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Elon Musk vs. Short sellers

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

  1. Reality

    Reality Member

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    No literally, it is, the SEC agrees with me on this

    Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday.

    SEC.gov | Theranos, CEO Holmes, and Former President Balwani Charged With Massive Fraud
     
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  2. JRP3

    JRP3 Hyperactive Member

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    And exactly what claims is the solar roof not meeting?
     
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  3. AWDtsla

    AWDtsla Active Member

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    Even as recently as last week, people were in denial about Model S even being a product. Yeah, I said Model S. Not X, not 3. It's really hard to separate the deranged internet crank from short sellers. It's been 10 solid years of people denying anything Tesla makes even exists.
     
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  4. pz1975

    pz1975 Member

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    I saw someone on StockTwits claiming very strongly that Tesla has only ever made less than 20,000 cars total. All models combined. Crazy.
     
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  5. CarlK

    CarlK Member

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    Just want to add Amazon and Netflix stocks are among the best performers in recent years. Both have been the most shorted stocks from their IPO about two decades ago until very recently when Tesla took the title. Those people are sophisticated? I don't think so. They maybe sophisticated in stock market manipulation but they are not sophisticated in business at all.
     
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  6. Uncle Paul

    Uncle Paul Active Member

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    I understand Elon and why he is taking it personally when the shorts put out one fake negative story after another to take his company down. These shorts profit from failure and not success.

    Imagine, for a moment, that this was happening to you and your personal life. That someone was putting things in your local newspaper stating you were going bankrupt, That you were in terrible financial shape and needed to borrow lots of money to keep your house. That your kids were horrible and getting into lots of legal problems. That your wife was sleeping around and had diseases. They you too would take it personal.

    If the shorts simply took their short position and shut up all would be good, but they don't. They put out all sorts on negative news, false scenarios, terrible predictions, lies, miss-reperesentations. Only talk about the bad stuff. The fires, panel gaps, Autopilot mishaps, pricing of previous bonds, borrowing needs, employee problems, Union issues, lithium shortages, competitors coming up in a few years, distractions from Space X. The litany on negativity goes on and on, even though many of those issues have already been addressed inside the company and improvements already in place.

    If they just placed their bets that the stock would be going up or down, then all is fair. If the spent millions of dollars to manipulate the stock prices then that goes far beyond just being an investor. They become stock manipulators.
     
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  7. mickificki

    mickificki Member

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    Fantastic insights, thank you Jesse.

     
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  8. electracity

    electracity Active Member

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    That's just not true. Sunrun subcontracts which is why they have remained relatively healthy. Solarcity was an inefficient way to install solar. They didn't fail because of Chanos. They were a business model failure.

    Initially solarcity could count on ignorance as customers were incapable of comparing a PPA to an equipment purchase. So solarcity could effectively create a nice margin when they financed the install. Customers caught on and profitable business declined.

    You are correct that the truth of solarcity is in the FICO scores. Counting on people who can afford to buy a solar system only works until people catch on to the game.
     
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  9. Oil4AsphaultOnly

    Oil4AsphaultOnly Active Member

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    Claiming the solar roof tiles were a fake product despite having physical products being deployed and sold, AND then claiming that the product didn't meet its announced financial specs shows that you don't understand anything about the product nor what was announced.

    If that's what you've been basing your short position on, please re-read jesselivenomore's postings on this thread to understand what kind of "facts" you've been feeding on.
     
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  10. adiggs

    adiggs Active Member

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    The equilibrium price after the shorts had all covered and the market had recovered from the spike would have to be higher than today's price.

    Round numbers - 210M shares at $370/share = $77.7B market cap.

    Remove 40M short shares. 170M shares at ? = 77.7B market cap. ? = $457.


    It appears that the market evidence is that there is demand from longs for $77.7B of Tesla. On 170M shares that would be $457/share, but with the extra 40M shares available due to shorts, the price is "only" $370.

    But the original point, that there would be a spike, and then the stock price would settle back to more reasonable level (about $457) is well taken, and I agree with @jesselivenomore 's point. $457/share isn't going to be enough to get 40M shares out of the hands of longs so they can be retired, the price will spike much higher. Afterwards though, it will come back down into this range.

    For a really long holder such as myself, the only way that matters to me is if I become a short term trader and trade the spike, and then buy back in after the fall.
     
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  11. jesselivenomore

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    Moody's

    Hopefully by now you have read the transcript linked in the OP. If so, you understand the depth that these people will go to. You understand that analyst reports are circulated before they come out for them to front run. You understand the rating agencies are mentioned by name. But you also have to understand, Fairfax Financial was a relative unknown midsize firm from Canada. Tesla's short interest is the largest in the entire US stock market. What is at stake now is profoundly greater, what about the methods? Of course I can't know that for sure. But what we do know:

    Screen Shot 2018-06-18 at 2.36.06 PM.png

    After the close on 3/27, Moody's downgraded Tesla's debt to B3, senior notes to Caa1, with outlook negative.

