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Tesla Stock Plunged After Elon Musk's 'Bizarre' Conference Call (wired.com)
A recent Bloomberg article describes Elon Musk's "bizarre" conference call on Wednesday -- and its aftermath on Wall Street.
Elon Musk told investors not to buy Tesla Inc. shares if they can't stomach volatility. They got the message. The comments -- part of a bizarre, heated conference call after the close Wednesday -- sent the electric-car maker's stock plunging. Tesla fell as much as 8.6 percent Thursday after the chief executive officer rejected analysts' questions on another quarter in which the company burned more than $1 billion in cash.
Investors had shorted a total of more than 40 million shares by Thursday -- the most ever in Tesla history -- and despite a rise in Tesla's stock price on Friday, they shorted 500,000 more shares.
Wired argues that Musk "clearly is avoiding some hard questions about Tesla's financial viability. But it's equally true that the call exposed how limited Wall Street can be about visions for the future and what it takes to create new templates for doing old things." This clash was highlighted by Musk's response to "sober questions by respected Wall Street analysts" like Toni Sacconaghi.
Musk brushed him off, sniping that "bonehead, boring questions are not cool." To add insult to that injury, Musk then fielded questions from a YouTube user, who proceeded to dominate a call normally open only to significant Wall Street analysts. That did not sit well with the Street, and Sacconaghi lambasted Musk the next day on CNBC with the rather clever jab, "This is a financial analyst call, this is not a TED talk."
Friday, Musk returned fire, with tweets asserting that the question was boneheaded because the analyst already knew the answer and was asking purely to advocate a negative thesis about the company.
But Barron's replayed the conference call, and argued that Musk was mistaken, reporting that "the analyst wanted to know about capital requirements, not expenditures."
Investors had shorted a total of more than 40 million shares by Thursday -- the most ever in Tesla history -- and despite a rise in Tesla's stock price on Friday, they shorted 500,000 more shares.
Wired argues that Musk "clearly is avoiding some hard questions about Tesla's financial viability. But it's equally true that the call exposed how limited Wall Street can be about visions for the future and what it takes to create new templates for doing old things." This clash was highlighted by Musk's response to "sober questions by respected Wall Street analysts" like Toni Sacconaghi.
Musk brushed him off, sniping that "bonehead, boring questions are not cool." To add insult to that injury, Musk then fielded questions from a YouTube user, who proceeded to dominate a call normally open only to significant Wall Street analysts. That did not sit well with the Street, and Sacconaghi lambasted Musk the next day on CNBC with the rather clever jab, "This is a financial analyst call, this is not a TED talk."
Friday, Musk returned fire, with tweets asserting that the question was boneheaded because the analyst already knew the answer and was asking purely to advocate a negative thesis about the company.
But Barron's replayed the conference call, and argued that Musk was mistaken, reporting that "the analyst wanted to know about capital requirements, not expenditures."
The issue is that during an earnings call, you field the analyst questions, not indulge feel good fanboyism.
His rationale was that the ones he snubbed were 'sell-side' and therefore just out to screw him over to help those who have shorted stock, which is problematic as that isn't what 'sell-side' means. It seems he doesn't understand that (bad for one having that responsibility) and that he is sore over how many people are shorting Tesla stock, and unable to handle it.
Even if he did feel the analysts were spinning a bad story out to get him for the sake of boosting the fortunes of those holding a short position, the right response would be to face it head on and point out how he feels the narrative implied is inaccurate, not to cut it off, which gives an impression that you don't have a rebuttal for such a story and as such the people advocating a 'short' position are right.
Musk may be unable to provide good business leadership through controversial/rough times.
XML is like violence. If it doesn't solve the problem, use more.
" respected Wall Street analysts...."
That is exactly how the Wall Street racket works, by selling fake expertise on the basis of reputation.
Musk's disrespect for Wall-Street is certainly warranted. Analysts claim to possess expert knowledge which will yield higher returns, when really their returns are worse than a dumb strategy such as ETFs. Retrospective comparisons of analysts picks to passive investment show analysts perform worse.
Investment firms are a scam. Do not be a sucker and a victim. Read about investment from someone who is not trying to extract money from you.
That Musk moved the price of Tesla shares by blowing off analysts just shows how many idiot investors there are. When idiots sell their Tesla stock because Musk hurt the feelings of the con artists, the smart move is to buy Tesla.
Ceci n'est pas une signature.
Tesla is the most shorted stock on the market, with short positions covering more than 30% of the total stock available for trading. Tesla stock has been kited to a high price by its previous short squeezes. When the commitments on short positions came due, the holders had to buy Tesla stock at the prevailing price to fulfil their obligations. They had no choice. There werenâ(TM)t lots of Tesla shares available to cover the short positions, and thus the price of the stock was driven up.
What if Elon Musk was out to further kite the value of Tesla on a short squeeze, at the expense of all of the Tesla-doubters? He might act exactly as he has been: heâ(TM)d divert attention from good news, and act like a flake. Heâ(TM)d be confident in doing this, nobody could prove it was deliberate manipulation of the stock without reading his mind. Eventually, those short positions would come due, and there would be no stock to cover them, and Tesla shares would go astronomical.
Short positions like this are called âoewidow makersâ. They can wipe out investors and sometimes drive them to suicide. Elon Musk made his fortune, and continues to, by taking risky actions that other people wouldnâ(TM)t dare. He obviously has an ego, and pauperizing the shorts would fit that.
Bruce Perens.
So we can agree that the dialogue between Musk and the "YouTuber" was rich and informative, almost like a well-scripted presentation.