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chollida1

The sad piece of karma in all of this is that Musk tweeted in an effort to destroy the shorts.

His tweet turned out to:

- give the shorts a big dip in his stock,

- an investigation by the SEC

- an investigation by the DOJ

- the backing off of a deep pocketed investor in the Saudis

- Him potentially being personally liable, which would mean having to step away from SpaceX and Tesla if he was found guilty of fraud.

This could be the biggest thing to come out of all of this. Imagine Elon getting a 2 year ban on begin an executive in a company. Or SpaceX not being able to bid on government contracts because their CEO is a felon.

There is going to be a lot of backroom dealing to do everything they can to prevent Elon from being charged.

- A lawsuit that is seeking class action status for anyone who was short at the time of his tweet.

- this is speculation, but it must have really strained his relationship with the board. I mean you can only fight so many battles at once, you'd think you'd want to have the board on your side

All to screw with the shorts, who really have no power what-so ever to hinder Telsa. If he had just not used twitter he and Tesla would be better off and the shorts would be worse off.

View on HN

It’s important to note that Elon screwed over the “longs” (people holding TSLA stock) too, not just the shorts. Many people and funds bought more TSLA stock in the $350’s range on the assumption that of course the company could/would go private at $420/share. After all, hadn’t the CEO just said so?

I was reading r/TeslaMotors that day and a long made the astute observation that shorting the stock after Musk's announcement when it hit around $380 was the most logical thing to do, because at most you'd be out 10% if Musk were telling the truth. If I had a trading account I think I might have gone for that.

Max loss being 10% is absolutely not accurate at all in that scenario. Taking the company private would still be up to a shareholder vote and shareholders could determine that the price offered was not sufficient. In that case, there are a lot of ways the stock could trade above the takeout price.

Isn't it possible to set the short order at a max limit to cut your losses? (this shows how little I know about having a trading account)

This might help: https://www.investopedia.com/articles/active-trading/091813/...

The problem with stops is that you run the risk of the price gapping up or down and your stop getting filled at a much different price than expected.

I'm an experienced trader in the sense that I've had only bad experiences trading. Thinking a stop loss order would help I (and the order) failed to account for one of those flash crashes that happen for no obvious reason other than to trigger execution of stopped orders.

With leveraged products (like rolling turbos [1]), that risk is usually on the offering institution? I dabbled in those a few times when pretty sure (or full) of myself. There are no margin calls in turbos, you add leverage to your liking (x 2, x 5, x 10, ..) and you pay a hefty interest on your leverage (say 7%). Your exposure is exactly the price you bought for.

[1] https://en.wikipedia.org/wiki/Turbo_(finance)

Unfortunately I was long Kraft (the food co), completely unleveraged, and got taken out at a 15% loss thanks to a flash crash-induced stop loss. It taught me a lesson that only losing real money teaches.

The only reliable way to limit losses would be using options.

Sell short and buy a corresponding (shares short / 100) number of call options at $420 strike (which, in theory, if Musk were telling the truth, should essentially be worthless but in practice will come with some amount of premium). That way you have a guaranteed exit at $420/share + option premium paid. You could reduce your option premium cost while slightly increasing your max loss if you went with $430 calls or whatever.

Why not just buy puts and simplify the trade?

That could work too; without seeing the numbers it's hard to say. For example you might have a higher chance of losing your money due to theta decay depending on how far out you're buying. And the premium on the puts is going to be substantially higher than on the defensive calls unless you go significantly OTM.

> If I had a trading account I think I might have gone for that.

It does not take that long to open a trading account or you could have taken one of your friends help to execute this trade

Well, as others have pointed out, I might have been in for a bigger loss based on my assumptions about shorting :). I mean, had Musk been telling the truth.

Funding an account usually takes a few business days unless you use a wire transfer, which has a cost. By the time you open and fund the account, it may be too late to execute the trade.

You can do a straddle and get the best of both sides.

Longs are not "people holding stock". A long is purchased on borrowed capital paid back with interest. It is a much riskier play.

Long is short-hand for anyone benefiting from the price of the stock rising. This includes people who own the stock outright, have bought on credit, own call options, have sold put options, etc.

Yeah, long is slang for long term investor: https://www.investopedia.com/terms/l/long.asp

The link you posted doesn't support that etymology; there are some proposed etymologies here https://english.stackexchange.com/questions/145376/what-is-t...

That's definitely not standard industry convention. Previous poster's interpretation is correct.

Nope, he never said so. He used the word "considering" - to interpret that to mean it's a done deal is stupid, and all the risk you take is your own.

He also said, "funding secured at $420 a share", which wasn't true.

^ Jefro118 is correct. This is the a significant phrase in financial and regulatory circles.

How about on Twitter?

It’s irrelevant where it is said so long as it is said publicly.

