Fund manager William B. Smith of Blaine Capital appeared on CNBC to offer up his thoughts on one of the street’s most talked about names: Tesla.
Blaine, based in Stamford, CT, is short the name and when prompted by the hosts on CNBC to explain his reasoning why it’s his “favorite short”, Smith didn’t mince words. “We’ve been short Tesla since the low 300’s. We believe the company is going to have to restructure,” he says. “We believe the company is going to be zeroed out, it’s going to be worthless as far as the equity is concerned.”
“They have very poor management. Elon Musk is not a genius, he’s not a visionary. He’s a charlatan, he’s a carnival barker. He can not replace any of the massive amounts of management that are leaving the company,” Smith continues.
Smith discussed the company’s recent capital raise: “They have a toxic balance sheet and while they were able to pull of a recent secondary, that secondary was done at $242 and the shares are right now $179.”
He then turns his attention to the Model 3: “If you look at the product that Tesla is actually making now, this Model 3, it is absolute garbage. This is not the ‘S’ and it’s not the ‘X’. That’s the old Tesla. This new Tesla is being thrown together by hand in a tent. You can’t go through a car wash. These things are blowing up all the time. The batteries are incinerating. It is not a quality product.”
Finally, he turns his ire to the company’s financials: “They have never made a profit in 16 years,” Smith concludes.
Blaine Capital, on its website, calls itself “an event driven Investment Manager that analyzes and invests in the public equity and debt securities of companies that trade at steep discounts to Private Market Value (PMV) and Sum-of-Parts (SOP) valuations.”