Tesla Enters “Whistleblower Hell”
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At least from a PR perspective you dont want to engage like this if you have nothing to hide, so either they're doing something wrong or they have terrible terrible PR sense. Both seem equally likely right now.
Given they have a higher market cap than either Ford or Honda, I'd be betting on the latter....
Shorting a stock is not just a statement that you think the stock is overvalued. It’s a statement you think the stock will soon drop, because each short costs money and expires.
Eventually being correct is useless. If for example it performs poorly over the next 20 years and never actually drops you will lose everything.
There is no way you can get a rebate just by shorting the name.
You're probably thinking of the rebate rate, which is the money received by people long Tesla who are lending it out.
Can I prove that’s what’s going on? No, I’m just some dude on the internet. But it really is not implausible at all.
At a stretch, it might make it more difficulmore expensive for Tesla to refinance/raise capital via issuing stock, but that sounds like really bad ROI for billions of dollars.
I think someone would have noticed if Exxon’s balance sheet said something like “Derivative securities - $2.8B”.
Big money has a lot of legal levers to keep their investments in dirty economy profitable that also make sense for them financially.
The 80s was rife with things like this, to the point many became famous for it.
Ford's EV is 145B (42B market cap + 103B debt).
Tesla's EV is 56B (44.5B market cap + 11.5B debt).
Ford and Honda are still valued considerably higher than Tesla.
Ford's debt and assets are largely from its financing arm. It doesn't make the car making part of Ford worth more.
It's a piece of evidence that investors might be wrong.
It's an easy double. Buy Ford, sell of the assets, pay off the debt and pocket $110B for a cost of $42B. Since that's not happening, nor anything like it, investors don't think Ford assets are worth $250B.
An apples to apples comparison between Ford and Tesla to compare valuation means teasing out the part of Ford that actually makes cars. Lumping in the financial services arm makes no sense if intellectual honesty is the goal.
And in any case, EV isn't at all the final word you're making it out to be. If Ford takes on $100bn of debt to finance $100bn of cars with zero margin in order to move metal, now Ford has a $241bn EV. Is Tesla now suddenly even-more-undervalued compared to Ford? Nope.
You're right that Ford probably can't be broken up and liquidated at book value, but my argument doesn't hinge on that.
Who said Tesla was undervalued?
I take it you're not interested in addressing my actual argument given you've deflected twice.
So saying that Tesla is overvalued compared to Ford is like saying "water is wet". By that measure all 499 of the other companies on the S&P 500 are also overvalued.
I haven't addressed most of your arguments because they're both not wrong and irrelevant.
The original point I was refuting was the belief that the stock market values Ford less than it values Tesla. I'm saying that the stock market values Ford at about 3X what it values Tesla. If you disagree with that statement you need to give an actual number, and why.
But the EV of Ford including FFS also offers no insight in to whether Tesla is overvalued. Not even a tiny bit.
If we can agree on that, then we're arguing here for no reason.
This would be true even if things were going well and Musk were going from strength to strength. But Tesla has had a whole raft of problems, many of them self-inflicted. This is catnip to shorts.
Further, part of Musk's strategy has been to bank on the genius-founder stereotype. It has clearly paid off as well; I'd bet that that there's an order-of-magnitude difference between the percentage of people who can name Tesla's CEO and that of any other car company. But again, it's risky; if Musk quit or were forced out, confidence in the company would collapse. And he has made a number of unforced errors; no other car company CEO is in dutch with the SEC. This kind of risk is also hugely appealing to shorts.
It's also worth noting that the shorts were right. Tesla's managed to lose half its value from the peak, and it's still down something like 30%. Some of them have surely made a ton of money.
https://www.forbes.com/sites/antoinegara/2019/03/05/after-ho...
I'm surprised any company has the time to engage and attack those kinds of threats, but I'm not surprised there is an incentive for them to do so. Is it just the lack of time (or maybe optics, for whatever reason) that other companies don't "fight back"?
Because it's incredibly pointless, an utter waste of time, a distraction from things which actually matter, and can veer all-to-quickly into illegal actions as Musk has already found out? (His "taking Tesla private" tweet seemed to have been driven, in part, by a desire to punish shorts. It was later found, of course, to be illegal stock manipulation, and it wiped billions of dollars off Tesla's market cap.)
