Tesla’s stock is shorted FAR more than any other company with comparable market cap. 30% of outstanding shares are shorted. It’s bonkers.

It's not bonkers at all. Musk's strategy from the beginning has been hype-driven. This gives him low cost of marketing and low cost of capital. But the downside is that the stock will appear overvalued to observers who don't buy the hype.

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.

But which is the more likely causes of this: That TSLA is the victim of an evil coordinated effort to cause the company to take, or just that 30% of the market genuinely believes they're overvalued.

Given they have a higher market cap than either Ford or Honda, I'd be betting on the latter....

~“Markets can stay irrational longer than you can stay solvent.”

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.

Shorting Tesla actually pays a rebate right now, because the stock is cheaper to borrow than the interest paid on the cash proceeds from selling it up front.

Tesla is one of the most shorted stocks around.

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.

Tesla is also one of the most widely held stocks around which means there is an ample float to borrow for shorting. Interactive Brokers pays a rebate.

When you consider how rich and well-connected the players who stand to lose if Tesla wins, I don’t think it’s at all crazy to suggest that they are using some of that wealth to slow them down. If you happen to have 10 billion hanging around and there are billions more on the line, it’d almost be stupid not to. There’s no law against malicious short selling assuming you’re not outright lying about them in print. Oil companies have a the means, motive, and opportunity. Exxon Mobil alone made $20b in profit last year. 30% of TSLA is 12b or so. If they can delay the electric transition by a couple of years by kicking in a few billions along with the other big ones, that’s a great return on investment even if they take a huge bath on the shorts.

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.

Are you suggesting Exxon Mobil is placing huge short bets on Tesla? How would that affect the company apart from deflating the share price?

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.

Wouldn’t a public company like Exxon need to disclose any massive short position on it’s quarterly public statements?

I think someone would have noticed if Exxon’s balance sheet said something like “Derivative securities - $2.8B”.

Exxon mobile also has a heavy investment in clean energy. Bigger than the total value of the Tesla shorts. They're not just oil anymore.

This isn't about a coordinated conspiracy although there have been multiple examples of such in the past in other situations. Multiple independent malicious actors through their own self interest if sufficiently capitalized can easily destroy a company through actions like this purely in the persuit of self profit. Especially if they are competing in the same space.

The 80s was rife with things like this, to the point many became famous for it.

That’s not a dichotomy. Literally they could be both.

Big money has a lot of legal levers to keep their investments in dirty economy profitable that also make sense for them financially.

It's not either or. It's safe to assume the vast majority of TSLA shorts believe the stock is overvalued. In addition, some minority of shorts take overt actions to hurt the company's share value.

Equity value (market cap + debt) the real measure of company valuation, since debt holders are owners too.

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.

Don’t profits make a difference there? Ford is actually making quite some profit.

Ford has over 250 billion in assets. Quoting enterprise value without context is highly misleading.

Ford's debt and assets are largely from its financing arm. It doesn't make the car making part of Ford worth more.

Investors have valued Ford at $141B. Assets doesn't affect that statement one bit.

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.

Sure, the statement is correct, but misleading.

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.

> Is Tesla now suddenly even-more-undervalued compared to Ford? Nope.

Who said Tesla was undervalued?

Less overvalued works too, if you prefer.

I take it you're not interested in addressing my actual argument given you've deflected twice.

Ford is perhaps the most undervalued company on the stock market, according to a bunch of metrics, one of which you've pointed out.

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.

OP was using Ford's market cap to argue Tesla is overvalued. Your response was that EV is a better metric to use than market cap.

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.

It’s not if the stock is overvalued. Time will tell. I’m actually a Tesla shareholder. I bought it when I believed in their vision. Musk’s antics have caused me to rethink the wisdom of my position though. I wouldn’t be surprised by a crash in share price. Then again I’m not betting on it either.

Because the market cap itself is bonkers. For every short seller there’s three to five fanboy speculators propping the stock price up.

Why don't more companies "engage and attack shorts"? 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?

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"?

> Why don't more companies "engage and attack shorts"?

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.

If you want to see the correct way to deal with a short seller, look up what HerbalLife did against Pershing capital’s massive short.

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”.

I think it's fair to say that Tesla managed to do both.

https://www.forbes.com/sites/antoinegara/2019/03/05/after-ho...

I don’t have any problem with someone shorting a stock if they don’t engage in spreading lies and trying to take the company down. If you don’t see what shorts are doing against Tesla, I recommend reading articles about them more often.