Tesla On Brink Of Collapse Says Hedge Fund Manager
There are a variety of ways that an economic collapse can begin. One of those ways is by major companies bankrupting and toppling. While Tesla isn’t the global economic driver that Amazon, Apple, and Google are, its collapse would still be rather stunning and it could indicate worse things to come.
Vilas Capital Management’s John Thompson says that’s exactly what Tesla is on the brink of – bankruptcy.
“Companies eventually have to make a profit, and I don’t ever see that happening here,” he told MarketWatch. “This is one of the worst income statements I’ve ever seen and between the story and the financials, the financials will win out in this case.”
Thompson’s firm is so confident that Tesla is doomed that his biggest position is actually that of shorting Tesla. Over the years, shorting Tesla would have led to some pretty drastic losses for Thompson’s $25 million dollar firm, that, however, has not stopped them from consistently taking such a position.
Tesla’s stock hit the $300 point last April which essentially annihilated any entity shorting it, something Tesla CEO, Elon Musk, bragged about on Twitter. Tesla eventually reached the $389 mark.
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“Tesla, without any doubt, is on the verge of bankruptcy,” Thompson said in an email sent to clients. He surmised that Tesla will no longer be able to acquire much-needed funding and may not be able to adequately deliver the Model 3. He also cited lower consumer demand and interest in Tesla products. He also predicts a credit downgrade by Moody’s from B- to CCC.
The whole thing is stacking up in a bad way. If Tesla does indeed file bankruptcy, could it be the start of a larger, more pronounced corporate travesty? Since Trump took office, the economy has certainly been healthier than it has been in years, however, there are a lot of fundamental issues with the economy that needs correcting. Socialist influence remains a hindrance on our economy and citizens. Trump’s recent signing of the disastrous Omnibus bill shows that he’s not likely going to be the President that corrects government waste at the highest of levels. This is all a major burden on us, the people.
Author: Jim Satney
PrepForThat’s Editor and lead writer for political, survival, and weather categories.