I don't know if this carries the same weight in a public company, but setting expectations with investors is super important in a startup and prevents a ton of wasted time wrangling investors who don't get the true cost/benefit ratio of what you're doing.
This is financial suicide for the company. TSLA needs more money this year or next year. Losing $1 Billion per quarter means he is relying on his shareholders each time he raises another round of equity.
The $1.7+ Billion to build the Gigafactory was from the Stock Market (https://electrek.co/2016/05/25/tesla-tsla-stock-offering-pro...). Tesla will need future rounds like this to continue to function.
Pissing off shareholders and reducing the value of your stock is financial suicide.
That seems a bit counter to the purpose of an open public market.
Unless Musk has a plan to get money from somewhere else?
Also, recent events have proved that pissing off the entire financial community so much that they refuse to lend you money because you always lose it is no barrier to becoming President of the USA - and, in fact, can help, because the entire electorate hates the financial industry anyway. Maybe we'll see Elon 2020 and a government bailout. Hell, government bailouts of the auto industry is pretty par for the course these days.
+ 1 for the funniest thing I read on HN for a ling time. Kudos!
Also, can you point out who said "Tesla will not need money again"? Elon is always careful to say something like "We will not need to raise money in <relatively short timeframe>". And then he raises money, says he did it because the price was right but it wasn't needed. Shorts accuse him of lying. Rinse, repeat.
As for the second part of your comment:
The Economist wrote that Tesla would have to raise money this year, 2.5 to 3 Billion $.
Elon Musk's response to that:
https://twitter.com/elonmusk/status/984705630106673152
And as far as I can see it has no qualifiers. The complete text of the tweet:
"The Economist used to be boring, but smart with a wicked dry wit. Now it’s just boring (sigh). Tesla will be profitable & cash flow+ in Q3 & Q4, so obv no need to raise money."
Now, that's a pretty strong statement and just like the 5000 vehicles per week production in Q1 that everybody seems to have forgotten about (now it is suddenly good news they do about half that much) it is very much falsifiable. For Elon's sake (and all those employed at Tesla) I hope it works out that way but this could turn out to be a very expensive own goal.
As for Tesla's targets, they have changed (downwards) several times, and I've seen plenty of people noticing. IIRC the target announced after Q4 earnings was 2,500 Model 3's per week by the end of Q1, and they missed by 500.
Honestly, this entire discussion is the kind of thing I'd expect on Seeking Alpha, not Hacker News.
Bloomberg has even charted the successive reduced projections against measures of actual production.
If we’re talking about Model 3, there’s also no way they’ll have unforeseen expenses in Q3/4. It takes way more than 6 months to plan a billion dollar expenditure, so it seems exceedingly unlikely Tesla’s expenditure model is wrong.
So that leaves their revenue model as the only wildcard. If they dramatically fail to increase production... say they plateau at 3k per week... that’s like $50k * 3k * 35 weeks = $5 billion in Model 3 revenue.
Plus they have a couple billion in the bank?
I just don’t see how this is a bankruptcy year for them.
Even with release of the Model Y pushed out to 2020, if they need money and they aren't raising it this year, it probably means more delays.
Which is not true. Investors want to know about the risks, in detail, because then they can make informed choices. Maybe they'll adjust how much they invest, or look for offsetting investments (other companies or financial instruments that would go up if Tesla goes down), or do any of dozens of other things. But they can't do that if they don't get accurate information about the company, which is what Musk is supposed to provide.
Being bombastic and arrogant instead of providing accurate information might be good PR in certain circles (like HN), but Musk has, well, literally any other venue he's ever spoken in as a place to be bombastic and arrogant. This is the venue where he's supposed to be actually honest with investors, not the venue to be fake-honest through statements like "not everyone should invest in this" (gee, Elon, that's never been true of any other company in history... oh wait).
What he’s not providing is accurate predictions of how long things will take. And he’s not obligated to do.
If investors want to make predictions, that’s their job. The company is only responsible for reporting what it did and what it will do.
“Excuse me. Next. Next,” Musk said to the call operator. “Boring, bonehead questions are not cool. Next?”
Yeah. Real helpful there in providing financial information to investors.
If he wants to maximize the amount of money he gets the next time he goes to the trough, while minimizing the dilution, then yes, he needs to drive the price up.
It would not be in Musk's best interests to pander to those investors and compromise the actual long-term integrity of a business that has tremendous opportunity to provide substantial returns by avoiding the mistakes of short-term decision-making.
Sounds like the CEO equivalent of a movie director saying "I didn't make this one for the critics." Translation, "I know there are problems but I'd rather have my ego stroked by fans than face real criticism."
Elon seems to be more focused on his vision of the Big Picture (solving transportation problems, moving to new planets, fixing the energy crisis, etc) than making money in the short term (which might be over the next 10 years). He appears to be a man convinced he knows how to help fix global problems, and believes in his mission more than making money. You still need money to change the world, so he's also tried to do very well at the business side of it.
I'm not convinced Musk will fix humanity. I'm also not convinced he won't. I just feel that this specific statement, that Tesla isn't a business everyone should be involved in, feels like a "we're mission driven, not money driven" proclamation to me.
This is easy to say when it's someone else's money you're burning.
I also hold a wildly different interruption of the saying "I didn't make this one for the critics."
Not all investors have the same aims. Shaking off short-termist investors may be sensible to follow long term strategies. Sometimes public companies even have to become private again in order to pursue the course of action that's best for them.
There is a lot wrong with getting the budget of a superhero action movie and then making the sort of small art-house film that will never be able to pay off the investors.
If this were some quirky, self-funded Musk project, he could do as he pleased. But not only do they have shareholders, they have $1.8 billion in loans due in the next 18 months: https://www.forbes.com/sites/jimcollins/2018/04/02/forget-th...
While I prefer to focus on long-term over short term, you still can't let the short term kill you. A lot of people think Tesla will be out of money within the year and that's a short-term problem that needs to be solved in the short term. If not there will be no long term.
"Fuck off, I know what I'm doing, and I'm not chasing short-term single quarter results" can easily be fulfilling that duty.
And the cases you bring up for fraud/negligence are very different, and pretty obviously not covered under running an enterprise in good faith.
https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
This can be and has been widely interpreted. It does not have to mean maximizing profits to the exclusion of everything else.
I think one could say that one's "duty" is more about what is ethically required, however. I tend to think that, ethically, a CEO is required to maximize shareholder value. This doesn't mean that he needs to agree with shareholders about what that means, necessarily, and trading off short-term value for long-term value could be the right call.
I feel like sometimes "caring only about shareholder profits" is some kind of code for being greedy, when I think it's quite the opposite -- it's much greedier to spend your company's money for your own vanity, or to set up your next job, or to do favors for friends -- often the non-profit-maximizing activities a CEO engages in falls into one of these buckets.
It is also completely reasonable to say that it is in the shareholders' best interests that their company act ethically, and in accordance with the law.