Edit: This is the same reason Elon is now being sued for "Twibel". You cannot say state lies publicly without legal repercussions. "Funding secured" is classified as material non-public information.

I used to work in finance and regulatory compliance.

I'm guessing there is a HUGE difference between, say, Twitter, and a regulatory filing.

There’s no requirement that he lie that way in a regulatory filing, previous posters are trying to explain to you that it’s enough to make the claim publically. Lying in a filing would be a different crime.

Tesla regulatory filings mention to his twitter account as an official source of news.

You would be wrong, but the bigger issue will be claims of stock manipulation rather than Reg FD violation.

Either the Twitter account is a financial venue covered by the regulations at issue, or making the announcement there was illegal independent of its truth.

So, either way...

I would never equate "considering" with "of course".

All great points. This is a lot worse than it probably seems to most people on HN. Imagine a prosecutor telling a jury that Elon funds a lavish lifestyle (with lots of details of the excess) with loans against his Tesla stock. That shorts of the stock threatened him personally, because of those loans, and alleging that he threw the $420 figure out there to counter-act the shorts. That’s a terrible narrative to have to deal with. The responses are not exactly things that would play well to a jury (“no, it was a marijuana joke!”).

>> Imagine a prosecutor telling a jury that Elon funds a lavish lifestyle (with lots of details of the excess) with loans against his Tesla stock.

Not going anywhere. Even if Tesla goes to zero, Musk still is a billionaire, 10 times over with SpaceX. https://en.wikipedia.org/wiki/SpaceX#Ownership,_funding_and_...

It's not greed, he just hates that some don't bow to him.

Hubris.

Is it schadenfreude to hate hubris?

Indeed, and to that end, the punishment could be that he is barred from serving as an executive or board member. I think that would be a far deeper punishment to him than if you took every penny of his.

It would sting, but I doubt he would find it that hard to start again in another country if he had to.

> Imagine a prosecutor telling a jury that Elon funds a lavish lifestyle

Recent Paul Manafort case shows it doesn't do what its intent to do. Jury was not interested in Manafort luxury lifestyle and judge himself outright ban prosecutors from bringing it up again and again. Unless you believe they can prove Musk bought $2B worth of business suits.

I'm not super knowledgeable in the stock market, what would he have gained from destroying the shorts? I understand that shorts are effectively a bet that the stock will go down but do they actually damage the company in any way? At a glance it sounds like trying to break the thermometer because you think it's too cold out there, the stock wasn't at risk because of the shorts, instead there were shorts because some investors though that the stock was at risk. What am I missing?

Also even if destroying the shorts was a positive outcome for Must and Tesla how does that excuse his behaviour? Isn't that textbook market manipulation?

Shorts drive the price down, making it more expensive for the company to borrow from the market by selling stock. They have to sell more shares to receive a similar amount.

I obviously lack a piece of the puzzle here, let me see if I get this right: a short means borrowing stock, selling it then rebuying it later (betting that the price would have fallen in order to turn a profit) before giving it back to its original owner.

I suppose if everybody shorts at the same time the huge amount of stock being sold could drive the price momentarily down, but then again the opposite happens when the stock is re-bought. So in the end it should be effectively zero-sum? Or is it just that a huge amount of people started shorting the stock at the same time which made it a sort of self-fulfilling prophecy?

Hopefully, the sale to start the position and the purchase to close it do not move the market themselves. People do long positions without moving the market (affecting the price). Sorry if I explained anything to anyone who already knew it.

They wouldn't have to buy it back immediately. Short sellers would borrow the stock from a long and pay a predetermined interest rate for however long they're borrowing it. They technically don't have to rebuy the stock unless they get margin called (if the collateral posted is no longer deemed sufficient for the counterparty to allow the borrowing position) or need to close out positions because of some risk tolerance threshold being met. Usually when this happens to a bunch of shorts at the same time they must all rebuy, driving prices higher, which is called a short squeeze, but it is usually determined by someone cutting losses on a short position or positive news coming out driving prices up.

That's equivalent to saying that buying a stock doesn't move the price up because you'll have to sell it eventually. A lot of people in long positions means a lot of buys that haven't been re-sold. A lot of people in short positions means a lot of sells that haven't been re-bought.

Actually, short selling has another nasty sting in the tail.

If there are few willing sellers out there when everybody goes to cover their short, you get a short squeeze - a feedback loop where the price increases, so people need to buy to cover shorts to avoid losses, which pushes the price up, which means more people need to buy to avoid further losses as the price rises and so on.

The original owner who lent the stock can also ask for it back on relatively short notice (say, because they are long and want to sell). Usually this isn't a problem because the short finds someone else to borrow from and uses that to cover - but if enough people do that then it can trigger a short squeeze even without significant price movement at the beginning, as happened rather dramatically in Porsche shares in 2008.

Shorting a stock is like renting a car for a year, and selling it - because you think you can buy another car in a year, and still make money after paying the rental company. This is possible in this example because all cars are identical.

