Jim Chanos says there’s a culture of lying in Silicon Valley and Theranos was the tip of the iceberg


Theranos CEO Elizabeth Holmes was charged with fraud in March after raising more than $700 million while deceiving investors.The start-up made it appear as if it had successfully developed a commercially-ready portable blood analyzer when the technology could only perform a fraction of the tests advertised.

Holmes settled civil charges with the Securities and Exchange Commission in March. As part of the agreement, she returned millions of shares to the privately held company, paid a $500,000 fine and cannot serve as an officer or director of a public company for 10 years.

Chanos pointed to an overall lack of due diligence by both the boards and investors in believing CEOs like Holmes.

He also said the Silicon Valley “willingness to sort of say anything by CEOs” is an issue at Tesla, a company he is betting against.

Chanos called shares of the electric car maker “overvalued” and said its CEO Elon Musk’s predictions are based on “futuristic hype.”

“The fact of the matter the company is not profitable from operations,” Chanos said. “It’s about the future and keeping investors focused on some point in the future when they think the company might be profitable.”

He criticized Musk for not seeing “the immediate future” when it came to layoffs. Tesla told employees Tuesday it will cut about 9 percent of its workforce.

A Tesla representative wasn’t immediately available.

Chanos said in April on CNBC that he shorted Envision Healthcare in the middle of last year, Mednax in 2018, and that he’s been short Dunkin’ Brands and Restaurant Brands International for “about a year.”

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