I did follow the short campaign against Tesla closely from 2014-2018. And that project was vicious. I could easily see it toppling a less-financed company, or one where the quality of their engineering was less obvious. And trust me, although things might look black and white in retrospect, there was nothing obvious about Tesla's success in 2014. The indications were pretty clear if you followed it closely, but this reality was in very sharp contrast with the narrative. I believe it was a closer call than most would believe in reterospect.
Comparisons with Nikola nonwithstanding, I believe you're wrong about loud short sellers in general not being able to destroy the prospects of a company that would succeed in their absence.
Moreover, companies in that position are exactly those with the greatest profit potential for short sellers. Companies that are obviously going to succeed or already have aren't likely to decline in value in the near future. Companies that are obviously going to fail will have declined in value already.
The largest opportunity for short sellers is when there is that uncertainty, because then you have a company walking a tightrope and there are people willing to bet that they make it to the other side. The short sellers can take their money and then give the company a hard shove and hope that it makes them fall.
Provide an example of this happening.
Judging by many of these comments, I'm not sure some people here understand the mechanics of how selling shares short actually works. It does not, defacto, destroy any value in the company.
There's a pretty good case that they were trying to do this to Tesla. We heard all these claims about how nobody was really buying their cars and so on, which turned out to be bullocks, but were being made at a time when they were in a precarious financing situation.
But the general problem with asking for examples is that nobody has the inside information necessary to verify them. I can point to any company that went bankrupt following negative media coverage at the behest of short sellers, but how is anybody supposed to prove whether or not they would have survived in the alternative?
> Judging by many of these comments, I'm not sure some people here understand the mechanics of how selling shares short actually works. It does not, defacto, destroy any value in the company.
Are you sure you know how short selling works? Short sellers borrow shares in the company and then sell them, which temporarily increases the supply of shares on the market and suppresses the price. If the company at that point issues new shares or wants to borrow money against the value of their stock, it costs them money, i.e. reduces access to capital or requires them to pay higher interest rates, which negatively impacts the business.
And that's just the result of the actual short selling, not including the reputational harm caused by false allegations (or over-hyped technically true allegations), which can reduce demand from not only investors but the business's customers.
Another, perhaps ultimate, persuader of the value to markets/investors of short-selling would be Michael Lewis's book, The Big Short [2]. An often overlooked point about short-selling is that it is frequently done, and it was certainly so in this case, in demonstration of utter conviction that the masses are being duped; rather than as some calculated bet against a single company.
[1] https://www.forbes.com/sites/amiyatoshpurnanandam/2020/01/13...
[2] https://en.wikipedia.org/wiki/The_Big_Short
[slight edit for grammar/readability]
You believe I'm wrong, but can't name a public company that had its prospects destroyed by a short-seller? I take issue with that.
>I did follow the short campaign against Tesla closely from 2014-2018. And that project was vicious.
What leads you to believe that this is a "done-deal", and that Tesla has "won"? There are still many open questions about this company.
Did you know that the Wirecard fraud went on for a decade, and even the German financial regulators were going after journalists and short-sellers to protect the company? And it was a huge fraud. Now that it's out in the open, it's a very interesting read:
https://www.ft.com/content/745e34a1-0ca7-432c-b062-950c20e41...
You can't prove a negative, and I was clear that I don't have the historic knowledge to provide good candidates for what you're asking. They certainly exist; sibling commenters have made some attempts. I made this comment because I didn't want your implied statement of "if you can't mention a specific name, you're wrong" to stand without providing a reasoned counter-argument.
Nikola lied about its trucks, and now plans to outsource all of its production to other CV manufacturers, or at the very best buy parts off the market and "integrate" them in house.
Since they don't have the killer tech or top engineers what's stopping the next charismatic founder from selling the same exact thing Nikola has (dreams and a couple wrenches and bolts) and eating their lunch?
They have no working trucks or plans to begin production any time soon. And for a while their market cap was larger than Ford and GM.
Not saying they can't be successful, but Tesla they are not.
