I will say one thing about Teslas. They are fast. There is no doubt about that, and in my world that counts for a lot. Unfortunately Tesla is also a very crony company, and has long lived off of subsidies and special deals supplied by you and me. For this reason I could never own a Tesla in good conscience. Of course I can say the same for GM and Chrysler.
In fact, Thompson says if his prediction comes true, his fund could surge by another 50%. With that in mind, he says he’s investing $500,000 of his own money.
“Tesla, without any doubt, is on the verge of bankruptcy,” he told clients in an email over the weekend. He explained that funding will be hard to come by in the face of problems in delivering the Model 3, declining demand for the Model S and X, extreme valuation and a likely downgrade of its credit rating by Moody’s from B- to CCC.
“As a reality check, Tesla is worth twice as much as Ford [estimate of the enterprise value of both companies], yet Ford F, +0.23% made 6 million cars last year at a $7.6 billion profit while Tesla made 100,000 cars at a $2 billion loss,” Thompson said. “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’ve never seen anything so absurd in my career.”
Tesla declined to comment on Thompson’s views.