> Aren't people taking short positions on companies effectively lowering the stock price of the company compared to someone just not buying their stock, and therefore doing potential damage to that company's valuation and future?
In much the same way that people choosing not to buy Tesla shares do, yes. The effect is real, but even in extreme cases, trivial.
It is quite clear that Musk has done vastly more damage to Tesla by worrying about short sellers than the short sellers themselves could have possibly done (eg, with his "taking Tesla private" tweet, but there are many other examples).
> I'm not surprised there is an incentive for them to do so
There is no incentive to do so. It is actively harmful.
They basically continued to grow and show positive financials. Eventually Pershing exited his position.
It’s not worth playing a PR game. You’re just asking to get called out on some statement you made.
The proof is in the pudding. Sell lots of cars. Don’t claim your going to sell 500,000 vehicles this year, then come back and say “oh, I meant if you annualized our peak month”.
If the short sellers are wrong about Tesla being overpriced, they will pay for it. They are taking all of the risk, and they are not hurting anything except Musk's feelings.
So the big short sellers are trying to force the share prices down enough that Tesla is forced to deal with this, which would push the share prices down even more and let them profit hugely.
Umm, yeah. There is nothing special about that.
In fact that is the point.
In other words, the shorts are totally right to be taking their position? A company that depends on its stock price to stay afloat is not a healthy company. Let’s take AAPL as an example. Their stock could plunge to $1/share and they would be absolutely fine because they have positive free cash flow, and thus don’t need to rely ok raising capital via selling shares.
Many of the shorters just think the company's overvalued.
But anyone aiming for that event to trigger is making a bet that enough people will make the same bet, in deliberate disregard of whether the stock's value is appropriate for the actual business.
It's kind of like a prisoner's dilemma. Is it 'right' for someone to defect?
That motive isn't saying anything about the company. It's a pure meta-move. That places outside of the normal "markets efficiently allocate capital" logic. It's profitable but very much not efficient to swing your weight around and make a company go out of business in a way that owes you money.
Investors help companies, right? They add to the demand for the stock, and keep the price up. Stockholders have invested in the company. When shares are created and sold, the new stockholders inject capital into the company, and when shares are re-sold that property of "have injected capital into the company" is in some moral sense transferred at the same time.
Short-sellers do the opposite -- they depress the price of the underlying. If short seller S borrows TSLA from holder X and sells to Y, two people are long TSLA (X and Y), but there is only one share between the two of them. If S hadn't been there, the stock price would be higher.
From the perspective of market efficiency (and the economy) I agree that short-selling is important. I wish it were easier to do. From the perspective of individual companies, though, short sellers are directly harmful to their success.
> “It’s taken a long time to get to this point, and I remain steadfast regardless of any monetary outcome. The only thing we are guaranteed to take to our graves is our name. I’ve spent a career of integrity, and won’t stand idly by when someone like Elon Musk runs roughshod over others because he happens to be a billionaire.”
edit Please give me the courtesy of explaining downvotes. Thanks.
If you meant either/or, Patagonia. Clifs. Panera. In n out. There's way more but hopefully you get the point.
Responding in public fashion is a rational choice for TSLA to make assuming:
1) There exist short sellers who are willing to engage in malicious activities that hurt shareholder value
2) Publicizing their efforts to fight back against said actors acts as a deterrent for further malicious activity.
I don't know for sure, but I think there's a reasonable likelihood that both these statements are true.
Very much a real phenomenon, hard to catch them and it's very lucrative.
Because apparently figuring out the basic business functions of your chosen industry is hell.
Selective reporting or withholding of information is a form of bias.
Short selling is part of a functioning market. It's not some evil thing. It's one mechanism the financial world uses to gauge company value. I'm shocked every time I read this conspiracy theory on HN. The positions of these traders are public.
The only response to short sellers is to focus on your business. Responding with "it's a conspiracy" does not help your business.
But it doesn't matter what I write if ones only motivation is profit.
Try googling "why do markets allow short selling". First response [1]. tl;dr - short selling helps your retirement account & balances the market when there are bad actors, such as Enron.
> If it's healthy how do I profit from global climate disasters?
You're conflating things. Profit != world health.
