Stop me if you heard this before, and I know you have you may just not recognize it. There is a company who is basically a fraud. It is a Ponzi scheme. It has seriously questionable sales practices that border on the illegal.

Sounds disastrous right? Super deadly for shareholders – FOR SURE! But it doesn’t end there. It gets worse, way worse.

Governments, foreign and domestic are lining up to stop the company from selling its products and limiting its sales force from doing its job.

Actually, I am just getting started here. Let’s get to the deep issue. The customers of this company are crazy … they pay way too much for something that only costs a fraction of the price to make.

Talk about being duped, the customers don’t even get what they pay for! The product literally doesn’t work as advertised. No, worse than that, it is dangerous to the customers!

Same Old Playbook

I know you think that this time it will be different… but it isn’t. If you didn’t recognize the playbook above, it is the one the shorts used on Herbalife (HLF) and Questcor (QCOR) and they are doing the exact same thing to Tesla (TSLA).

Thing is, the end game for the shorts and HLF and QCOR was disaster… so take a wild guess what will happen with TSLA.

Let’s take a look at the similarities here, how the shorts prove they are incapable of thinking outside of the box.

Quick Review Of HLF And QCOR

I lay claim to a particular achievement. I guided investors into shares of HLF and QCOR and profited by from the short covering and validation for the longs via the pay services I manage at Zacks. This isn’t a commercial for the services, of which one was long TSLA at less than $40 per share.

HLF was claimed to be a Ponzi, a fraud, have a customer base that essential is its sales force. They said the product didn’t work… but in the end, the shorts covered at higher prices and lost hundreds of millions.

QCOR was said to have questionable sales practices and procedures. Only a handful of doctors were responsible for hundreds of millions in sales. The drug wasn’t as effective as promised. It mirrored a Ponzi because all the money went to a few at the top.

What The Shorts Hated

The shorts hated the fact that HLF didn’t have to pay for a sales force. People bought the product and got paid if they could get other people to sell it too. The shorts believed the company preyed upon the uneducated and their product simply didn’t work.

The shorts despised the fact that QCOR bought the rights for Acthar for $100,000 then charged that amount for a single treatment. The real problem was that ANYONE could have bought it, it was publically available for DECADES. Let’s leave the sales practices aside – the core of it was that a few people turned an old drug into a “blockbuster” and this simply doesn’t compute in the mind of a short.

Products

So let’s bring this back to TSLA. The Model S has some of the best reviews for a car in its class. People love their TSLA’s and really that isn’t limited to just the Model S. We see fans of the X, the roadster and most importantly the Model 3. There has never been a car that has seen 420,000 reservations.

I am going to simplify things for HLF and QCOR. Let’s face it, these ideas are mostly in the past. HLF makes some dust that is mixed into a shake. At the core of it, it is just some dust. QCOR makes a drug – and it comes from a complex system that really prevented a generic. I could go on about the peptides and process to make Acthar… but let’s just say if it was easy, there would be lots of competition.

Sales Model

TSLA has a different sales model than traditional automakers use. The traditional dealership is no longer part of the equation, so that reduces a drag on margins… but the shorts will tell this is an abomination of everything they hold dear when they purchase a car.

HLF had its customers as its sales force. They recruited others to sell more product and got a slice of the sales. This was the driver behind the Ponzi claims … but at the end of the day, there was a real product, where Ponzi schemes don’t have that real, hard true to life product.

Story continues