Tesla short sellers $2B in the red for June as shares soar
reuters.com
reuters.com
People were asking legitimate questions about orders and finances and he told them to shut up, while directly insulting their intelligence. That was an extremely bad sign to me. When I saw that even after that, there was still support in the $270s, I declared the market too bullish for my liking and was no longer comfortable being short.
As far as I'm concerned TSLA has to turn a profit in the next couple of quarters or they're just not going to be able to be competitive enough with the additional financing they're going to require. Elon promises they won't need to raise capital. If he's right, great. But I'm not betting on it one way or the other.
The second story is structural debt burden and the effect on profitability. I am not an economist, but I think you may have over-stated this. I think it would be a mistake to make investment decisions based on your information, absent clear signals from people who ARE economists about the effect on short, medium and longterm investment outcomes. If (as I suspect) you are looking for short term profits, well and good, you can use this rationally to say "dispationately I don't think I can see a return on my investment by value gain or dividend, so I won't invest" But if somebody is a non-dispassionate investor, in for the medium to long term because of a belief building the EV market has wider outcomes which WILL raise their stock value, or return dividends, then this debt burden is a risk-side decision: Is the risk of a problem sufficient to outweigh the chance of the upside in the longer term?
They said they'll increase production of Bolt but refused to say by how much and by when.
In contrast, Tesla lays out their future plans months, sometimes years in advance.
Tone aside, it seems to me that Tesla is being measured here by a completely different stick.
Compared to all other public companies they provide vastly more "legitimate" information.
Just for a few examples of "legitimate" questions that well known companies refuse to answer, even if politely:
* GM won't tell you any details about future plans for Bolt and other EVs. Tesla: "we'll make 10k by end of 2018". GM: we'll increase production, don't ask us when or by how much"
* Amazon only recently disclosed number of Prime subscribers, and only total number, not breaking down e.g. US from international
* Netflix won't tell shareholders viewing numbers for any of their shows
I could go on talking about information that companies don't share.
It's just bizarre that people expect Tesla will just disclose anything that's asked.
If a company is giving regular updates on production and targets and then gets weird about it for one meeting then you can expect a drop. It looks like they are back on track (and are again open about production), but you can bet if they get cagey about it again their stock is going to take a hit. They might be able to transition to less openness if they want to (so they only reveal what they want and don't spook investors), but not one extreme to the other in just one shareholders meeting.
1) Short your stock.
2) Hold press event.
3) Get cagey about questions.
4) Profit.
For example giving an uncharacteristic pregnant pause when answering a straight forward question or becoming agitated when normally you're subdue?
It looks like they are going to do just that. Tesla is very close to 200k this month and that is probably partly why they shut down to "improve production rate". Slow down production in June to not hit 200k until after July 1. They have also been playing with exporting more cars to hit the 200k number at just the right time.
Having the maximum 6 months instead of the minimum 3 months will be a lot of extra cars/people getting the tax credit. If they average 6000 cars a week over that time (12 weeks x 6000 x $7500) that is an extra $540 million.
Then the tax credit goes in half for the next two quarters and in half again ($7500/4) for the next 2 quarters.
Seems a bit strange for the law not just to say the credit extends for 6 months after the 200,000th car is built, but who knows how such laws get crafted.
it's not: https://www.irs.gov/irb/2009-48_IRB
From a page linked on the page you gave:
"The new qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period. Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period."
I believe this somewhat convoluted language says the same thing I did. The phase out lasts a year. 50% for the first 6 months and 25% for the next 6 months. This starts after the end of the first full quarter after the quarter where the domestic sales are greater than 200k (ie, between 3 and 6 months after 200k sold).
The marketing surrounding Tesla's autopilot is borderline false to the point of illegal and when it does things like crashes into lane obstructions at full speed it's the user's fault for using it wrong.
GM got rakes over the coals because a handful of people (most of whom were not wearing seatbelts) died when the airbags failed to go off because of an ignition switch malfunction.
