Seven months after Tesla bear and former Kase Capital Management hedge fund manager Whitney Tilson said Tesla Inc (NASDAQ: TSLA) would not be profitable in any quarter of 2019, his misfire is costing him $15,000.
Back in March, Tilson bet Citron Research founder Andrew Left and a group of other Tesla bulls $10,000 that Tesla would not turn a profit this year.
Tilson Pays Up
On Thursday, Tilson proved he is a man of his word.
“I lost my charity bet with Andrew Left and a dozen other folks that Tesla wouldn't report a positive net income quarter this year, so I'll be donating $15,000 to various charities of their choice,” Tilson wrote.
While he admitted he was wrong about Tesla’s ability to break even, he remains a major skeptic of the stock.
“I suspect the company did classic ‘kitchen sink’ accounting in the first half of the year, whereby it took massive write-downs, and is now releasing the excess to make its third-quarter numbers look better than they really were,” he said.
Tilson said when done correctly, this type of accounting is perfectly legal. However, the financial boosts it provides are short-term in nature and difficult to maintain over time.
Tilson said he is not short Tesla or rooting for Tesla to fail. He also said he takes no credit away from CEO Elon Musk for his engineering accomplishments. He is merely skeptical of Tesla’s business model and its stock’s valuation.
“I write negatively about Tesla not because I’m rooting for the company to fail, but because I think the stock is extremely risky, with more downside than upside, and therefore warn my readers away from it,” Tilson said.
Citron Research has not yet commented on Tesla or the Tilson bet on its Twitter account this week.
If Tesla did use “kitchen sink accounting” to beat expectations in the third quarter, it will likely be exposed in the next couple of quarters. If Tesla can maintain its profitability through the early part of 2020, Tilson may be forced to once again admit he misjudged the electric car maker.
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