Is Elon Musk a con man?

I was sceptical about Tesla’s business model in the past (here and here) and although there were a lot of red flags in plain sight (accounting, green business, PR etc.) I did not call it a fraud.

The only reason I have not voiced any accusations in this regard is because I have set myself the self-disciplining target to identify weaknesses in the potential fraudster’s business model, rather than hint at qualitative (nevertheless very important) indicators. This worked well for me in the past when I was offered to buy one of Madoff’s many feeder funds: there was simply no way the guy could have achieved his stated track record with the option strategy he claimed to use.

It also helps not to be called a pessimist and miser at cocktail parties (it is not that I don’t enjoy controversy)…

But Elon Musk and the liberal PR machine really make it difficult to stay disciplined.

Fortunately, more and more people are coming out (Jim Chanos recently called Musk ” a very good showman”) and pointing at Musks questionable business practices. The best write-up so far is by the streetwiseprofessor after Musk announced another dodgy transaction yesterday.

Enjoy the read here

(Disclosure: no position in the stock)

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One comment

  1. Thanks for the read. With regard to “I did not call it a fraud”:

    I don’t like to call it that either, because that’s a severe accusation, but I should not wonder if one day we will call it just like that: fraud. Some people already call him Enron Musk.

    By the way: Musk says (according to a Reuters report http://www.reuters.com/article/us-tesla-gigafactory-idUSKCN1062SR?type=companyNews) that the second masterplan could cost “tens of billions” of dollars, but will only require a “modest” capital raise, because of 5 billions of gross profit per year on model 3 (to be launched in 2017) – as if there are no SGA or R&D expenses.

    I never really shorted, or even bought puts, but with Tesla I am really tempted…

    Tom

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