterday from Sam E Antar , a.k.a Crazy Eddie .

As a retired fraudster, I have to admire Musk for his latest ploy :-) $TSLA

Crazy Eddie Memoirs: We tried to take the company private at $7/share to coverup our frauds, using other people’s money. Zinn/Palmieri bid $8/share and ended up with a pile of sh*t. $TSLA

Used Car Salesman Musk wrote:

It’s a house of cards my friends...and it’s going to collapse.

And it will be fun to watch.

No business like this wrote:

And whoever buys the assets will probably continue making great cars.

Econ 101 Reminder: Price is where supply meets demand.

Currently, Musk/Tesla loses money "making great cars" (each and every one), even with huge subsidies, etc.

Whoever ends up stuck with this junk (e.g. bank foreclosure), is not likely to continue operating at a significant loss.

1. Tesla doesn't lose money on every car they sell. They spend money ramping up production and make great margins on car sales. Same as any new company.

2. Oil companies and ICE car companies get huge subsidies and bailouts. Tesla's subsidies are temporary and pale in comparison.

webby wrote:

1. Tesla doesn't lose money on every car they sell. They spend money ramping up production and make great margins on car sales. Same as any new company.

2. Oil companies and ICE car companies get huge subsidies and bailouts. Tesla's subsidies are temporary and pale in comparison.

1. I think they are losing $11000 on each car they sell.

They also have rented a huge parking lot in California to store unsold or cars they can't sell.

2. True but that does not make Tesla less of a scam.

I disagree. Look into the engineering and chemistry of a modern lithium based battery. They are extremely prone to fire, just by simply using one dendrites can form inside and once these grow through the thin layers of anode and cathode you get a fire.

Puncturing or bending the battery as in a crash will cause the battery to ignite for the same reason as above. The electrolyte in the battery also tends to be a flammable hydrocarbon based gel or low molecular weight polymer.

Gasoline catches fire if it encounters a spark or the engine overheats, but lithium has those problems on top of being reactive with water, puncturing, bending, high use cycles, temperature of operation etc.

What's the best way to go short Tesla without being on the hook for a ton of $$$ if it backfires?

Musk may be a genius but he's unstable and there are issues with the cars. The cars are amazing when made right -- but a) quality control problems are a big deal in the car business and b) They are very expensive.

So of scenario a) homerun b) falls apart . I'm leading to b) but don't know how to try and make some money on this. If I'm willing to lose $2000 what do i do?

Canada likely to ban TSLA over Saudi row?

TXU quickly went bankrupt after it LBO'd.

The market doesn’t believe him," said David Kudla, CEO of Mainstay Capital Management quoted by Bloomberg, which is shorting Tesla. "His credibility has come into question over a number of things. If this were real, you’d expect the stock to go closer to $420 a share than it has."

https://www.bloomberg.com/news/articles/2018-08-08/for-elon-musk-an-82-billion-gambit-to-silence-telsa-s-critics

If you have a stat that they lose $11,000 on each car, then that still can be subjective based on how they allocate overhead.

Maybe they make $1,000 on each car based on materials and labor but allocate $12,000 in addition to that for factories, leases and administrative fixed costs.

Higher sales volume and lower overall costs could lead to profitability over time.

That said, this move to say he would maybe take the company private at a certain stock price is pretty shady and artificially affects the company value.

It is Ponzi like in that aspect of declaring an artificial value that may require future funky moves to maintain that value.