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Tesla Short Sellers Actually Made Over $1 Billion After Musk's Taking-Private Tweet (fortune.com)
An anonymous reader quotes Fortune:
Investors betting that Tesla stock will lose value -- so-called "shorts" -- have made $1.2 billion since CEO Elon Musk first tweeted about taking the company private. Much of that gain came on Friday, after the New York Times published a revealing, emotional interview with Musk that drove Tesla stock down nearly 9%. The tally comes from a report released Friday by stock analytics firm S3 Partners. The Friday collapse helped reverse a price spike after Musk's August 7 Tweet saying he was "considering taking Tesla private at $420," about 18% higher than the stock's market value at the time.
According to S3, the subsequent surge in Tesla stock cost short positions $1.3 billion. But soon after, it became clear that Musk had exaggerated the certainty of his funding, and the SEC began a probe of his statements, driving the stock back down. On Friday, the Times interview with Musk detailed his 120-hour work weeks, lack of social life, and reliance on Ambien to sleep. That sent the stock down 9% in one day, for a total drop of 19% over 10 days. That gave $2.5 billion back to the shorts, for a net gain of $1.2 billion since Musk's going-private tweet.
Tesla remains the most-shorted stock on the American stock exchanges, and the researchers note that only 4% of shorts have actually cashed in these on-paper gains.
According to S3, the subsequent surge in Tesla stock cost short positions $1.3 billion. But soon after, it became clear that Musk had exaggerated the certainty of his funding, and the SEC began a probe of his statements, driving the stock back down. On Friday, the Times interview with Musk detailed his 120-hour work weeks, lack of social life, and reliance on Ambien to sleep. That sent the stock down 9% in one day, for a total drop of 19% over 10 days. That gave $2.5 billion back to the shorts, for a net gain of $1.2 billion since Musk's going-private tweet.
Tesla remains the most-shorted stock on the American stock exchanges, and the researchers note that only 4% of shorts have actually cashed in these on-paper gains.
What Musk did over Twitter is first and foremost unbecoming of a CEO and is outright manipulation of the stock price.
It's clear that he didn't have a buyer to bring the firm public. This was him Tweeting up late at night buzzed out of his mind on Ambien or tripping balls on LSD.
He's become dysfunctional, has allowed women of ill repute to pollute his life, and is allowing his ego to be propped up by his cult of personality who believe he is the second coming.
The whole thing is quickly becoming like Theranos and it's a complete and utter shame given what he is capable of.
What Musk did over Twitter is first and foremost unbecoming of a CEO and is outright manipulation of the stock price.
In your opinion.
That's the problem with all the Tesla news nowadays - there's actually very little going on, what we see in the media is opinion dressed up as news. And if it's bad, the shorts will run with it.
(source)
Really, there's nothing in the news anyone can trust about Tesla nowadays. After the NYT interview I saw these competing headlines:
"Musk says Tesla had an excruciating year, and the worst is yet to come" (one source, among many)
"Musk says Tesla had an excruciating year, and the worst is over" (one source, among many)
Which of these is an accurate portrayal of Tesla's future?
Don't believe any of it. Given the timeline above, it's really hard to see how Musk could be charged with a crime - SEC is civil, not criminal, the FBI would have to get involved for that. It's also hard to see how the SEC could impose a fine. There *might* be an issue with the exact definition of "secured", but it's a) moot, b) can be argued either way, and c) it took the SEC 5 years to bring down [Theranos CEO] Elisabeth Holmes for much more severe problems, they aren't likely to move any faster with Tesla. Five years from now we can worry whether this has made any difference to Tesla.
It's clear that Tesla only has to weather the next 4 months or so, and then be clear of all this nonsense.
Until then, just ignore the rabble - it's only noise anyway.
BS. Shorts don't care about the "environmental movement". You guys are nuts: Tesla isn't "green". They are producing $60,000+ EVs! Are you out of your mind? There are other manufacturers who are actually producing affordable EVs. Why not invest in them? It is like you guys are brainwashed. The only thing shorts care about is making money. Tesla is priced way too high. It isn't personal. He isn't attacking your god.
Exactly. rich guys driving around in $60,000 EVs is NOT environmental movement.
He's not just "shooting military and communication satellites to LEO". He's doing that in such a way that it is breaking up the entrenched, fossilized existing launch providers, most notably ULA, Arianespace, and the Russians. That by itself is a service to the world. His other grandiose plans, it is too early to judge. Tesla, whether it survives or not, seems to have at least set an expectation for EVs and the infrastructure to support them which is pushing the other automakers to compete, and not just build bigger and bigger pickup trucks which cost more than a loaded up Tesla Model 3.
Yeah god forbid Visa and MasterCard chose to stop servicing a foreign propaganda outlet distributing misinformation design to promote donestic unrest.
First they came for the Socialists, and I did not speak out—
Because I was not a Socialist.
Then they came for the Trade Unionists, and I did not speak out—
Because I was not a Trade Unionist.
Then they came for the Jews, and I did not speak out—
Because I was not a Jew.
