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Tesla Short-Sellers Lose $1 Billion (cnbc.com)
An anonymous reader quotes CNBC:
A bullish call from a Wall Street analyst capped off a rough week for Tesla short sellers, with Nomura Instinet advising clients that the electric car maker's shares could rally 42 percent over the next year. The stock rose 1.7 percent Friday and is now up 10 percent on the week. One of the most shorted stocks in the United States, Tesla shares cost investors betting against the company more than $1 billion in losses on Wednesday alone after the stock rallied 9.7 percent. Adding to the short woes, the stock is up 13.5 percent in June and up 21 percent since April. More than 30 percent of Tesla's floating stock is currently sold short, according to FactSet.
Last week long-time Open Source advocate Bruce Perens (Slashdot reader #3,872) argued this is fueling Musk's anger at the press: [A] great many investors are desperate to see Tesla's stock reach a much lower price soon, or they'll be forced to buy it at its present price in order to fulfill their short positions, potentially bankrupting many of them and sending some out of the windows of Wall Street skyscrapers. These investors are desperately seeding, feeding, and writing negative stories about Tesla in the hope of depressing the stock price. Musk recently taunted them by buying another 10 million dollars in stock, making it even more likely that there won't be enough stock in the market to cover short positions. If that's the case, short-sellers could end up in debt for thousands of dollars per shorted share -- as the price balloons until enough stockholders are persuaded to sell. Will short-sellers do anything to give Tesla bad press? You bet.... Musk is stuck with a press that feeds negative stories about Tesla seeded by short-sellers, business competitors and the petroleum industry, and even the U.S. Government...
Musk is far from the only one who suffers from this abuse. I was personally involved while the Linux developers were hounded by bad press for years from Forbes and lesser entities, backed by a large software company we all know (and who is, surprisingly, funding more Open Source these days), based on SCO's unfounded lawsuit. Time proves them wrong, but don't expect them to admit it, nor should you hold your breath for an "I'm sorry".
And on Musk's plan to rate the credibility of news sites, Perens writes that "The world would be a better place if this was done honestly, with integrity, and well. Musk is one who has improved the world by going where conventional wisdom said he'd fail..."
Last week long-time Open Source advocate Bruce Perens (Slashdot reader #3,872) argued this is fueling Musk's anger at the press: [A] great many investors are desperate to see Tesla's stock reach a much lower price soon, or they'll be forced to buy it at its present price in order to fulfill their short positions, potentially bankrupting many of them and sending some out of the windows of Wall Street skyscrapers. These investors are desperately seeding, feeding, and writing negative stories about Tesla in the hope of depressing the stock price. Musk recently taunted them by buying another 10 million dollars in stock, making it even more likely that there won't be enough stock in the market to cover short positions. If that's the case, short-sellers could end up in debt for thousands of dollars per shorted share -- as the price balloons until enough stockholders are persuaded to sell. Will short-sellers do anything to give Tesla bad press? You bet.... Musk is stuck with a press that feeds negative stories about Tesla seeded by short-sellers, business competitors and the petroleum industry, and even the U.S. Government...
Musk is far from the only one who suffers from this abuse. I was personally involved while the Linux developers were hounded by bad press for years from Forbes and lesser entities, backed by a large software company we all know (and who is, surprisingly, funding more Open Source these days), based on SCO's unfounded lawsuit. Time proves them wrong, but don't expect them to admit it, nor should you hold your breath for an "I'm sorry".
And on Musk's plan to rate the credibility of news sites, Perens writes that "The world would be a better place if this was done honestly, with integrity, and well. Musk is one who has improved the world by going where conventional wisdom said he'd fail..."
I wish you well Mr. Musk. You have inspired many people, and you surely have integrity in this world of Wall Street defeatists.
potentially bankrupting many of them and sending some out of the windows of Wall Street skyscrapers
And nothing of value was lost.
No sig today...
I"m not the GP, but in my opinion, the problem with short selling is this: you're selling something you do not own, akin to selling the Eiffel Tower or the Brooklyn Bridge. Yes, I know it's a bit more complicated than that when you bring things like futures into it, but for stocks, it's straight up fraudulent. Legal, sure, but fraudulent nonetheless. (So is fractional or no reserve lending, by the way. Lending money you do not possess is no better and that is the cornerstone of fractional reserve.)
If it works in theory, try something else in practice.
Growth stocks typically do not offer dividends from profit, they plow as much capital back into the company to fund growth. No astute investor expects a growth company to have a good P/E ratio, they expect a big win in the long run based upon stock price growth.
Unlike all their competitors, Tesla is a Growth stock as opposed to a Value stock. This graph (https://www.statista.com/statistics/272120/revenue-of-tesla/) indicates that they are successfully executing a very effective growth strategy.
The reality is that the greedy cynics expect the headwinds generated by fossil fuel PR to win. The reality is that the fossil fuel industry is headed to a long term decline.
Greed is the root of all evil.
Tesla may very well become profitable. Maybe not, maybe so.
The current stock price has Tesla valued as already being the world's biggest car company. They aren't even in the top ten. Buying Tesla stock isn't a bet that the company will survive. To make money long time Tesla has to become bigger and more profitable than any car company ever has.
Shorting Tesla will (eventually) make money if Tesla becomes as large and successful as General Motors or Toyota, because the current price is justified only for a company much bigger than Toyota.
