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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..."
How is the stock market different from the betting/gambling market.
http://archive.is/WdAq6
FEMALE JOURNALISTS: Have you been harassed by Elon Musk fans? Please DM me your most horrific tweets and messages. AND PLEASE SHARE THIS
Completely ignoring the ethical concerns to run off and manufacture a narrative of mysoginy and harrassment . . . the same Gamergate-style behavior all over again.
Tesla's stock is down 12% in the last 12 months in a strongly up market.
confirmed
Seems like a clear case of cherry picking.
Plus, Musk is a whiny little snowflake. He can't get enough of uncritical media praise, of which there is has been tons, but anything remotely critical and he shits the floor. Its nice he's doing the electric car thing, but lets not buy into a cult of personality here because there is tons of evidence he's got a shit personality (he fired his 12 year PA when she asked for a raise he used underpaid illegal foreign labor to build his factory he uses illegal union-busting tactics and he was emotionally abusive to his first wife, treating her like an employee.
Billionaires have their place, but they aren't special geniuses, they are just 99.9% lottery winner and 0.1% skill. If there was no Elon Musk, there would just be some other billionaire doing the same work. Do not put your faith in princes.
I've been looking at the stock market reporting for the last couple of years, and to make it interesting I bought some Tesla stock awhile ago.
My take is that all of the "important insightful" news reports we see about companies boil down to the following:
1) Reporter picks some stock to report on
2) Plugs the numbers into an algorithm that spits out a recommendation
3) Writes an article justifying that recommendation
Notably, reporters don't write about a stock because something happens or because it's a particularly good investment, and they don't muse any personal skill at analysis for the article - they basically take whatever is happening at the moment and use it to justify whatever is going on with the stock.
Daily market reports are always "Dow is down x% due to *this* thing happening in the world", as if the world incident is driving stocks. (As I write this, one of the top stories is "Dow posts best week since March as traders shake off G-7 trade jitters". The two linked points of information are unrelated.)
In the case of Tesla, the company is taking all their profit and borrowing extra to invest in manufacturing facilities. From the viewpoint of the algorithms, Tesla is burning through cash with no hope of recovery, as the chart on this page shows.
Any other company with Tesla's numbers would be a lousy investment. We see this all the time in other companies - burn through VC cash over a couple of years and then go bankrupt (or get bought out). (GitHub anyone?.)
Looking more closely at the chart shows a different story. Tesla takes several quarters to tool up, then releases a model and goes profitable for a while. They've done this twice now and are on the verge of a 3rd round. Once the Model 3 production is fully ramped up they will be positioned to *own* the car manufacturing industry in the US.
Tesla is a great opportunity to "go against the groupthink with reason", and Bruce has it exactly correct: Tesla stock will be closely held, making it ever more expensive to cover the short positions. Expect a temporary meteoric rise in value as the short holders fight each other trying to get out of their short positions.
Oh, and Tesla isn't one of the most shorted stocks in the US. It's the *most* shorted stock *ever*.
Interesting that the summary devoted ¾ of its space to comments from Bruce Perens. Is this really about Tesla short sellers or is it pushing a narrative?
Let's remove the gilded veneer from this. There's a bunch of degenerate gamblers who now find themselves in to their bookie for more than they got. They're desperate enough that some of them are trying to demoralize the players to tank their chance at the playoffs.
I'm sorry, you're going to have to speak up, we can't hear you over all of the laughter.
Jesus: "Son of a
Are you daft?
Trick Two: SpaceX
Trick Three: The Boring Company
Trick Four: PayPal
Trick Five:Solar City
Trick Six: Hyperloop
Trick Seven: Neuralink
etc.
How about a moderation of -1 pedantic.
The smart money who sorted Tesla have decided to cut their loses and have already bought enough stock to cover their short positions, only the pathological-gambler-in-denial type of investor will wait to break even 'till the end. Also, how do you plan to codify in law a ban on short selling that cannot be circumvented trivially and can be enforced? Many lawmakers have tried and failed.
No they didn't. There were more than 40 million shares shorted. At average daily volume (7M a day for TSLA) that's over a week of nothing but buying from short sellers to exit. So in reality it will take more than a month to unwind those positions and to do so at that rate would cause the price to spike by a very large amount (by increasing the buying interest over that period). The shorts are still very far in and very much in a bad position. In fact, to defend the $325 price on Thursday, its likely they had to get in even deeper in new positions (to replace short positions that were stopped out between $315 and $325) as the price was spiking at that point and a large volume of (apparently institutional) sales pushed the price lower before close on Thursday. While we won't know if those were new shorts or longs getting out for two weeks (till the block trade reports for this week are released), its a reasonable assumption to think they were new shorts as they looked to be large, institutional trades (and not many smaller trades which would indicate profit taking by long, retail investors).
"Those that start by burning books, will end by burning men."
This requires that you believe that SpaceX selling rocket launches to the government for half of what they would have otherwise paid is somehow a "government handout". Learn how to read, and then learn how to read critically. Care about the the truth, it really does matter.
You're correct "that's not how stocks work", yet incorrect in concluding "nobody has been handing Musk money".
If Tesla were like most companies, they would have used the money from their IPO in 2010 to invest in building a profitable, stable company, and they wouldn't issue any more stock. Many years later, they might buy back their stock, and then sell again later.
Tesla is not an ordinary company, and certainly not an ordinary stock. Tesla has been making new issues, averaging $2 billion per year. Mostly stock, though recently they've started issuing junk bonds.
Yes, ordinarily a stock represents a partial ownership of a business. Once the business "goes big" with the IPO, stock transactions don't involve the company directly, at least not until they mature enough over several decades that they have bought some back. Tesla stock value doesn't represent the value of the business, the business isn't worth 10% of the stock price; and they do continue to issue stock. Tesla depends on a steady flow of new investor cash to keep things afloat. Most companies depend on revenue from SALES.
You know what kind of financial scheme DOES depend on continually getting more and more investors, there is a name for that arrangement.
Re giving money to Musk, while Tesla has been losing money, investors' money, Musk's personal fortune has been increasing by $1 billion each year. Where do you think that money is coming from?