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Elon Musk vs. Short sellers

Discussion in 'TSLA Investor Discussions' started by jesselivenomore, Jun 18, 2018.

  1. Brando

    Brando Active Member

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    Economics is a man made game.
    Fine discussion on how the Wall Street part of this game is currently being played.
    Bankster rules.

    Elon actually creates things. Speculators merely speculate and can only have one value: money, right?
     
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  2. kbM3

    kbM3 Member

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    I love this thread (although it makes me angry)!
     
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  3. ChrisA

    ChrisA Member

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    Short selling can be benevolent. It also can serve a constructive role in uncovering fraud. A while back there was a terrific op ed in the WSJ or the NY Times (I forget which one) that was written by a financial regulator who discussed how short sellers helped his regulatory team uncover fraud. So, in theory short selling can serve a constructive role.

    HOWEVER, it seems that in many instances today, short sellers cross the line from uncovering fraud into making fraudulent claims themselves and into stock market manipulation (coordinated attacks with intentionally slanderous allegations). Fraud should be deterred wherever it is taking place, and it appears that things have gotten out of control on the short side. But it is also a general problem. Our financial markets and our economy would be much healthier with vigorous enforcement of common sense laws that deter fraud. We are far from this ideal.
     
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  4. bdy0627

    bdy0627 Active Member

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    Curious if this ultimately ties into why Moodys downgraded Tesla when they did. The timing was awfully strange. They should have either done it previously or waited until the Q1 delivery numbers came out. Instead, they downgraded 1 week prior to the delivery numbers. The downgrade obviously affected Tesla's access to capital.
     
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  5. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Well-Known Member

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    A key part of any financial analyst's job is to obtain and respond to information that isn't in the accounts. If they wait for the company's numbers, they're too late.
     
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  6. Reality

    Reality Member

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    See this is a good post, i agree with all of it, except the 'out of control' on the short side. I mean Tesla is getting booted from NTSB investigations, made up a fake product to get the SCTY merger/bailout through. If anything I think there hasnt been enough noise about it.
     
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  7. sundaymorning

    sundaymorning Active Member

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    In need of life support?
     

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  8. Reality

    Reality Member

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    no, not close, obv the last 2 weeks sucked though
     
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  9. Zextraterrestrial

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    obv on the wrong side for the last couple
     
  10. Oil4AsphaultOnly

    Oil4AsphaultOnly Active Member

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    fake product?
     
  11. Reality

    Reality Member

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    the solar roof tiles, this is a good thead (warning short biased account @teslacharts made it) about it


    Also they "launched" the solar roof over a year ago, any non employees have one? Why is it never talked about anymore?


    TeslaCharts on Twitter
     
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  12. jesselivenomore

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    #32 jesselivenomore, Jun 18, 2018
    Last edited: Jun 18, 2018
    Short interest

    Tesla currently has close to 40 million shares or over $12 billion dollars betting against it. It is easy to conflate this with the litany of Tesla bears all over social media, twitter, seeking alpha, etc. Don't. These people may be responsible for 99% of the noise, but I highly doubt if they even amount to 10% of the short interest.

    Historically in the stock market, a high short interest is actually bearish and indicative that something is wrong. (there are obviously great examples to the contrary, ie AMZN) And in general short sellers are considered more sophisticated than longs, because they are mostly professional traders/fund managers vs retail investors. While there does seem to be an inordinate amount of "retail shorts" in Tesla, again, I believe the actual money amount is minimal compared to the real actors.
    Screen Shot 2018-06-18 at 12.21.01 PM.png

    Over the past few years, there has been three significant spikes in short interest.

    So the bear thesis ranges from Tesla is overvalued, to Tesla cannot make a profit(therefore doomed to bankruptcy), to now recently Tesla is fraudulent. So as professional, sophisticated, presumably intelligent short sellers who really believed in any of that, you would think that they would short the most when the stock is high. After all, is Tesla not most overvalued when it is highest? Reality is not the case, in fact short interest is lowest at the peaks, and the three spikes in short interest all coincide with significant market declines. Now, it is easy to scoff at this and dismiss it as "dumb shorts" buying highs and selling the lows. I am sorry, but as a trader of many years, you cannot convince me that this is $12 billion of dumb money.

    Moreover, the three spikes in short interest all coincide with specific events:

    1. In early 2016 there was a market downturn that stemmed from declining high yield bonds that contributed to this. But also, this coincided with the Solarcity short seller attack described before. If Solarcity was forced into bankruptcy, they would have defaulted on their solar bonds that Spacex bought previously. All Elon Musk companies are connected, and all would have been harmed. It is almost as if, it was a coordinated attack.

