Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[VValleyEV]

I am imagining a headline:

SEC forces profitable and growing company into bankruptcy for statement that has no effect on market.

In the body of the article, the point will be made that we are all made safer from investor fraud by such vigilance and enforcement rigor, that a policy of zero tolerance is preferable to any consideration of intent or timing or factuality in the offending statement, and also preferable to consideration of possible damage from enforcement. Also the point will be made that the slack in this market segment will easily be taken up by the other automobile manufacturers, in fact that without this company that according to the SEC was forced into bankruptcy by mismanagement, many existing companies will be more likely to survive, so there is not economic loss on balance. Or some such horrendously awful total bullshit.

Yeah sure I exaggerate, if they force Elon completely out Tesla will survive, but I expect it would no longer pose as much of a threat to Detroit.

 

[EVNow]

It is this kind of nonsense that makes CEOs to be so guarded and non-committal all the time.

SEC should look at massive security malpractices rather than fringe cases like this.

 

[Krugerrand]

Must be nice to be a mind reader.

I’ll do a bit of my own. This poster won’t last a month here.

 

[PhaseWhite]

management and whether Tesla wants to post a substantial Q1 profit, or is content with maximizing growth with tiny profits.

EXACTLY...…………….this is nothing because the tweet was not any new material information. Which makes it even more obvious of the SEC's obsession with Elon.

Thanks for that. Should be required reading before anyone else comments on this topic here.

We're all friends here, but Musk clearly screwed up. Again. Over something stupid, due to his ego. The case is pretty clearly open-and-shut. He said something inaccurate, and material, and did not have it vetted prior to posting. I agree that he didn't mean to make a material disclosure, but the reality is that he did (because he didn't say what he meant to say--Tesla will not make 500k vehicles in 2019, and he stated that they would).

Yep. This is a silly thing that pretty clearly was not intended to be a thing. But since Musk didn't have it cleared, it went out and the agreement was violated.

Do I think the SEC should be pursuing this particular violation? No--it was pretty obviously a mistake to anyone paying close attention to the company, it was made and corrected outside of market hours, and the stock didn't significantly react to it.

But at the end of the day, this isn't an isolated event. Elon Musk gonna Elon Musk, and sometimes he Elon Musks himself into a hole. He's been poking the SEC bear, to the point of flat-out taunting them on national television.

The judge is unlikely to toss this IMO, as Musk is, by the letter of the agreement, clearly in violation. And when you've spent time publicly discussing how little you respect the SEC, and how you'll probably make mistakes, you don't set yourself up for the judge to take your side.

This will probably blow over, hopefully with Musk actually making an effort to comply. But I'm sitting on the sidelines with my additional cash for the time being.

Just as I was heavily disappointed in Musk after the 'pedo guy' incident, so am I now. For such a smart dude, Musk is incredibly adept at making level one noob mistakes that would be so simple to avoid, and which damage his stated mission. If nothing else, perhaps we can hope this incident will aid him in leveling up and getting out of his own way going forward.

I'm sure a lot of people don't have respect for the SEC but they are smart enough not to say as much on 60 minutes. There's a reason why people are generally tactful towards their regulators, it's because they hold the power of discretion to decide when to enforce the law. The SEC is exercising that power now because they believe Musk and Tesla are in technical breach of the agreement and maybe they don't particularly like Musk. I agree this is a ridiculous over reaction, but it is also predictable. Musk is smart enough to know that the SEC doesn't go after real criminals, they go after the Martha Stuarts of the world. Ask yourself, in the time where every news article tries to tie Tesla or Musk to the headline because it drives traffic, who is the highest impact person the SEC can use to make an example of?

To win this case, Tesla and Musk would have to go to court and fight a very public battle with the SEC, but that is a losing proposition for a public company already. It's like I tell my kids when it comes to crossing intersections: "You can be in the right, but still end up dead wrong (So don't cross in front of moving cars)"

 

[Krugerrand]

What are the repercussions if the court rules in favor of the SEC?

Private Tesla

 

[Zaxxon]

Think the shorties have their short shorts in a wad over nothinburger. I appreciate Elon clarifies the info he did. Buy up tommorow!

FWIW, despite my prior comment I bought in with 1/3 of the couch money tonight. Will see how the morning looks for the rest.

 

[MarcusMaximus]

I’m just catching up on the forum. Wasn’t the tweet to correct misinformation in the Ark invest interview?

I... don’t believe so? It was showing the level of growth from 0 cars/year at end of 2011 to 500k/year at end of 2019(mistyped to be raw number of production in both respective years)

 

[Barklikeadog]

wasn't the agreement about 'communications'? What does the SEC think about the 'full self driving by the end of the year' statements? big deal or no deal

 

[Krugerrand]

Bye

Dang, I was generous with my prediction. I didn’t have to read more than a single page and he’s already declared his departure.

