Tesla Inc TSLA traded higher by 2.5% on Wednesday ahead of the company’s first-quarter earnings report due out after the market close.
Glenn Tongue, general partner of Deerhaven Capital Management, said Wednesday that Tesla’s curious amended 10-K filing on Tuesday may suggest that the company is planning to announce another offering.
“My guess is that the company is running desperately low on cash and will announce an offering quickly after the earnings report,” Tongue said.
He also criticized Tesla’s decision to have CEO Elon Musk personally provide directors and officers insurance for board members after the coverage became too expensive for the company.
“This is unprecedented based on my experience and introduces numerous conflicts, making a mockery of the concept of corporate governance at Tesla,” Tongue said.
Musk’s Big Payday
Tongue said new disclosures that Musk is borrowing money against the value of his Tesla stock and using a large portion of that money to buy more Tesla shares should raise eyebrows as well. Musk seems to be doing everything he can to keep the stock price high enough for him to qualify for a roughly $1 billion market cap-based payday in around two months, according to Tongue.
Despite the red flags Tongue saw in the 10-K filing, Tongue said Tesla will likely once again have no problem raising capital if it chooses to do so, and he warned short sellers about the dangers of betting against Musk.
“The disclosure/accounting games continue to get more and more outrageous, yet the Cult of Musk seems to be impenetrable,” Tongue said.
In fact, bullish sentiment among StockTwits messages mentioning Tesla is up from 28.6% on March 18 to 65% on Tuesday.
Benzinga’s Take
Most Tesla skeptics take more issue with the stock’s valuation than with its growth story. Tesla’s market cap of $145 billion is now greater than the combined market caps of Honda Motor Co Ltd HMC, Ford Motor Company F, General Motors Company GM, Nissan Motor Co Ltd NSANY and Fiat Chrysler Automobiles NV FCAU.
Do you agree with this take? Email feedback@benzinga.com with your thoughts.
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