    2. In late 2016, short interest rose to an all time high. I remember the negativity was overwhelming during this period. Constant negative media coverage and bearish articles/analyst reports. And then all of sudden, it all went away and the stock rallied. Do you remember what changed? Do you remember what those analyst reports and bearish articles were about? This was the lead up to the Solarcity/Tesla merger vote. The articles and analyst reports were about how Solarcity and its mountain of debt was about to drown Tesla. The outrage over the lack of corporate governance and how bad a deal this was. The other major narrative was that this deal would not pass. Gordon Johnson rears his head again and declares there is only a 50/50 chance of Tesla shareholders approving. (SCTY), Tesla Motors, Inc. (NASDAQ:TSLA) - Gordon Johnson Warns Of 'Burgeoning Risk' To SolarCity/Tesla Deal Closure Jim Chanos came on CNBC, and implored Tesla shareholders to reject this deal since it would bring Tesla down with it.

    And then, Nov 17, 2016 the vote passes. The stock literally bottoms three days before this, and proceeds to rally to all time highs. Media negativity is gone instantly. Analyst reports muted. Think about that for a second, and logically if it even makes sense. If this deal truly was so bad, if it was the down fall of Tesla, shouldn't the overwhelming negativity occur AFTER the deal closes? After all, now that it is official and Tesla is responsible for this huge debt burden, isn't Tesla doomed? Yet there was nothing. Almost as if, the negativity was to shut the deal down.

    3. In March 2018, short interest spiked to a new all time high, to its current levels. This coincided with the Moody's downgrade, and sudden questions over liquidity. Just as Tesla's most important product, the Model 3 is about to ramp. Just as Tesla is about to take its biggest leap, become profitable and sustainable as a company, a new narrative we haven't heard before: Bankruptcy. I will talk about this more in followup post.

    To reiterate my sentiments towards short selling. I have no qualms with market participants betting that a stock is overvalued. I have no problems with people betting that a stock will go bankrupt. I believe the majority of the Tesla bears on social media, with the highest visibility, fit into those groups. I believe they are misguided, but they have every right to risk their own money how they like.

    However, it is my belief that the vast majority that encompass the $12 billion in short interest do not fit this. They are not chasing highs and selling lows because they are emotional retail investors. They are not shorting because they think Tesla is overvalued. They are not shorting because they think Tesla will go bankrupt. They are shorting during specific events when Tesla is most vulnerable, and covering when they fail to achieve the targeted goal. They are shorting to bankrupt Tesla.

    *more*
     
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  13. AlMc

    AlMc 'Senior Moments' member

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    All I can say is 'WOW' and 'Thank YOU"......and. Don't be a stranger.:)
     
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  14. JRP3

    JRP3 Hyperactive Member

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    Relevance?

    What fake product?
     
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  15. JRP3

    JRP3 Hyperactive Member

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    It is, you're just too busy reading the short BS to read about it. Tesla Solar Roof customer gives insights on cost and installation process
     
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  16. Reality

    Reality Member

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    i do remember seeing this, and i think you need to read the articles

    According to the Solar Roof customer, the difference in price between the photovoltaic system and a traditional roof is substantial. Thus, he does not recommend the tiles for those who are financially-sensitive.



    Also think about this:

    The installation involved a surprising 20 people who worked on the Solar Roof for two weeks.



    They dont dig in much more than this but I seem to remember the product revealed claimed to be cheaper than a regular roof once you account for energy savings. And the roof tiles only had 2% loss compared to regular solar tiles. All of this is fabrication, it is make believe. It is not real. It is a lie.


    A grossly misrepresented product is the same as a fake product. Ask Elizabeth Holmes
     
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  17. Moderatefan

    Moderatefan Member

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    Btw, whats up with 3 weeks before shorters doom? They won't show profit in Q2, supposedly. Does Elon think that re-iterating his Q1 statement about Q3/Q4 being profitable in Q2 will put a start to a short squeeze?

    The War on Tesla, Musk, and the Fight for the Future

    Btw, TSLA seems on the rise already, Even after Elon's done w/ his share purchase...has the squeeze started prematurely? :rolleyes:
     
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  18. EinSV

    EinSV Active Member

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    Wrong thread.
     
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  19. pz1975

    pz1975 Member

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    Amazing thread and analysis jesse - thank you.
     
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  20. JRP3

    JRP3 Hyperactive Member

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    Actually it's not..Amusing how "Reality" is in fact denying his screen name at every occasion. Solar roof is a real product going through real product innovation cycles just like every other real product. It will get better and cheaper over time.
     
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