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The Palo Alto-based carmaker — which reported its first loss on an adjusted basis since the second quarter of 2018 — had significant issues that began at the top, Accipiter Capital Management Founder Gabe Hoffman told Yahoo Finance’s The Ticker.
“The biggest issue for the stock is that Elon Musk — basically the lying magician — is not able to tell investors or his, you know, cult followers, ‘OK, here's this bright shiny object in the future like a Tesla Semi or like a million Robo taxis’ like he was saying yesterday, or like an auto insurance company a month from now, like he said on the conference call,” Hoffman, who noted that Tesla is his firm’s biggest short, told the Ticker (video above). “Just blatant lies. People have stopped believing them.”
Hoffman added that the company was, in his opinion, toast despite its best efforts.
“They're starting to focus on the actual business and the business has completely collapsed. Demand has declined very significantly in the U.S.,” Hoffman said. “And even when people knew the units number, because they disclosed that on April 3, the company still missed the revenue number by 11% because the pricing has gone down so much to move metal.”
‘No pilot on the plane’
Hoffman’s not alone in making this call.
Fellow short seller and Muddy Waters founder and prominent bearish investor Carson Block previously told CNBC that “at the end of the day, just don’t think that the company is ever going to achieve the kind of scale necessary to be able to compete with the competition that is coming on line in electric vehicles.”
Former hedge fund manager and Empire Financial Research Founder Whitney Tilson also added his voice to the chorus earlier this month after the company lowered its guidance.
“I had actually been telling all my short-selling friends it was a bad short for a couple of years. You just didn’t want to get in the way of a very open-ended growth story,” Tilson said in an interview with Yahoo Finance’s On The Move. “But then the early indications — this big Q1 miss — was not a surprise to anyone who’s really doing the work. The evidence was all there.”
So he reversed his position, he said, and decided: “This is the beginning of the end for Tesla.” He also predicted the stock would sink to $100 by the end of the year.
‘Tesla needs to file bankruptcy’
The pessimism is spreading rapidly. Another former Tesla bull, Wedbush Securities Managing Director of Equity Research Dan Ives, downgraded the stock to neutral after the earnings call on Wednesday.
“I’ve covered a lot of companies, and seen a lot of ups and downs. I think last night was really out of a sci-fi movie in terms of that quarter … and the guidance,” Ives said in an interview on The Ticker. “There’s no pilot on the plane to navigate through the turbulence.”
Ives also added in a note that he was “throwing in the white towel.”
“To be perfectly frank with you, Tesla's balance sheet right now, by basic financial ratios like the quick and the current ratio, which any first year finance or accounting student learns, they're in worse shape than General Motors was six months before bankruptcy,” Hoffman stressed. “I believe Tesla needs to file bankruptcy to even have a chance at continuing their business.
“There's simply, I believe, no light at the end of the tunnel for these guys, and I believe the stock will collapse and may collapse very soon.”
Aarthi is a writer for Yahoo Finance. Follow her on Twitter @aarthiswami.