After many years of the incident.
They don't get to have their cake and eat it too until they prove they've earned it, and thus far they haven't by the metrics that matter to analysts or the public in general.
EVs are now, and for several years into the future, a small part of GMs story. They are Tesla's whole story. So, yes, GM can afford to be less specific—heck, even less certain—of exactly what they are going to do in the EV market.
> Netflix won't tell shareholders viewing numbers for any of their shows
Netflix doesn't sell individual views of shows, nor does it sell products (e.g., advertising) to customers on the basis of any show’s viewership; that's about as relevant a stat for Netflix as the number of ceiling tiles in the headquarters building is for Tesla.
Tesla sells electric cars, and a very small number of models of them.
Not sure I understand your logic. Every business bar none likes to be seen as forward looking, future proof. The fact that GM keeps mum about their sole EV offering means they are behind Tesla, and likely others such as Nissan on this front. If they weren't I don't see why they couldn't say they'd make 500K of it by end of 2020, for example.
They were already supposed to be at 10k cars a week. Live by the prediction, die by the prediction.
> Tone aside, it seems to me that Tesla is being measured here by a completely different stick.
And if Elon Musk had made this argument during that earnings call, it would have been far better received than “We’re going to YouTube. These questions are so dry. They’re killing me.”
I find the fact that they have an executive departure rate on par with what Enron and Valeant had most concerning - when large numbers of senior people don't vest their stock grants, it's normally because they know there's very something wrong that's not yet public.
It's especially suggestive that the VP of finance and chief accounting officer left in March, at the same time as the Fremont factory was put up for collateral and a "special purpose entity" was created to hold $546m in car sales, presumably to make the company appear more creditworthy.
I almost never short. The only time I ever shorted was when earlier this year some bad -- and to a techie, obviously false -- news about AMD hit. Expecting panic from non-tech investors, I bought short turbos for a day, sold them later that day, and would have bought long if it had dropped far enough. But most of the time, I find shorting way to speculative and risky.
It's pretty dangerous to short high flying stocks like TSLA in a major bull market. Especially when most of the shares are owned by Musk and his institutional backers. It's not intuitive, but highly shorted stocks like TSLA in a bull market is a recipe for a significant price rise to burn the shorts and steal their money.
> Elon promises they won't need to raise capital
He's been saying that for a while and he keeps raising capital and diluting the shareholders.
> If he's right, great.
I suspect TSLA's recent layoffs are to work some accounting magic and show "profits" in the coming quarters. If so, it'll get big pops come earnings.
> But I'm not betting on it one way or the other.
In the long term, I'd watch oil prices and FED rates. If energy prices stay relatively low, if governments end subsidies and of course the FED decides to pop this bubble, I could see TSLA bankrupt in 5 - 10 years ( like it was in 2008 before the bailout ).
Maybe after a big price spike flushes the shorts, then it might be time to start averaging in short positions. But either way, it's a gamble.
Disclosure: I have a small TSLA position, but I do consider it a high risk venture that has just as good a chance to buy me a house in 20 years as to go to 0.
What Elon could do to really stick it to the shorts is make the amount of cars he said he will and do so with the profits he claimed he’d have. Otherwise no amount of shares is going to be enoug.
https://www.cnbc.com/2018/04/11/tesla-is-the-biggest-short-i...
I think Elon's image as a person/CEO is almost as important as his ability to execute and build the cars. Part of the value he brings as CEO is the cult of personality around him. I'm not suggesting that's right or wrong, good or bad investing, good or bad reason to buy products, etc. That's just what I believe is true.
It is not even clear if the entity collecting this data can have such depth and knowledge of individual positions. Also my understanding is that unless you put capital, your position will margin called. It means the losses are not just on paper. The players have already engaged money.
Also, it would only take one particular rich/narcissistic employee to make up all of it if he wanted to secure a few billion dollars of his net worth for the future.
I listened and man was that overblown. He was simply bored of shitty questions.