Also the shorts try to push the stock down via endless false rumors (there are real challenges to tesla of course) about bad cars, crashes, fires, etc, and those false rumors must prevent some people who just don't have time for so much drama from looking into them.

That's a realllly simplistic and one-sided view of short sellers.

They aren't all trying to do that of course, a lot of people are just trying to make money and look at a stock and think it will go one way or another. But I don't like the people that push false narratives and convince people of things that aren't related to reality.

> They aren't all trying to do that of course

The vast majority of them aren't trying to do that, similar to how the vast majority of longs aren't trying to P&D.

> But I don't like the people that push false narratives and convince people of things that aren't related to reality.

I hope you see the irony in saying that: This is almost word-for-word what Tesla shorts accuse Tesla of.

And shorts I guess keep down voting my comments but I hate that musk posted that, and he better be able to document why he felt that was true.

Nah, what really happens is that there are so many short positions that the stock is notable for just how many people are shorting it, and that itself becomes the negative news. You don't have to write a single 'fake news' story to get that effect.

Haters gonna hate. A lot of that news is just to sell clicks and has nothing to do with short selling. Other people hate Musk for reasons not having anything to do with self-interest in the stock price and want to bad mouth him. And the only way to do with those rumors is to be successful. Going to war with people bad mouthing you never works.

Shorts drive the price down

Not on their own they don't. You can go and short Facebook right now and it won't move the price at all.

Not individually, but if enough people short it, then that becomes a signal to other investors that maybe there's something they don't know about, which will push the price down.

And other investors see that short interest piling into an otherwise healthy (hypothetical) stock and they buy in anticipation of a short squeeze. And when the stock pops due to good news, those shorts become rocket fuel for the stock going up.

No single action in the stock market happens in a vacuum, and longs will absolutely react to what the shorts are doing. And a high short interest is often viewed as a contrarian indicator that dumb short money has piled into the stock and that its actually due for a pop. You often see that at bottoms in the stock.

Sure it does short 20% of FB float it will sure move

I'm not so sure. What direction will it "sure move" if you short 20% of FB float? You have to borrow a stock to short it from someone, so the stock that you short is not actually sold just lent.

It's lent but you just artificially increased the volume because otherwise someone would have to sell actual shares.

The price would definitely move down if you sold 20% of facebook's float. The market doesn't care that you borrowed and are the one selling (as opposed to the party you borrowed it from selling them), all that matters is that 20% of the shares are being sold.

Hedge funds, which can turn huge sums into market swings often use this technique to drop the price, creating additional drops from panic sell offs, allowing them to make a margin on it from the bottom.

Is that legal?

It doesn't make it "more expensive" for the Company (as opposed to its existing shareholders) raising equity capital unless the stock pays a dividend and the only way they can sell more stock is to promise buyers they won't reduce the dividend per share to compensate for the increased number of shares in issue. Tesla doesn't pay a dividend, so that isn't the case here.

In extremis, a falling/low price could limit the size of a potential new equity fundraising because the resulting dilution is too much for existing shareholders to take, but Tesla's price/valuation would appear to put it quite far from this being an issue.

Key point: I was trying to explain this to someone who had no idea of what a short is. I didn't want to muddy the issue with complex descriptions of equity, dividends etc.

But if you think of equity as having a value other than derived from the market, then 'expensive' might still have applicability here.

It's been a long time since I've used this though.

In addition to what other replies have said, Elon also has pledged some of his stock in order to secure personal loans. He will have to fund margin calls or sell his stock if the stock falls below a certain price.

THIS. Elon is the largest Tesla stockholder, but he has taken out huge loans against that stock. If the stock price of TSLA falls below about $230/share (there is some confusion about the exact price, but it's widely believed to be somewhere around there) his stock could all be sold to cover the loan, which would suddenly dump the stock price even further, or he could be forced to post more of his stock as collateral for the loan. Either way, it's not good for him OR for the company.

Elon has used those loans to finance a rather extravagant lifestyle. He own FIVE mansions in Bel Air, all right next to or near each other. He owns a $70,000,000 private jet, a top-of-the-line Gulstream G650 ER, and flies everywhere with it, burning immense amounts of fuel sometimes just commuting within Los Angeles (between Hawthorne and Van Nuys airports, for example). Because his unusual compensation arrangement at Tesla is contingent on the company's increasing market value or maybe someday turning a profit (which has never ever happened), these loans against his Tesla stock are his main bread-and-butter.

In other words, Tesla's fate as a company and its stock price are intimately tied to Elon's personal financial solvency. That's gotta create some conflicts of interest between his various jobs as CEO, head of the Board of Directors, and a person who doesn't want to be personally financially wiped out.

What should we believe? This, or Elon claiming that shorts are evil, and are done by bad people who hate the climate?

