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.
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
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.
So, either way...
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.
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.
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?
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.
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.
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.
His lifestyle isn't the big problem, IMO. He's not Johnny Depp, he's way richer. That money most be going somewhere else...
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.
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.
"Never ever" as in two profitable quarters? https://www.cnbc.com/2018/06/29/tesla-still-isnt-profitable-...
How does this actually work? His stock is just his collateral for those loans, which can be transferred if he defaults on payments?
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.
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.
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?
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.
Not on their own they don't. You can go and short Facebook right now and it won't move the price at all.
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.
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.
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...
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.
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.
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.
(Congrats on your successful trade!)
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.
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.
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.
[0] https://www.buzzfeednews.com/article/ryanmac/cave-rescuer-su...
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.
As for the truth...we don't really know until there's discovery
EDIT: added the "per se" since regular defamation requires proof of damages but the per se form does not.
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.
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.
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.
How does a man risking his life to save children halfway across the planet qualify as an opponent?
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?
Elon Musk is business man. His actual occupation is organization, management, negotiation, finance and public relations.
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.
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.
(Also I don't think they'll be profitable)
So what's your take?
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.
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.
The actual lawsuit is damning: https://www.documentcloud.org/documents/4895828-2018-09-17-C...
Musk is responsible for this because he actually rejected this deal, not because the Saudis were involved, but because it involved partnering with VW.
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.
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.
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.
Is there any evidence that this was his intent? How do you know that he didn't actually intend to take the company private?
Reporters asked everyone and found 0 evidence.
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.
I can think of a political figure for whom this would be true, too.
Getting great updates about technologies in SpaceX, Tesla or Boring. He also answers questions of podcasters and journalists.
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.
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.
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.
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.
Has anybody told musk this? He doesn't seem to act like it.
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.
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?
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.
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.
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.
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.