    Before this happened, during the trading session on 3/27 Tesla was down $25 on double the average volume. In the prior 11 trading days, Tesla was down 10. Note that the stock market as a whole was also down during this period, but not to this extent and especially less so on 3/27.

    The rationale behind Moody's downgrade:

    Tesla's ratings reflect the significant shortfall in the production rate of the company's Model 3 electric vehicle. The company also faces liquidity pressures due to its large negative free cash flow and the pending maturities of convertible bonds ($230 million in November 2018 and $920 million in March 2019). Tesla produced only 2,425 Model 3s during the fourth quarter of 2017; it is currently targeting a weekly production rate of 2,500 by the end of March, and 5,000 per week by the end of June. This compares with the company's year-earlier production expectations of 5,000 per week by the end of 2017 and 10,000 by the end of 2018.

    The negative outlook reflects the likelihood that Tesla will have to undertake a large, near-term capital raise in order to refund maturing obligations and avoid a liquidity short-fall. Prospects for addressing its liquidity requirements (whether equity, convertible notes or debt) will be supported if the company can establish credibility for reaching Model 3 production levels -- 2,500 per week by the end of March, and 5,000 per week by the end of June.

    So the crux of the downgrade and especially the negative outlook revolved around the uncertainty of Tesla's production rate. It was stated that this could be alleviated if Tesla could hit its production targets by the end of March. Those precise production targets were set to be updated the very next week. Moody's could have waited less than one week to confirm their projections in order to make a more informed judgment, yet for some reason they did not, and was determined to get this downgrade out.

    The fallout after Moody's downgrade:

    Tesla bond price plummeted to 87 cents on the dollar, while yields approached 8%. Just a few short months before this, Tesla sold these bonds paying 5.3%. At these new prohibitive rates, Tesla was essentially shut out of the debt markets. This was happening precisely during Tesla's cash "valley" before Model 3 ramps up. There was talk of a liquidity crisis, while JP Morgan started peddling Tesla "crash puts" below $100. JPMorgan Recommends Tesla ‘Crash Puts’ With Tail Risk Rising

    I did not have a position in Tesla at this time, and I did not yet read the excerpt in the OP. I am not sure if my reaction would have changed much if I had. I consider myself a conservative bull, and after reading this news I became more cautious on Tesla than ever before. I understood that nothing has changed with Tesla the company, but there are many things outside of Tesla's control. Markets create a narrative and it takes on a life of it's own, especially when it comes to liquidity issues. It becomes a self-fulfilling prophecy*. These were my own words of warning to a fellow TMC user through private message before I had read The Divide, so I understood too well when I finally came upon it.

    *will expand on this*
     
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  12. kbM3

    kbM3 Member

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    You ain’t seen nuthin’ yet.
     
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  13. mutle

    mutle Member

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    Thank you @jesselivenomore for the amazing insight and putting all these events into context. Most interesting thing I've read on the internet in a long time.
     
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  14. Reality

    Reality Member

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    Cost and efficiency
     
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  15. Reality

    Reality Member

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    ya that's weird

    i dont even deny the Model S is a cool looking car and 'first of its kind' and even 'groundbreaking'


    doesnt change the fact Tesla is doomed as a company imo
     
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  16. EVMeister

    EVMeister Member

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    Thought we might see you quite active on this thread. Guess you need to distract yourself from the truth of the situation unfolding before your very eyes somehow. It must really hurt.
     
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  17. Reality

    Reality Member

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    I get it, the stock is up, im still posting and commenting and trying to add insight and absorbing all reasons possible as to why i might be wrong.

    If the stock turns, i will be interested to see how many of you never show up again.
     
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  18. EVMeister

    EVMeister Member

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    "We" have been here all the time, through the highs and lows. It's not us longs who tend to shy away when things aren't going our way. So yes, credit to you for sticking around trying to absorb information, as you say. I still can't pretend to understand your position and see it as doubling down on a losing bet. And I reckon you'll see that sooner or later, but whether or not anybody here can convince you in time I'm not sure.
     
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  19. AWDtsla

    AWDtsla Active Member

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    It already did. People are still here.
     
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  20. johnnybgood888

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    I will give you credit for continuing to show up here and comment, however, none of your "new insights" are particularly new, nor insightful. In fact, some of your assertions, re: Tesla Solar Roofs being a fake product, is bordering on disingenuous at best, and outright lying at worst.

    I like hearing from the other side of the aisle, but if you cannot engage us here in good faith, then none of what you write provides any value to anyone here.
     
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