Wow! I Googled and there it is: *"At the end of 2016, Musk had 11,420,723 shares pledged as collateral. At the end of 2015, it was "4,000,000 shares of which are pledged as collateral to secure certain personal indebtedness owed to Morgan Stanley."" https://www.inc.com/erik-sherman/1-reason-why-elon-musk-migh...

His lifestyle isn't the big problem, IMO. He's not Johnny Depp, he's way richer. That money most be going somewhere else...

Does that mean his debt increased by 7M shares? At ~250 a piece? Almost 2B$? Is that what he actually owes or is it more like a line-of-credit up to 2B$ He's burning money faster than Tesla!

There's a current tax dodge where high net worth people get pledged asset loans and spend that, because loan proceeds aren't taxable, but selling stock is. Selling stock in a company you're the CEO of also can be bad PR, but pledging it might be less bad.

OTOH, selling stock to redeem a pledge could be scrutinized for insider trading, and such a large amount could move the stock, so if I were loaning the money, I would require some large multiple of the loan in pledges -- enough so that I would expect not to have to call the pledge, because I know it will be a disaster if I do.

https://www.forbes.com/sites/jimcollins/2018/05/18/musk-has-...

It's close to 13.775M, and growing. The worrying sign is that the company is losing tons of money at the same time. As the author of that article writes:

> So, Musk has steadily increased his personal leverage to a company that has been steadily increasing its financial leverage. That's a double whammy. It's too much financial engineering. In following other companies I have experienced situations in which a CEO faced margin calls as his company's share price dropped. It is not pretty, and obviously adds incremental selling pressure to an existing decline.

It just seems inevitable that the colliding forces of an overleveraged CEO running into an overleveraged company will create some kind of financial implosion.

> Elon has used those loans to finance a rather extravagant lifestyle.

How does this actually work? His stock is just his collateral for those loans, which can be transferred if he defaults on payments?

Owning mansions is an investment in real estate. Vehicles are the assets that aren't a store of value

> turning a profit (which has never ever happened)

"Never ever" as in two profitable quarters? https://www.cnbc.com/2018/06/29/tesla-still-isnt-profitable-...

If you short a stock, you profit when that company does poorly; since Tesla is one of the most shorted stocks out there, we have many people trying to spread FUD via blog posts/tweets/etc in hopes that they can drive the stock price down. (Or in some cases even going to extremes like fraudulently submitting reports to the NHTSA claiming design flaws and problems with Tesla cars.) This has the side effect of damaging public perception of Tesla.

I don't know why I'm getting downvoted. The parent post asked why short sellers harm companies, and I gave a legitimate answer, and that answer is also exactly one of the reasons Musk cited for wanting to take Tesla private.

Maybe folks are skeptical about the fraudulent NHTSA complaints? If so, here's a source: https://electrek.co/2016/06/13/tesla-fale-complaints-suspens...

It's because you're answering the wrong question. It isn't how short sellers overtly try to lower the stock price, it's how they inherently lower it just by shorting the stock.

The answer is that a short sale is borrowing a share and then selling it, which increases the number of shares available for sale and by supply and demand reduces the price (until the short seller eventually buys back the stock to return it to the person they borrowed it from). In the meantime, which can be as long as the short seller is willing to pay interest, the stock trades lower because the extra share is on the market. It's essentially the same principle as the way banks lending money to people causes inflation because it increases the money supply and so lowers the value of the dollar.

Seeing a lot of existing shorts also tends to spook buyers, which also lowers the price, though it also attracts buyers hoping for a "short squeeze" that raises the price when the short sellers eventually have to buy back the stock.

Your answer is correct too, but the question originally asked was "what would he have gained from destroying the shorts? I understand that shorts are effectively a bet that the stock will go down but do they actually damage the company in any way?" The answer is yes, short sellers do damage the company for a variety of reasons, some reasons relating directly to stuff like stock price, and other reasons being more indirect like the one I cited.

I saw that other answers had already explained how shorts lower the stock price, but nobody had pointed out the other ways in which they "damage the company", as the original post put it.

I guess we're just interpreting the question differently.

I don’t think Musk needs any help in driving Tesla stock down ;)

Tesla's stock price is very high right now, largely on the basis that many investors expect it to do well in the future. This high valuation makes it easier for Tesla to raise more money to fund its future ambitions. The short sellers are promoting a story that Tesla will not do well in the future, and is overvalued today. If they manage to convince other investors of this story, the stock price may decline and hinder both Musk's personal wealth and prestige, and Tesla's ability to fund its future operations.

So it's somewhat understandable that Musk doesn't look kindly on the short sellers - he would prefer that skeptics stay quiet and stop trying to ruin his company's valuation. You are correct, however, that acting in a deceiving manner to make the shorts lose money is not an acceptable retaliation.

> "he would prefer that skeptics stay quiet and stop trying to ruin his company's valuation."