Profit is just a human motivational tool, and money is paper trust. I wrote this software that helps your farming equipment run, and I need food. Money smooths these transactions so I don't need to trade goods-for-goods in every scenario.
I don't know how anyone could profit from hurting climate. Ultimately, destroying your environment destroys you. That's like kicking the amniotic sac open. Why do that? To the extent someone is so-motivated, I'd argue they're depressed, not profit-oriented.
> I'll just keep investing in prison companies for now. /s
I don't know whether that's possible for the average person. For a wealthy entity, it's still a risk, because that industry could disappear due to public pressure. Your money may have been better invested elsewhere.
[1] https://www.quora.com/Why-is-short-selling-legal-allowed
Elon occasionally does not help this, but authorities should look into the allegations that a group is actively manipulating Tesla employees for these types of stories.
https://cleantechnica.com/2019/07/21/were-cnbc-sources-tesla...
See this tweet from Paul Graham for example https://twitter.com/paulg/status/1122987659079618563
People notice the hate, and although there most probably are issues in the factories, then the reporting of them is way bent to the negative.
For profits, I think it's pretty obvious that both Tesla and SpaceX will start making a profit quite soon, and will probably make a lot of it in the long term. (Maybe they are making a profit even now? Sorry, don't know, I'm just a random developer...)
SpaceX is private, so its books are closed and there is no publicly reviewable valuation.
Tesla is public and has had < 5 profitable quarters in its existence. None of Elon's existing companies have been able to turn a profit. Paypal does not count as "his" since he joined there on an acquisition and he was only CEO there for a few months before getting the boot.
Are you serious? I can throw a rock at any newly minted tech IPO in the last year and almost guarantee that it's not even remotely close to being in the black without even hearing the name.
With what I said was more aimed at the argument that building electric vehicles isn't a straightforward business where there is nothing to innovate and the purpose is just to get profitable as quickly as possible. But yes, as you say, they invest it all back.
I wonder if the negative side in the whole argument would just like the profits and stock go up as fast as possible, and that is the reason for unhappynes?
They didn't need to become huge right away, that was his gamble, and it remains to be seen if that will pay off.
- Calling someone's boss and threatening a lawsuit to make him take down critical writings on Twitter and Seeking Alpha (https://ftalphaville.ft.com/2018/07/27/1532692760000/Je-suis...)
- Threatening to "nuke" a departing employee who had returned to Tesla HQ to collect some personal belongings (https://www.bloomberg.com/news/articles/2019-04-05/tesla-boa...)
- Trumpian attacks on the press, including by riling up his fans on Twitter (https://twitter.com/lopezlinette/status/1014983757252780033)
- Lying with statistics, e.g. "traffic incidents are xx% less likely with Autopilot engaged" or "Tesla cars are xx% safer than the overall U.S. fleet" without mentioning the huge selection bias at play
- Running factories with tons of environmental, health, labor, and QA-related problems, then attempting to just gaslight his way through the criticism (https://www.cnbc.com/2019/07/15/tesla-workers-in-ga4-tent-de...)
- Brazenly lying about his company on Twitter in an attempt to manipulate the stock price (https://www.sec.gov/litigation/complaints/2018/comp-pr2018-2...)
There’s a good reason why mainstream media doesn’t talk about it as seriously as it should be doing.
Also, those companies happen to build products that are needed and can actually be afforded by people who need them to, you know, make a living, unlike Elon's shiny toys.
This conspiratorial mindset on part of Tesla's fans is far more detrimental than any mythical shorts' conspiracy or anything.
Wattaboutism does not address the man's problems, including all the problems he brings onto himself, the company he runs, and its investors.
While I've yet to actually see the latter I'm not so sure what to think, quite honestly. However it seems odd of the timing of this - right before earnings. I'll be curious to see how CNBC drums this up today.
The bigger reason is that Tesla really put themselves out there and now negative stories getting a lot of views.
FWIW The linked tweet did make that claim, so hopefully I made that clear.
Ironically, you resort to personal attacks instead of making an argument based on merits. It's perfectly fair to point out that the "I'm not PC or tame" line is frequently used by people that are just jerks to justify jerk behavior. I don't think calling him a prick is unwarrented given the behavior.