How would this scenario play out for a non-fraud and non-zombie business? If a publicly-traded company is in such a precarious state that they need the large cash infusion of either debt or a secondary offering to remain in business, the conclusion is that the business is non-viable. Either they IPO'ed prematurely or the expected growth isn't materializing. The short-sellers are performing the broader market a service in this case.
https://www.reuters.com/article/us-volkswagen-idUSTRE49R3I92...
As far as I remember, Matt Levine used to say, a company that sues short-sellers is most likely deep into securities fraud.
Well, maybe the Nikola thing will have people asking questions and holding Tesla to the same standard.
We know, from depositions in the Solar City law suit, that the solar shingle reveal was faked and non-functional. The shingles didn't exist in that form then, and still don't (they buy panels from China, the factory in Buffalo isn't doing anything). The battery swap demo was also likely faked, as was the "Paint it Black" self-driving video from 2016 (demonstrating self-driving capabilities Tesla still doesn't have in the real world, today). Those are off the top of my head.
How many years now has Tesla claimed that full autonomous driving will be ready by the end of the year? They sell a lot of that “software” which to me appears to be vapor ware and they claim the price will rise when the tech is GA’d so you should buy now. It just seems suspicious to me.
Even the giga-factories don’t look anything like the designs they promoted. They look like, well every other car factory.
I get that they don’t advertise so they smartly generate hype in other ways.
Wasn’t Audi the first company to sell a level 3 car?
It turns out there's a reason factories look the way they do.
Much better to design the production process first and then fit a building around it than to try and fit the production process into a pre-designed building that's made too look pretty.
What do you base this off of? What "magic" production processes are Tesla utilizing that other OEMs are not? Aren't EVs far simpler to assemble? Tesla are building some of the lowest-rated cars out there in terms of fit and finish. Why do you believe they are doing anything from that end "better" than other manufacturers?
They're worse. Please, identify a modern car factory that builds cars in a tent.
(Or maybe... just maybe... the construction method of your factory walls doesn’t actually matter so much?)
Any evidence for that? That a hell of an accusation.
Since literally the Roaster Tesla offered test rides on all of these vehicles. The Roadster 2, Cybertruck and so on all were driving around costumers all night. They were fully functional. The Tesla Semi is regularly transporting things between California and Nevada.
Now can we prove that the prototype Cybertruck could do the most hardcore rally in the world? No, but calling them non-function is just laying unless you have evidence to back it up.
> How many years now has Tesla claimed that full autonomous driving will be ready by the end of the year?
Elon is overconfident about AI, everybody knows that. If you don't believe it, don't buy it. Also the revenue they get from FSD is not actually realized unless they deliver on the features.
> Even the giga-factories don’t look anything like the designs they promoted. They look like, well every other car factory.
Elon has admired that he was wrong how easy it was to speed up production on Model 3. He took the blame for that mistake and since then they have worked and improved their production capability.
That is not a costumer features, and the reality is for no other company would you ever even get that information. For other car companies they release a press conference 'car delayed 6 month' not telling you why.
Their solar shingles are where?
The semi was to be in production 2 years ago. There are serious doubts it’s even viable for long haul.
The battery swap demo has never materialized and there’s doubt it is feasible.
They continue to show photos of a sleek, modern giga-factory with solar panel roofs. Meanwhile their factories look like any other car factory.
Their self driving tech has some cool demos of what the computer “sees” but there’s no evidence it’s close to being available or that it’s any better than where other companies like GM are with the tech.
I’m not trying to dump on Tesla - they’ve done a lot to push the industry forward. I’m just saying I think they generate a lot of hype but don’t deliver and they may have people confused on where they really are.
First of all, even if the glass broke. The window still worked. If it was a normal truck, the ball would have gone straight inside and killed the driver.
Its called a prototype for a reason and they have demonstrated the technology and multiple experts confirmed that this is in fact a viable technology.
> The battery swap demo has never materialized and there’s doubt it is feasible.
No there isn't. They had a working system, they demonstrated it and it was in open beta. And again, NIO has this working in China. Its literally just undoing 4 screws and let the battery fall out. I really don't understand why you feel the need to come of with a conspiracy theory on this.
The fact of the matter is that its a system that is simply not needed for 99.9% of situations and makes no operational sense for Tesla.