Yes, as would any company. He went public. He should have known better. If he looking for unconditional love then the stock market is not the place.

I don't think Musk is a bad guy. Torn, tired and confused ATM but not a bad guy. Unconventional thinkers + doers always come with some baggage. It's part of the profile. However, in this case, he should have kept his mouth shut and channeled that energy into proving the nay-sayers wrong.

I opened my first actual short position that day (instead of just buying puts). He literally set an upper limit on how much money you could lose and I just felt really confident he was full of crap.

Got out of the position at a bit under $310 so left a lot on the table but was happy. He literally handed people considering opening a short position on the stock a gift.

...and those of us who bought puts, because we don't feel comfortable actually shorting a stock. :-)

(Congrats on your successful trade!)

One of the episodes on the Netflix documentary Dirty Money is about short sellers with regards to certain pharma stocks (the one click baiting with Skreli in the thumbnail but not in the story, otherwise it is a great watch). And one thing that struck about me about the short seller they interviewed was her analytical and systematic approach to it. What she was looking for was yet to be recognized flaws in a certain company that can only result in falling stocks in the long run. And than acting on them in concert with others.

A mean thing to do? Maybe. Or you could call it natural selection in some cases.

Going back to Tesla and Musk, I think his behaviour in the last couple of weeks, and all the information that surfaced since, probably just convinced every short seller out there that they are onto something.

EDIT: fixed some typos.

Short sellers are not mean, it's a good thing they exist. They're calling out companies they believe have serious problems, to the benefit of shareholders who are being misled.

Except when they're actively expounding upon and peddling bad news to ensure the stock price drops at the right time. That is what Musk is most frustrated by.

In my mind, all negative news about Tesla is now called into doubt as being news peddled by shorts. This is the challenge of declining journalism standards: all news now has someone with a vested interest behind it.

I havr to disagree here. Considering all the real trouble Tesla is currently in, not to mention Musk himself, and with otger car makers catching up electrical vehicles there is undeniably some doubt about Tesla as a company. On top that you have shaky financials and the departure of important executives, also in financial department. So yes, just looking at that without any hard number crunching and financial analysis the picture is not rousy.

All of which is sad, Tesla really had and still has some appeal to it. I don't think that appeal in itself is enough for a public company.

And by the way, not all negative reporting is automatically bad journalism or even fake news.

The small upside of this is that maybe Musk will be convinced to settle the libel suit that was announced yesterday [0]. For the suit filed in the UK, the max loss would be ~$400K (unless it goes to trial and he ends up paying Vern Unsworth's legal costs), and it would spare us the sad spectacle of Musk trying to prove that Unsworth is a pedo.

[0] https://www.buzzfeednews.com/article/ryanmac/cave-rescuer-su...

I give Musk a little bit more credit than brutely calling someone a pedo without any proof. If you are as rich as Musk, there must be someone you can pay to dig up dirt on your opponents. Now there may be more trouble in showing that proof than settling. 400k is nothing for Musk, but principles and hurt ego are priceless.

> dig up dirt on your opponents

How does a man risking his life to save children halfway across the planet qualify as an opponent?

He said Elon's rig was total shit.

Seems like a better response would be to prove your submarine is awesome than claim the detractor is a pedo. But I'm not the smartest man in the world.

It'll be interesting to see if Elon Musk, darling of startup entreprewannabes, gets a pass here.

I hope his followers understand the precedent this sets. Are they truly about engineering solutions to tough problems (as they claim they are), or are they just a cult of personality cultivated to protect a thin-skinned master?

People who are about engineering solutions to tough problems would worship an engineer that spends his time actually working on tough problems.

Elon Musk is business man. His actual occupation is organization, management, negotiation, finance and public relations.

He wasn't wrong, he just dared displease King Elon

I give Musk a little bit more credit than brutely calling someone a pedo without any proof.

Have you missed the multiple other shit storms here lately where he smoked a blunt on camera, said crap on Twitter he shouldn't be saying, cried in an interview while looking completely exhausted, etc?

He isn't exactly putting on a convincing performance as a trustworthy, stalwart, social conservative ("respectable business man") with all his ducks in a row.

Musk had repeatedly challenged reporters to “investigate” Vernon Unsworth, and they did. They found no criminal records in the UK or Thailand, no marriage records, and AFAIK, no record of Unsworth visiting or moving to Thailand in the timespan Musk describes. They did however find Unsworth’s girlfriend, who is in her 40s and had been posting about her relationship on social media for years, which would support Unsworth’s assertions that he had first visited Thailand in 2011.

If Musk is as good as a human as his devout fans think he is, he’ll put truth and his grand hopes for humanity over his ego, and give Unsworth — who let’s not forget, was essential to saving those boys’ lives — a proper apology and compensation.

I hope he does this not because he’s a good person but just because I want Tesla to succeed and I don’t want his stupidity to ruin its chances.