Although I don't have the full list of what Elon has done wrong then I'm pretty sure that there is plenty of way more ugly stuff going on which we don't even know about, but by people who don't bring any value to the world. And you are just randomly angry because the current guy at hand is public with his mistakes, you can see them, and then you go and argue about it on the internet.
> he has made a name in the general public and is not politically correct nor "tamed". Obviously he's going to get plenty of negative attention.
This is a classic excuse used by pricks/jerks. I don't have a full list either, but I've literally never called someone a pedo for criticizing me, I've never seen it happen. It's a jerk first; truly exceptional. "I'm not politically correct" is a classic, tired, and lame excuse.
WTF are you talking about people that don't bring value to the world? Everyone does, and I'm not impressed by Musk.
> And you are just randomly angry because the current guy at hand is public with his mistakes, you can see them, and then you go and argue about it on the internet.
I'm not angry, and this is an internet discussion board, so I don't know what your point is.
You're commenting on a man who accused a cave rescuer of being a pedophile after he criticised mr Musk's brain-dead proposal to rescue the stranded kids.
The problem does not lie on strawmen such as this silly idea tha the industry does not like him.
Clean Technica is to Elon Musk as Fox News is to Donald Trump
Please elaborate.
There are trillions of dollars at stake in the launch industry that SpaceX is trying to seriously disrupt.
There are trillions of dollars at stake in the ride-share/taxi industry that Tesla/Elon is trying seriously to disrupt.
There are a lot of people who are working very hard to paint a very negative picture of Elon/Tesla/SpaceX right now.
It's amazing that stories like this make headlines while the news that the Tesla Model 3 is outselling every other electric vehicle combined doesn't make a blip.
Follow the money.
And yet if you do this at the actual companies (SpaceX, Tesla) or industries (rideshare) you mention, most traditional economists will tell you they have questionable futures based on their balance sheets (all of them have been consistently losing extremely large amounts of money for years) and some believe they will actually go to zero. So by following the money, it's not hard to see why some would think these companies are overvalued.
United Launch Alliance, SpaceX's main (only?) competitor pulls in a few billion in revenue a year. Profits are well under $100 million, so we're talking Trillions over a couple thousand years. Arguably, if we're disrupted into a spacefaring species, this could change, but there's physical problems with that.
You might be correct about rideshare/taxi industries over a 100 year timespan or something, but not before Elon dies.
So that leaves car industries. Which are the closest, but EVs aren't going to take over any time soon, and other carmakers are better at logistics than Tesla, and that's the important part.
Ask Norway.
Seriously this comment section of conspiratorial Tesla apologists is pathetic.
Even just a view of HN comments without having to weed out the threads complaining about fake news would be great. I bet it's not so hard to train a classifier to identify comments that amount to "This article is paid for by short sellers". They all make the same point and never address the issues in the article.
Oh please, provide some reliable sources.
So far, all the allegations -- including the ones pushed by the NYT about the company hiding unsold Model 3 inventory in the desert to cover lack of demand -- proved to be nothing.
Anecdotally: I worked for a company with a sub hundred million dollar market cap and they had /thousands/ of open lawsuits every year.
It's not common for companies to get sued. 620 over Tesla's lifespan is extreme.
(Edit: sorry, didn't see the first part where it is stated that the lawsuit includes Mexican nationals. But, I still think it's crazy that this is included in an article about Tesla and whistleblowers)
If it's the Colombian bit, what you didn't quote makes clear what's happening. The lawsuit alleges links to a Mexican drug cartel. The Colombian comment at the end was to make clear that the Escobars are (allegedly) part of a different drug cartel.
Here's the full paragraph:
Paragraphs 16 through 19 of the lawsuit identify thefts ranging between $37 and $150 million dollars, along with links to a Mexican drug cartel. (Pablo Escobar’s brother recently demanded $100 million in cash or Tesla shares from Musk for purportedly stealing his flamethrower idea, but the Escobars are Colombian.)
1. Make a name as a whistleblower
2. Invite further insiders to volunteer new negative stories
3. Solicit "the right people" to fund your operation
The concern here is insider trading. It's implied that funding contributors (Tesla shorts) may receive preferential access to negative news stories.
Edit: insider trading is not the correct legal term. Extortion perhaps? Which law would prevent them from just coming out and saying "fund us and get the scoop on bad news for Tesla"?