Then they came for me—and there was no one left to speak for me.
Given that TSLA is only about 15% off it's all time high, the vast majority of shorts are still losing money right now. It's not like all those shorts shorted within 10% of it's all time high.
Funny how the short sellers all hide.
I'm here with my name (trivial to link to my real-life identity even, if you are not an idiot with a search engine) and I own those Tesla stocks that you sold. And I'm holding them still and will hold them in a year, just like I did a year ago or two years ago when people were doing the same dances.
Because Tesla is hands down leader in its market, Elon Musk or not. I love idiots like you who focus on the star CEO and don't understand that half of a leaders job is to take the shit so people under him can calmly work without the interference. And what I see coming out of the company I like. There are growing pains, but as long as they are growing pains, I'm fine.
You can continue selling short, I don't care much. You can also invest in some AAA rated company that is closing factories and firing people and cutting markets and for some reason people think that leads to being more profitable (it doesn't, it just leads to a higher profit-to-equity ratio which is a KPI for analysts who think only in numbers).
At the same time, I'm driving a BMW and not a Model S because there is a lot that the guys at Tesla still need to learn about good interior design, but from what I've read (only test-driven a Model S, so I can't say myself), the Model X and Model 3 are already much better in that regard.
Assorted stuff I do sometimes: Lemuria.org
But let me ask you a question: why DO YOU CARE that the "entrenched, fossilized launch services" exist? Does it affect you in any way that the military or communication companies save a bit on money on a launch?
It's not just military and communication. Highly capable and cheap launch vehicles are perhaps the most important step on the path to cheaper and more capable scientific probes and space-based telescopes, since they will allow for greater capabilities simultaneously with lesser engineering effort. I.e., they would cheapen both the launches and the payload designs. For people interested in natural sciences, this is a rather tempting prospect, since the funding of scientific missions isn't unlimited.
Ezekiel 23:20
Has the short interest in Tesla decreased? If so, then shorts have cashed out, having a much better position than a week ago. But I'm not under the impression that the shorts have been exiting. It seems that there is a large contingent that really expects Tesla to outright fail, and they want to ride the stock down to zero.
There is a contingent that deeply wants to see Tesla fail because they view it as part of the environmental movement, and they see the whole movement as a leftist attack on free enterprise and their way of life. A company like Tesla being successful is counter to their worldview, and they desperately want to see electric cars fail. I have no evidence to prove that there's a connection to the Tesla shorts, but I suspect there is. I suppose that's part of the reason I so desperately want to see the shorts get bankrupted.
It's nothing that conspiratorial. Tesla has a bigger market cap than GM. I mean Tesla has a cooler brand, and they're currently dominating the EV market, but GM builds almost 100x as many cars, has about 15x the revenue (not sure how that math works), and has an operating income almost as large as Tesla's total revenue.
Sure Tesla has some serious potential around self driving cars and EV, but so does GM.
The idea that Tesla is worth more is just plain dumb. People are pricing it like an Apple or a Google, but car companies don't get those giant semi-monopolies that generate outrageous profits the way tech companies do. Tesla becoming as big as GM is their potential, but there's a good chance they won't reach that potential.
I don't trade stocks, but I can understand why people would short Tesla, it can't really go any higher and you have to think as some point it's going to go down.
I stole this Sig
Yes, Tesla is priced like a tech company. Or more specifically, it's priced like a growth company. Automakers are like the weather: the best forecast for tomorrow is that it will be the same as today. Sometimes they do better, sometimes the do worse, but people don't generally expect them to make huge changes in their market share.
Tesla is growing rapidly. While traditional auto makers are constrained by sales, as evidenced by factories operating below capacity and massive marketing campaigns, Tesla is constrained by manufacturing, as evidenced by massive reservations and no significant marketing efforts.
Tesla also has their energy business, which is also constrained by capacity. They've proven the value of utility-scale battery storage in Australia and elsewhere. The potential growth here is huge.
The Tesla solar business is less clear. Personally I think the visual stigma with traditional solar panels has passed as home solar has become more common, so most people who want solar are happy with regular panels. Outside of historical districts and the like, I'm not sure how large their solar roof market will prove to be once they reach full production.
But back to cars, they're looking at a production rate of 500,000 Model 3s next year. They're also going to be starting production of the Semi and announcing the pickup and Model Y next year. Their growth could easily reach over a million vehicles a year as quickly as they can build the factories, probably two million or more.
And don't ignore their Supercharger network. Tesla is the only option for road trips. Independent charging networks are focusing on the higher-density markets (i.e., California), though that may improve a bit over the next decade, but without support from auto manufacturers, they price charging well above what Tesla charges. In short, most people are happy buying an electric car as a second vehicle, but only consider Tesla if looking for an electric vehicle as their first car.
I don't see any other manufacturer providing serious competition for Tesla in the next five years, which will let them continue to grow rapidly to become a major player in the industry.
The short story seems to boil down to "Elon Musk is lying about Tesla being profitable for Q3 and Q4 this year." If they are profitable, then the story that they're going to run out of cash before being able to expand as described above falls apart.