Many argue that you can't have Tesla without Musk, but I don't believe that's true. There is a paradox that can be observed over and over throughout history: great conquerors rarely make great managers. What Tesla needs now is a manager.

Maybe Tesla needs to fail in the market. After seeing how he behaves on twitter, I just cant imagine the chain of command in Tesla works effectively internally. With the leader so fragile in terms of ego, so easy to go ballistic and with seemingly no ethical limits on how he treats those who don't instantly bend to him.

He seems to care more about building personality cult around himself then about running business.

There are plenty of companies with toxic cultures, it is not like that would be unusual. But here, I just cant imagine people under Musk ever telling him he is wrong or telling him about problems. I would guess that his grasp of reality will be increasingly wrong. To a degree it is normal, of course, but here it seems to go really to extremes.

Electric cars will come with or without them.

This lawsuit is peanuts to Musk, money wise. Say he settles it for $20 million, that's nothing. And maybe Musk hires dozens of detectives that find out later that Unsworth went with underage girls (a lot of Europeans with some money do over there.) Still it's very petty of Musk to pick a public fight with a "commoner"

He wouldn’t settle it for $20M because libel damages aren’t capped at ~$400K in the UK. It doesn’t take “dozens of detectives” to undermine Unsworth’s story, but Musk has not yet managed to show anything, not even a FB or forum post, that would contradict Unsworth’s assertion of when he first visited Thailand.

The stereotype of white men going to Thailand for sex tourism isn’t proof. And to think it is evidence is incredibly ironic, because Unsworth, besides being the resident expert of the cave’s geography, reportedly had to push hard for Thai authorities to take his advice to bring in his British expert diver friends who ended up conducting the rescue.

My point was that even if true (what Musk said) he showed his pettiness in getting involved with someone that criticized him. As for the libel amount in USA, there's a limit too. Even if the jury goes haywire judges and appeal courts intervene.

As for the truth...we don't really know until there's discovery

There's no statutory limit on damages for defamation per se under California law. It's literally whatever the jury decides is appropriate, modified by what the judge thinks is reasonable.

EDIT: added the "per se" since regular defamation requires proof of damages but the per se form does not.

But in reality there is a limit. The jury can say $2 Trillion. What is the largest award ever that made it past appeals? Being called a pedophile publicly by Elon Musk is as bad as it gets, but it's still a personal thing, not a loss of $Xx billion in sales or brand name.

Personally I think Musk needs an intervention, something not right with him and he needs to chill out, detox or whatever for a few months.

If Musk offers a huge reward, you'll see Pattya Beach hotel and bar owners checking decades old security cassettes.

You are still considered inocent until proofen and found guilty. Which is agood thing IMHO.

I seriously hope that through this Elon Musk learns that he's not an expert at everything and sometimes he needs to shut up and listen, but I doubt it.

If he can't weasel his way out of this, I imagine he'll continue to spiral and lash-out... all this because he just can't shut up.

Yes, it's called market manipulation.

I think he's out at the CEO of Tesla soon anyways. Regardless of this mess.

Why? He's succeeded against all odds in making a fantastic car, that's not in dispute, and they'll be profitable almost in q3 and definitely in q4.

Just making profitability is irrelevant if they can't pay back the enormous loans coming due over the next year.

(Also I don't think they'll be profitable)

Nothing is guaranteed, but can you explain why they won't be? Selling lots more cars, they cost less than they sell them for, that should at the very least greatly reduce their loss,they think it will be enough to make them profitable.

So what's your take?

I don't think they will be profitable enough to pay back the staggering loans coming due.

Even if they manage, I fail to see why they should be priced much differently than GM, Ford, BMW, Mercedes, Toyota as far as long-term stock valuation goes. The "synergy" promised from SolarCity and Powerwall and so on doesn't seem to be a thing any longer.

I don't think a giant touchscreen for an interface has broad appeal but we'll see how they sell. iirc there aren't even buttons to lock the doors? talk about cheap.

Imagine the Lion!

Not to mention the lawsuit for calling that diver in Thailand a pedo.

Right or wrong (the dude certainly seems not to be a pedo), Musk is the ceo of a currently near-failing company unable to produce and deliver cars as promised. And a defamation suit is what he's spending his time on? I'd be livid were I an employee.

If it comes to worst, would it be possible for that single tweet to have started a damage chain worth far greater than actual Twitter market cap?

>- the backing off of a deep pocketed investor in the Saudis

Musk is responsible for this because he actually rejected this deal, not because the Saudis were involved, but because it involved partnering with VW.

> All to screw with the shorts, who really have no power whatso ever to hinder Telsa.

If Tesla wasn't burning through cash and didn't need an ever-inflating stock price in order to keep the house in order, the shorts would be powerless and in all honestly would back off. The only reason the shorts have power is that Tesla's future is currently heavily dependent on its stock price.