 

[brian45011]

FYI:

779. Burden of Proof in a Criminal Contempt Action

779. BURDEN OF PROOF IN A CRIMINAL CONTEMPT ACTION
In a criminal contempt action the United States had the burden of proving each of the elements of the offense beyond a reasonable doubt. See Bloom v. Illinois, 391 U.S. 194, 205 (1968); Gompers v. Bucks Stove and Range Co., 221 U.S. 418, 444 (1911); Falstaff Brewing Corp. v. Miller Brewing Co., 702 F.2d 770, n. 1 (9th Cir. 1983); United States v. Columbia Broadcasting System, 497 F.2d 107 (5th Cir. 1974); Peterson, 456 F.2d 1135 (10th Cir. 1972).

The motion is about civil contempt and the standard of proof is clear and convincing. (See p 6 of the Motion.)

Clear and Convincing Evidence

 

[MXWing]

Why I make good premium selling puts on most weeks is Implied Elon Volatity.

Spending that premium on long calls.

 

[Chunky Jr.]

You'd think that anyone savvy enough to follow Elon and use that for trading purposes would also know that he tends to to be a bit, um, overly optimistic, and therefore should take his words with a grain of salt.

 

[Thekiwi]

It wasn't even the high end of guidance. 350-500k was for Model 3s. Add in 80k for S+X, that's 430-580k. Musk's tweet was, and I quote: "Tesla made 0 cars in 2011, but will make around 500k in 2019". Tell me, is 430-580k "around 500k"? Sure looks that way to me.

The Q1 earnings shareholder letter said:

“In total, we are expecting to deliver 360,000 to 400,000 vehicles in 2019”

The 500k tweet (before “clarification”) - was definitely materially different to that.

What’s muddling things is Elon’s earnings conference call comments - which were different to the shareholders letter. It was annoying no analyst followed up on the conference call given Elon’s comment was so different to a document Tesla released just in the previous hour.

However the fact he had said it arguably gives Elon’s tweet enough cover that it isn’t an open and shut case, but not enough totally to throw out the complaint.

 

[Curt Renz]

It is this kind of nonsense that makes CEOs to be so guarded and non-committal all the time.

SEC should look at massive security malpractices rather than fringe cases like this.

I suspect that Elon’s October 4 tweet referring to the “Shortseller Enrichment Commission” inspired SEC officials to be on the alert for any excuse to retaliate.

 

[scaesare]

While a BLEVE is a (terrible) thing, that does not prevent leaking, non-pressurized fuel from a vehicle to vaporize and mix with air, forming a mixture that can ignite accidentally in much the same manner as it happens (by design) in a thermobaric weapon (a.k.a. FAE, Fuel Air Explosive).

In fact, the risk of having a sudden ignition of a significant volume of vaporized fuel / air mix seems worse in a burning ICE extraction scenario than one involving a BEV, where a fire can be expected to evolve in a more gradual manner.

Certainly it's possible for a violent as droplet/vapor ignition to occur, but this will almost certainly be a deflagration, which is subsonic. That's not to say it can't be powerful... even black powder ignition is a deflagration.

But very rarely would such an event involve the supersonic ignition necessary to be a detonation.

 

[Krugerrand]

So, would any "accredited investor" be able to invest in tesla after it goes private? I think they have a hard limit on total # of investors allowed.

Most of us here would be out. It was discussed fully after the ‘thinking about taking Tesla private’ tweet, so search back in last year’s investor’s thread.

 

[Stretch2727]

Personally think SEC is way over reaching on this one.

Material means it has a meaningful impact on the stock price or the company financials. For the SEC to ask for a contempt charge in this case without meaningful damage is over the top vindictive. It is also questionable as to whether it is much different from company guidance which was just published. My prediction is the judge throws it out.

Just my opinion.

I just freed up some cash as will be thanking the SEC for the buying opportunity, as for for sure this will blow over.

Elon has been pretty careful with his tweets since the settlement. In my mind the SEC has effected the stock more than Elon's tweets (at least since the fall). They are the ones that should be held accountable.

 

[Singuy]

The Q1 earnings shareholder letter said:

“In total, we are expecting to deliver 360,000 to 400,000 vehicles in 2019”

The 500k tweet (before “clarification” - was definitely materially different to that.

What’s muddling things is Elon’s earnings conference call comments - which were different to the shareholders letter. It was annoying no analyst followed up on the conference call given Elon’s comment was so different to a document Tesla released just in the previous hour.

However the fact he had said it arguably gives Elon’s tweet enough cover that it isn’t an open and shut case, but not enough totally to throw out the complaint.

Ah so Tesla has zero inventory at all time. Production is different than deliveries, hence his clarification.

 

[MarcusMaximus]

Ah so Tesla has zero inventory at all time. Making "ABOUT 500k" cars can be in the same universe as delivering about 400k cars you know.

In fairness, expecting 100k cars in inventory on Jan 1, 2020 would be more market moving than selling 500k...

 

[Singuy]

In fairness, expecting 100k cars in inventory on Jan 1, 2020 would be more market moving than selling 500k...

Tesla guided 10k cars/week by year end. We may even see higher burst rates than that. In conjunction of "about 400k" (which means maybe it can be slightly more) and "about 500k" which can be slightly less, with 3 weeks worth of inventory will bridge the gap. Need to stop thinking in terms of 5k cars a week by year end....could be 11-12k cars/week burst with gigafactory 3.