I would definitely short Tesla if I didn't have my funds tied up in another investment, because even if Tesla does remarkably well, shorts will still make money. Long term, shorts can only lose if Tesla is among the most successful companies ever. While Musk is great at publicity, the evidence suggests operations management at Tesla isn't even good, much less record-breaking incredible.
They really should outlaw short positions
No they shouldn't. Shorties provide a valuable check on inflated prices and help to root out corruption and fraud. Muddy Waters is a well known shorty. They investigate public companies, looking for inflated stock prices based on accounting fraud or other corrupt practices. If they uncover malfeasance, they take a short position, and then publicize their findings, driving down the price and reaping a profit. This prevents a much bigger crash that would occur if the fraud was able to continue.
Muddy Waters has been especially successful shorting Chinese companies listed in America on the NYSE and NASDAQ.
Go see the movie "The Big Short". Front Point Partners and others made a lot of money shorting the housing market, but the bubble, and ensuing crash, would have been much smaller if more people shorted it, and did so earlier.
The market can stay irrational longer than you can stay liquid.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
Tesla's stock is down 12% in the last 12 months in a strongly up market.
Ah, yes. Let's take an arbitrary time period and build an argument around that. Let me try:
Tesla's stock is up 10% in the last 2 months...
Tesla's stock is up 48% in the last 24 months...
I'm a leaf on the wind. Watch how I soar.
You're making one huge assumption here, namely that stock price is directly linked to how big or successful a company is.
It isn't. There is no such connection at all. The only thing determining a stock price is how much people are prepared to pay. That's *it*.
So unless Tesla goes under, the stocks will be worth what people are prepared to pay for them. And unless you have a set of mind-control orbital satellites which can make people sane and rational when determining what they will pay for stocks, there is absolutely no guarantee a short on Tesla will pay off, even if they remain a tiny company.
Short sellers have always had a relationship with financial news media that worked well for both sides, but not so much for people who actually counted on those media for objective information. Short sellers plant a story about how Company X is experiencing some kind of problem. The media dutifully reproduce it with a minimum of fact checking...basically just ensuring that they aren't publishing outright lies. Company X's stock declines in value. Short sellers are happy. The financial news media write stories about how the "troubled company" is now struggling to survive, so they're happy because they get two stories for the price of one. The cycle is complete when those same short sellers vaccuum up the company's stock at a much-reduced price and suddenly it's once again a great place to invest.
Everybody wins...well, everybody except honest investors.
But this long-time tactic starts to fail when average investors become aware that they're being manipulated, and begin to question the timing of those planted stories. And maybe they start to doubt whether Company X's troubles are really bad enough to justify a stampede to sell. Add in an insanely rich company owner who delights in shoving a barbecue brush up the bum of short sellers and their news media enablers, and we have this situation. Finally, those of us who have watched helplessly as time after time Wall Street insiders profited by manipulating the system in a manner that is dishonest, if not illegal, can sit back and enjoy a good laugh.
Yeah, if one or two of these guys decided to take the fastest route to street level, I'd be more than willing to award a score for the quality of their last, long dive.
I've calculated my velocity with such exquisite precision that I have no idea where I am.
Again, anyone who shorts a stock can cut his losses any moment he wants by re-buying the stock
Do you understand how stock markets work? Do you think a high frequency trader is going to give you a courtesy call before placing a buy order that will push the price beyond your ability to pay?
In 2008 20% of VW shares were owned by the government of Lower Saxony. 74% were owned by the Porsche family and corporation. 13% of shares were shorted. When Porsche publicized their position, the shorties needed to buy more than 80% of the other shares to cover their position, which is completely implausible, especially since these other stockholders had NO reason to sell since the share price was obviously going to skyrocket (it subsequently quintupled).
It's not irrational. People who profit from other's misfortunes tend to eventually start CAUSING other's misfortunes so they can profit from them.
Short selling creates a whole host of perverse motivations. It tempts people to do nasty and illegal things.
I have a similarly dim view of high frequency trading, but that's a whole different can o' worms.
"The agriculture ministry is not in charge of Gundam" - Japanese ministry official.
There are several technology transformations under way, which collectively represent trillions of dollars of economic activity:
1. ICE cars & semi-trucks transitioning to EVs
2. Carbon-based fuels transitioning to renewable energy (solar/wind)
3. Self-driving cars & self-driving semi-trucks
Guess who is at the forefront of all 3?
And both #1 & #2 create a gigantic demand for batteries (portable & utility). Guess who has a gigantic battery factory and is aggressively building more? If you own a Tesla car, who are you going to buy your solar roof & home battery setup from?
This is the problem with Tesla skeptics. You think of Tesla as a scrappy little car company for tree-huggers, when in fact it is the best-positioned company in the world. Tesla is Apple in 2007, the Model 3 is the first iPhone.
Enjoy your Zune.
Exactly what this guy said.
As soon as he got sick of mediocre journalism, within 48 hours I saw "Elon Musk, Tech Trump?" and "Elon Musk, just another nazi!" headlines pretty much on most sites.
That womans tweet is a fucking prime example "PLEASE SOMEONE PROVIDE ME THE NEWS I WANT TO PRINT"
If the media keep behaving this way, they'll continue to create people skeptical of them.