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> As a consequence of this, analysts rightly discounted TSLA's stock price

TIL some of the wildest, most speculative short selling in history is "rightly discounting" a stock price.

That's revisionist. I mean, yes, you're right that they could have operated more in line with traditional accounting. But that's not why their stock price was held incorrectly low.

There were plenty of reasonably thought-out cases to short Tesla, and there may still be. The company has had numerous recent instances where they've failed to pay vendors and their runway was shortening at a concerning pace. These are legitimate reasons to short a company's stock if you find them persuasive.

I don't disagree that there was some wild speculation, sensationalistic articles, etc., but that doesn't make all short sellers wrong for believing that the price is inflated.

Last, who's to say that the price was incorrectly low? Was it incorrectly high before? Is today's price the right price? I do not believe that there was some conspiracy to artificially depress the price of the stock if that is what you mean.

> Last, who's to say that the price was incorrectly low?

Uh... you. Because you're the one who introduced the "rightly discounting" nonsense that I was arguing with. Clearly you have an idea of what the stock price "should" be because otherwise there would be no "right" in your "rightly", right?

You just don't agree with the price the market has picked NOW, when you thought the price it had THEN was just fine. And you're reaching for stuff like "accounting norms" as justification, when the real truth is that, no, TSLA was artificially low due to short selling.

It is true that his actions were kind of reckless, plus, I agree that the hero worship must stop. He could've done it better, but it is a good sign that it all worked out well.

I also think that this will serve as a base for Tesla. The first few profitable products are the hardest to produce. If they launch an even affordable version, they'll be able to manyfacture in bulk and not he stuck in "production hell".

I don't know if I am mis informed, but I've always thought about the analysts as someone who, I don't know, are kind of traditionalst people. They might not be, that's just my perception.

I'm very happy that Tesla broke even, just look at a few months back. Who would've thought this would happen? I would read an article a day saying Tesla will go bankrupt, but now they are making more number of cars and cash. The main advantage Tesla had was that ither manufacturers are busy milking ICE engines.

JLR recently, said that they plan to go all electric in 2025, they are doing it NOW!!!! I'm an investor in JLR's parent org and its insane that JLR didn't think of this switch before it got burned down due to low sales in China! This is like a governmental response. Slowly and reactionary

There are a number of things here that I would quibble with:

1) There are absolutely reasons you can't raise cash with relatively inexpensive bond insurance, or by equity based capitalization. Investors get unhappy, and your bond ratings degrade. Bonds often are secured, so you can't just shaft investors by driving down the stock price.

2) Tesla's stock price is in no way discounted by standards of car companies - just startups. It's also the most shorted stock on the face of the planet - I suspect that has much more to do with volatility and downward pressure.

3) Your interpretation is "flustered" and "consequences". All sides agree that there were discussions prior to the tweet, but that the statement implied things that it ought not (Funding secured). This was a poor tweet, poorly though out. You bought into the conspiracy theory - that this author debunked - that cash management was a problem, and Tesla was about to go broke, so flustered desperate tweet. I think we can safely discount that, given the current results.

The rest of your argument is basically emotional attacks, so forgive me if I choose to ignore that.

All that said, I think Tesla will benefit by better governance - having a separate chairman role. This is just a good idea for all corporations.

1) I agree that it can cost a material amount to raise money in any manner, be it debt or equity. That said, Tesla was in an okay place to raise money after the success of Models S and X, and had all of the information to reasonably project that spending on Model 3 production would outstrip inflows from existing sales to a degree that could put the company's finances in a relatively precarious state. They were not reasonably inhibited from raising further cash to justify not doing so prior to ramping Model 3 production.

2) You're right, by car manufacturer standards the company is trading at an incredible premium, I should have been more clear. I meant discounted in the sense that "the street" marked their targets on Tesla down from where they had been as a result of these financial concerns.

3) The term "discussions" may even be too strong for the few conversations that occurred prior to the tweet. It was incredibly irresponsible, and it's somewhat difficult to interpret his intent as anything but to manipulate the stock price and punish short sellers.

The author did not debunk the claim that cash management was a problem. Cash management was a problem and may continue to be a problem in the future. Rapid cost-cutting and non-payment to vendors seems indicative of poor cash management to me. Anytime that a company's runway becomes a relevant part of an objective analysis, there are cash issues. Tesla did not need to give cause for investors to call into question its financial stability in order to make the Model 3.

Don't get me wrong, I want Tesla to thrive. It just seems as though many of these issues of financial stability need not have occurred. I agree that better governance is in order and that Tesla and many other organizations can benefit from a greater degree of independent oversight.

1) Yep, and anyone who has worked in a startup knows that these are "bet the company" moments. They had to ramp to model 3, they thought they gave themselves enough room. Turns out the engineering on factories were wrong - in particular Panasonic fscked up the battery assembly system and Tesla screwed up by over automating. That made it closer then they should have.

2) I've never thought that anything the street did around Tesla was rational. I just watched Mark Speigal still hold on to his position that Tesla is doomed.

3) I agree it was irresponsible - but I also disagree with your thesis that it was manipulation. Elon had access to the sales number, and the ramp. He didn't need tweet to inflate the stock - that would have happened (with a much larger market cap then today) at the end of the quarter. That just puts it back to twitter induced stupidity.

Thanks for the well-reasoned response here. I think we are agreed on Tesla governance going forward. I am really praying that the Mullally runner is correct. That would make me a very happy camper.

1) I agree that there are certain instances, especially in startup-land, where we have to bet the company. Lord knows I've had to do it with the company I'm a part of. That said, I don't think that this was one of those moments.

2) I've worked intimately with both buy and sell side clients, so I have pretty good first-hand knowledge of analysts on "the street". I can confirm to you that they are as irrational and misinformed as much of the general public. Bringing attention to themselves and their firms plays a big role in what they say/do. I agree that there has been a ton of irrational work done on Tesla, but I think that a reduction in target prices to reflect the company's financial state was reasonable.

3) I think we both just see this very differently.

I agree on Mulally, that would be great. Thanks for the detailed responses and thoughtful back-and-forth.

There is absolutely no reason that TSLA shouldn't have raised cash with a relatively inexpensive bond issuance or moderate share issuance in the lead-up to the large expenditures required to begin Model 3 production.

Well, apart from the fact that TSLA already has $10b of Debt to pay back over the next few-to-ten years. I believe Tesla did borrow heavily to begin Model 3 production, but then production took longer than expected to get off the ground and Musk decided it was now or never and that they would try to break even with what they had rather than taking on even more debt. At some point they had to demonstrate they could make money, and they've already left it a long time. I'm very glad that it looks like they're going to pull it off.

The best part about this moment right now is if TSLA immediately starts looking into restructuring their debt while interest rates haven't taken off and while everyone is excited again about TSLA's future. Seems to me this would be a savvy time to milk the market and roll over all their non-optimal debt.