It's not OK for directors of a company to make materially false statements to their shareholders and if they do they can (and deserve to) get sued. It's a bit silly to talk about people being "still angry about this" when between filing the lawsuit and today Tesla has been close to bankruptcy multiple times.
The market cap of Tesla is 137.2B in contrast to GM's 29.8B, Ford's 19.6B and Daimler's 32.3B.
Source: https://markets.on.nytimes.com/research/markets/usmarkets/in...
I'm mad about it and my only involvement with the market is through mutual funds and RSUs that are immediately sold up on grant from a FAANG.
He was lying with the intention of manipulating the shares of his company. That is unacceptable behavior for a CEO of a public company.
Tesla later issued a press release where they doubled down on the seriousness of taking tesla private: https://www.tesla.com/blog/update-taking-tesla-private
So you're just wrong on both counts.
Why does this matter?
Is the idea that if you're no longer a shareholder, this makes you bad?
As opposed to long term traders, who are not trying to make a profit?
Ideally, in a lawsuit, you want the plaintiff to have suffered some kind of harm at the hands of the defendant.
Yes, you can tactically become a shareholder and file suits as some people do all the time. You miss earning you get hit by a shareholder lawsuit every time. This is not a rare thing, but also does not necessarily imply they have any reasonable claim to any damages. Could be just leeching.
The distinction between this and the SEC matter that was settled is that SEC is supposed to care about the integrity of the market at large, not just Tesla, Inc. shareholders doing well at the cost of other players in the market that were misled. That's a much stronger basis to argue for damages.
Tesla's stock went down below 200 in May of 2019, well after the tweet and skyrocketed after that. The long term performance of Tesla stock is not the result of that tweet in August of 2018 and that tweet was not representative of creation of long term value. If Musk hadn't tweeted that day, I would bet long-term performance for Tesla shareholders would have been identical.
If Musk actually had funding secured and did take the company private, recent share prices might even indicate that would have been against the long term interests of Tesla shareholders as they were betting on the long-term results of Tesla's investments in manufacturing and would have been deprived of the gains from that bet that they are seeing now.
Holding a short position is similar to having a friend with a spare old car. Their lazy kid is going to get a job and their license eventually, and they definitely want to have the car for that, but who knows when that will be. You buy it for $3,000, promising they can have the car back whenever they want. But you sell it immediately to a third party. You're planning to buy them a replacement car on the used market when the car depreciates (they'll never know the difference), hopefully next year that old gas guzzler engine is even less popular and that model year's styling is considered even more dated. When your friend asks for the car back, you'll buy one for $2,000 and make a tidy profit! What happened to these folks was that the car didn't depreciate from $3,000 to $2,000 like they expected it to, that model had the lead role in a blockbuster movie and overnight, it became a coveted classic car. Turns out there are only a couple hundred still on the road, and now, if your friend asks for it back, you'll have to go to a big auction and pay $50,000 to replace it, suffering a loss 4700% greater than the profit you expected to make.
This is a lawsuit for car owNers, not car owe-ers. The owners are $47,000 richer, they don't want to sue the car manufacturer, regardless of any underhanded dealings that got it that movie role.
Again, I agree that your post above might serve as an avenue to claim some damages that a judge would agree to, but to say stock price today is immaterial is just plain wrong. If the stock price had dropped to $100 today, it would have been likely that all shareholders could make a valid argument to a claim, but now at the very least one has to demonstrate that they were a shareholder at the time of the tweet, and they have taken a certain action that hurt them based on that tweet.
Yeah, and time doesn't mean anything in markets, so that's somehow relevant.
> I point this out not to defend Musk (he is often an idiot, especially on social media), but to point out that the people still angry about this are likely Tesla shorts and day traders.
That...doesn't even remotely follow from the facts you cited. For one thing, a CEO repeatedly flouting securities rules and thereby triggering sanctions against the firm probably means that the current market price is less thanot would be, ceteris paribus, without that occurring. Just because the stock price has gone up since that event doesn't mean that the event did not negatively impact long positions compared to everything else being the same except that event.
Just to clarify, the stock hit the $969 high very briefly and dropped closer to what it is now far before any of the Coronavirus related moves in the market.
A hostile takeover, perhaps?