It is technologically clearly feasible but it operational impractical.
> They continue to show photos of a sleek, modern giga-factory with solar panel roofs. Meanwhile their factories look like any other car factory.
They are car factories? And they are modern looking. I don't understand what your problem is. They are very modern factories if you actually study what goes on in them. You just want them to put more solar cells on them? Is that your issue?
I really don't get what you complain about. The factories they build are being built very fast, and the have very good ROI if you look at their operational leverage. So they do exactly what Tesla says they do.
> Their self driving tech has some cool demos of what the computer “sees” but there’s no evidence it’s close to being available or that it’s any better than where other companies like GM are with the tech.
If you actually believe GM is just as far as Tesla then you haven't use those systems. They are clearly not.
> I’m not trying to dump on Tesla - they’ve done a lot to push the industry forward. I’m just saying I think they generate a lot of hype but don’t deliver and they may have people confused on where they really are.
It seem like you are nip-picking everything Tesla ever did wrong or not perfect and add some conspiracy stuff on top and ignoring everything they have delivered on.
That they delivered the Model Y early with excellent margin and low additional CapX. That they build up Giga Shanghai as fast as they did within a month are gone deliver Model Y from there. That they have managed to be profitable while they are still scaling and building factories like crazy. That they survived Covid with flying colors.
Personally, I think the DOJ should get more involved in technology pre-sales and prosecute more aggressively. Pre-selling products you can't produce should be considered fraud.
The big and obvious difference between Tesla and Nikola is Tesla ships products and has been for years. Not only that, Tesla customers love the cars Tesla ships. Musk makes some exaggerated claims—and some truly egregious time line estimates—but usually ships. I tend to agree with you about the up-charge for FSD though. Definitely a bit of a shell game and moving goal-posts.
You don't think disconnecting the whole undercarriage of the car and replacing a very heavy battery is difficult to do in under a minute?
>open to select members of the public.
Bingo.
But, as I said, I don't know if it was faked. I just believe it was.
I suspect the battery swap idea was a response to the criticism about charge times. Since most Tesla users at that time used either free supercharger stations or charged at home, the appeal of for-fee battery swaps was likely limited.
I can see why people are skeptical of the demo and think the limited trial, which didn't showcase what was demoed, isn't particularly persuasive.
I just don't see it as being deceptive in the way rolling a truck down a hill and suggesting it's operational is. Or at the very least, we're missing the smoking gun. Perhaps it is and someone who worked at Tesla or the blogger who posted about going to the station will come out and admit it was a big fake-eroo.
Finding the hill they pushed the truck down is pretty damning IMO in a way suspicions about Tesla's tech demo aren't.
https://www.youtube.com/watch?v=t1Ld5WByT34
Its really not very difficult. The battery is designed to drop right out if you unscrew the bolts. This system is open to the public.
Tesla just realized it didn't really make sense as its very expensive and super-charging is fast enough for nearly all situations.
Tesla cars now no longer allow battery swap as they added an additional protection layer under the car.
[1] https://www.marketwatch.com/story/luckin-coffee-to-be-delist...
That’s suspicious.
But I still think short selling is absurd and I don’t understand why we allow it. If you don’t think a company will do well then don’t buy their stocks. Simple as that. I don’t know why we allow seemingly infinite market gambling that benefits no one except the gamblers.
It happens that the economic incentive arose from shorting, but could have just as easily come (less efficiently) from buying naked puts.
Journalists got to Theranos first, and short sellers got to Nikola first. With both in play, the odds of a timely exposé go up.
I knew several people who said what they were claiming was impossible but they didn't really have any interest in being the whistleblower.
(Disclosure: I’m short $NKLA after Hindenburg published. I believe it’s more likely going to the teens [and possibly worse] in 2020 than sustainably into the mid-40s. If it holds $30+ through 2020, I’ll probably cover.)
On the other-hand, frauds brought down by journalists and short-sellers are abundant.
In my experience, CEOs (in this case, the board Chairman) whining about traders is a huge red flag. What do they care what a bunch of people are doing with their ownership in the company? It's irrelevant to the day-to-day operations of the company, but certainly harms the narrative.