Can you explain how that works? I thought that once a company's stock was listed, third parties just trade it amongst themselves. How does that activity affect Tesla in terms of how they're able to execute?

Public companies can raise money through "secondary" offerings of stock. That's why an IPO is called an "initial" offering.

Tesla has various options for raising cash including selling stock or bonds. In the case of stock, a secondary offering would come at a price relative to the current stock price. In the case of bonds, bonds are in almost all cases higher in the capital structure than equity. Having a large "equity cushion" makes bonds more attractive because there is someone else that will take losses before the bondholders.

There's a clause in Tesla's debt that if the share price is >$360, they can pay their bond notes with stock shares. If it is <$360, they have to pay their debt payments in cash. This obviously has a massive impact on Tesla's already precarious cash position.

Stocks prices are based off of two things really - current earning and perception of potential earnings in the future.

Tech stocks are infamously based largely on the second more than the first. Many do go reinvestment heavy like Amazon did for years before they started to post more profits.

Given the feedback loop impact things get weirdly circular in potential for success based upon others. Not in a something from nothing sense but in a giving what it takes to succeed sense.

>The sad piece of karma in all of this is that Musk tweeted in an effort to destroy the shorts.

Its not about trying to destroy or support the shorts its about having an effect on the stock price at all. Its some insider type stuff. He cant do that. The reason we like Musk so much is the same reason hes "failing". Hes not the typical CEO and he really doesnt want to be. I dont think he like being the boss, I think he rather build the cool stuff.

I think the money went to his head he is realizing that there is another tier to being rich and powerful that he still needs to climb in order to support the projects that drive his ambition.

> Musk tweeted in an effort to destroy the shorts

Is there any evidence that this was his intent? How do you know that he didn't actually intend to take the company private?

A long list of investors publicly denied any talks with Tesla. All potential banks expressed puzzlement with the tweet as well. One of them would absolutely have to be involved for a deal of this size and none were.

Reporters asked everyone and found 0 evidence.

Did they ask the Saudi crown?

Yes they did.

PIF, the sovereign fund, stated that they had no intention to go beyond their initial 5% investment.

Last week they invested $1b in a Tesla rival, Lucid.

Thanks

He's said a lot of anti-short-seller things on twitter. Even if he genuinely wanted to take the company private, it's hard to see the "funding secured" statement as anything other than a lie.

Yes. I saw a tweet the other day that essentially said that the very worst thing you could do to Elon Musk would be to lock him in a comfortable conference room with plenty of food and water and excellent WiFi signal...and his phone.

I can think of a political figure for whom this would be true, too.

The problem I have with statments like this is that is twitter is often awesome as well.

Getting great updates about technologies in SpaceX, Tesla or Boring. He also answers questions of podcasters and journalists.

He also goes on personal crusades against members of the press, or just some random people that have said something mean, but true about him. (Vern Unsworth)

He is very open to fans who give him good press, but closes up, and dismisses boring questions from haters and non-believers and shorts.

Now, there is certainly a bit of a track record with a recent American presidents for this sort of thing. I'm not sure you want to double-down on that.

What is the middle ground here? Are all public figures supposed to completely hold back all views and follow some unspoken social rules?

It's one thing not to make dumb mistakes that hurt your company but the end result of this outrage/apology tour culture we're developing and forever expanding the scope of is going to create a completely risk averse, milquetoast, and boring culture where honesty from public figures is rare and withheld as it was in the Victorian era.

I'm happy there are people like Musk who push back on this idea. He's still human, this is how he actually feels, and he has nothing left to prove to the world as a billionaire with multiple successful companies.

Plus measuring a private citizens communication to the same degree as a presidents is a bad idea. And it's like a good reason why Elon wants to take his company private as well.

I'm okay with having red lines but everyone seems so eager to make those red lines one step above corporate-speak filtered through a PR firm and a focus-group. At some point we need to push back on this and tell everyone to calm down, the world isn't ending because someone tweeted something you find (the key word here) mildly offensive.

> What is the middle ground here? Are all public figures supposed to completely hold back all views and follow some unspoken social rules?

The middle ground is that you shouldn't be so full of yourself, that when you make a technically stupid suggestion, and get called on it by an expert, your immediate reaction is making personal attacks against that person.

And then, instead of apologizing, doubling and tripling down on it.

The middle ground is that when the owners of your company ask you questions about your financials, you don't dismiss them as boring questions, and then take five fluff ones from some dude that makes gushing YouTube videos about you.

The middle ground is that you should generally behave honestly in public.

The middle ground is that you shouldn't fire people from your company for testing positive for THC, and then going on the air, and smoking pot.

These aren't some arcane, unwritten rules, that only slimy politicians and social contract lawyers understand. This is basic human decency.

> Plus measuring a private citizens communication to the same degree as a presidents is a bad idea. And it's like a good reason why Elon wants to take his company private as well.