Most people can't even handle the volatility of Tesla shares emotionally, when it's leveraged even more, of course Elon get very frustrated when the stock goes down.
He should have just waited a bit more with his billionaire lifestyle that he deserves.
What's baffling is how shorting is even legal. It's strictly gambling and benefiting off the misfortune of others.
https://www.aqr.com/Insights/Research/Journal-Article/Price-... https://academic.oup.com/rfs/article-abstract/26/2/287/15819...
Markets would be far worse without short sellers.
Shorting Tesla without hedging (or some good covering protocol) is a fool's game; no margin calls for me. There's a reason why the IV is ludicrous too.
And I don't think that Tesla is a "bad company", it's merely has substantially overpriced securities.
But what I find truly horrifying is how okay everyone seems to be with highly unethical and dangerous behavior when things are going up. Not just in Tesla, but in so many corporate offices.
Amazon grew so big in part because of the dotcom bust which took to the grave uneconomic players from their competition horizon.
Up until now (and possibly still now), the fate of Tesla has been in their ability to raise capital to develop technology and build factories. They raise capital by selling shares or borrowing money using their ability to issue shares as collateral, so a high share price is a prerequisite to their ability to raise enough capital and therefore exist as a company. Meanwhile the charismatic CEO has been a major contributor to increasing the share price.
Without the charismatic CEO they don't have a high share price, without a high share price they don't have capital, without capital they don't exist. At some point they'll be past that dynamic, but they weren't always, and maybe they're still not.
And it's an open question whether the existing auto industry would pick up the ball on electric vehicles if Tesla ceased to exist. It's not hard to argue that they're only doing it now because Tesla is forcing them to -- they could have started 30 years ago and they didn't -- and they don't seem particularly enthusiastic about it even now. They also have a lot of incentives to avoid it, because it requires investing a lot of money in new R&D and retooling factories, and then giving up very lucrative service charges since electric drivetrains are much simpler and require less maintenance. And if Tesla imploded it would be easy for anyone inclined to succumb to those incentives to point to it as an indication that electric cars weren't a good market to be in, as a justification for not entering it.
So right now the world kind of needs Tesla to succeed, at least until they've forced most of the incumbents to release competitive electric vehicles, which they haven't actually done yet.
To rephrase the question: what will change in the structure of reality that will make EVs a great business?
To guide the answer: me currently being able to type it comes from decades of silicon semiconductor manufacturing improvements (none of which were bubble-funded; silicon is often not a massively profitable business but profitable; though those were govt bootstrapped).
When Tesla started out, there was no model for this. Nobody had ever made an electric car that was reasonably competitive with gasoline powered cars. Nothing before Tesla was that fast with that much range. They might have spent billions of dollars trying to develop it and failed. It's hard to raise that much money when there is that amount of risk. But once you're actually doing it, the risk is proved out and there is a known viable model for success and all that's left is to mass produce the design. So now they've essentially done that for sedans and we're waiting on trucks.
> To rephrase the question: what will change in the structure of reality that will make EVs a great business?
Have a look at oil prices right now. They're a lot lower than they were end of last year. That's what a reduction in demand does. The reduction in demand came from the coronavirus, but you get a similar effect from replacing a relatively small percentage of vehicles with electric ones, because they use 0% as much oil as ICE vehicles.
In theory low oil prices are bad for electric cars, but they're also bad for oil producers, who are then making dramatically less money. And the amount of money they're making is the primary lobbying force against having a carbon tax. The other impediment is the pinch the consumer would feel at the pump, which low oil prices also address, as does a larger number of consumers driving electric cars. Take all those things together and it becomes a lot easier to get a carbon tax.
So you build enough electric cars to make the oil industry bleed enough that they're no longer strong enough to resist the need of everyone else in the world to kill them, they are then killed, and ~100% of new cars become electric. Which makes electric cars a good business to be in.
But first you have to get over the hump.
If Tesla continues to work towards a fossil fuel-minimized economy (and to my part, I hope they do), then their stock price will demonstrate this.
If you think investors will lose confidence and back out of Tesla because "the shorts", then they're demonstrating their faith (or lack of it) in the market, not the company.
Either way, a lot of this sounds like "we don't like the way _they_ play the game". Sucks to be a (regulated) free market, huh?