If you're exhibiting a lot of selfish and narcissistic traits as a private person and CEO, you'll probably keep exhibiting them as a president. I don't think the amount of scrutiny you undergo in the latter job goes down.

> What is the middle ground here? Are all public figures supposed to completely hold back all views and follow some unspoken social rules?

If you're a major public figure, try to hold back on accusing someone who has just shown themselves to be pretty heroic by rescuing stuck children, a pedo.

Everyone makes mistakes. That's part of being human. The answer doesn't have to be total control and aversion to personality and honesty in media. Which is what people seem to be pushing as the end goal, where no one ever says anything dumb or bad ever.

> he has nothing left to prove to the world as a billionaire with multiple successful companies.

Has anybody told musk this? He doesn't seem to act like it.

>>Imagine Elon getting a 2 year ban on begin an executive in a company.

In the US.

I'm sure there are a lot of countries that would be more than happy to invite such a hardworking, ambitious and industrious man to set up company like SpaceX in their countries.

If you make these sort of things impossible in your country, they will just happen else where.

> Imagine Elon getting a 2 year ban on begin an executive in a company.

Its not that big of a deal - other execs at SpaceX recently came and say company run great and they are mostly in charge anyways.

> There is going to be a lot of backroom dealing to do everything they can to prevent Elon from being charged.

Are you saying there are bribes or something? Can you please clarify?

Please define shorts. Google was unable to figure it out.

People short selling the stock.

Short-sellers: people that bet that the price of Tesla stock would go down.

Short sellers. People who sell something they don't own, speculating that they will be able to buy it later at a lower price.

If so, they make money. If not and the price goes up a bit, some shorts are forced to buy at the higher price to limit their losses. That pushes the price up further, forcing more shorts to buy, etc., causing a "short squeeze" where the price rapidly shoots up very high, "destroying" a lot of shorts.

Pedantically shorting doesn’t have to be borrowing the underlying instrument. Put options are another way to trade on the idea that a stock will go down. I’d actually bet it’s the more common way. It would still be colloquially referred to as being short.

That's actually the opposite of "pedantically" given that you're playing loose with the definition. Pedantically, shorting is selling a financial instrument you don't own, with the idea (though it is not a requirement to fit the definition) that you'll give it back later by buying at a price lower than it is now.

What you described is options trading, one method of which hedges against declines in stock price. Yeah, one could take a "short" position by buying puts, but it can be argued that a short position is not what puts were originally designed for. In contrast to short sellers who obviously intend for the price to go down, or they won't make any money.

I do question whether puts are the "more common way" given that they have an expiration. You can hold on to a short sell as long as you can pay the interest and the loaning party doesn't want their shares back.

Pedantically, I would agree with your definition if it was phrased as "short selling" and would ask for more clarification ("via what?") if someone said they had a short position.

Arguing over the definition of Pedantic. I think we've reached peak HN.

"Short selling" refers to selling borrowed shares. "Being short" is the opposite of "being long" and refers to exposure, irrespective of the instruments or methods used to attain it. TL; DR one can be short through options or short selling.

https://www.investopedia.com/terms/s/shortselling.asp

A short, or short position, is selling first and then buying later. The trader's expectation is that the price will drop; the price they sell at is higher than the price they buy it at later. The difference between the sale price and the buy price produces a profit or loss. [1]

[1] https://www.investopedia.com/terms/s/short.asp

Such a great land we live in where a CEO is investigated within weeks by criminal justice agencies for making a few tweets, but during the 2008 crisis other kinds of fraud (approving loans without verifying income, robo signing of "contracts") that cost people jobs, homes, and even lives, got CEOs unprecedented bonuses and billions in interest free loans to keep their ships afloat. God bless the USA.

The CEO in question may have violated multiple state and federal laws.

The problem during the crisis was that many of the things you listed weren't illegal because the laws and regulations that would have made them illegal had been rescinded in the years or decades prior. Thus, the CEOs got to keep their jobs and their bonuses and their freedom because even though what they were doing was highly immoral, it wasn't illegal.

Laws that exclusively protect shareholders. That's the problem. And most of the population doesn't have the resources to lobby Congress to roll back those laws the way financial laws were rolled back. The fault for that inequality lays squarely on our nation.

It would be a (possibly huge) blow to our future as a planet if he were banned from being an executive of a company for even just 2 years. I hope for humanity's sake that it doesn't come to that.

What makes you believe that? All the major car companies are making EVs and there are several SpaceX competitors (Blue Origin in particular). The SolarCity side of Tesla's business is declining, but there are still many companies offering solar installations.

Besides that I feel Elon's companies are the more important industry leaders in those areas, is anyone else working on high speed underground transportation around the US or space tourism?

Musk won't be banned from tweeting ideas about hyperloop or whatever, so other ceos can still build those things after analyzing the cost.

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