I think Wikipedia over-simplifies. For a court’s civil contempt powers to be brought into effect, any form of disobedience to an order will suffice. Criminal contempt, on the otherhand, requires some level of mens rea. See 18 USC 401.
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
To my view
- Elon was not trying to revise guidance with that tweet
- Looking back, Elon was sloppy on the call re Model 3 production of 350K to 500K in 2019. A case can be made for S3X combined production possibly getting close enough to 500K to offer that 350-500K range, but 3 alone? inconsistent with what was said that day re 3... at some point end of ‘19 or early ‘20 10K per week global 3 production (7K/week US, 3K/week China). I don’t see a reasonable case for 500K 3 production in ‘19 consistent with that.
- That said, IIRC the terms of the SEC agreement were about mechanisms to improve social media communication... not the issuance of a zero tolerance policy of any sloppy language on conference calls (strongly suspect Elon’s intent was to say 350-500K vehicles this year, not Model 3s alone)
- SEC got sloppy in looking at the earnings letter but not the call that same day (fwiw, I suspect the SEC
probably was heavily lobbied by bears pointing to that tweet and the letter).
- SEC appears over zealous in treating that tweet as a violation of their agreement with Tesla/Musk
- If on the call Elon did in fact mean to say 350K-500K total S3X in ‘19, the tweet is even more of a non-issue (not just without an intent to manipulate markets, but, additionally, consistent with such guidance from the call). In this case, the Tesla lawyer jumping in with concerns re the SEC agreement actually added confusion by creating the second tweet that comes across as a correction... of an already valid statement.
- Tesla appears pretty unwise not to error towards caution re Elon’s twitter account in the wake of the settlement and the general climate of many actors looking to see the company trip up (including trying to make such an event happen)
Not a great look all around, but, I really don’t see any intent to manipulate markets in that tweet.
Hopefully reason and calmer minds prevail, and the SEC and Tesla de-escalate. I realize that sounds naive, but, if all concerned are fortunate, the Judge might lead Tesla and the SEC towards that sort of more helpful resolution.
- Elon was not trying to revise guidance with that tweet
- Looking back, Elon was sloppy on the call re Model 3 production of 350K to 500K in 2019. A case can be made for S3X combined production possibly getting close enough to 500K to offer that 350-500K range, but 3 alone? inconsistent with what was said that day re 3... at some point end of ‘19 or early ‘20 10K per week global 3 production (7K/week US, 3K/week China). I don’t see a reasonable case for 500K 3 production in ‘19 consistent with that.
- That said, IIRC the terms of the SEC agreement were about mechanisms to improve social media communication... not the issuance of a zero tolerance policy of any sloppy language on conference calls (strongly suspect Elon’s intent was to say 350-500K vehicles this year, not Model 3s alone)
- SEC got sloppy in looking at the earnings letter but not the call that same day (fwiw, I suspect the SEC
probably was heavily lobbied by bears pointing to that tweet and the letter).
- SEC appears over zealous in treating that tweet as a violation of their agreement with Tesla/Musk
- If on the call Elon did in fact mean to say 350K-500K total S3X in ‘19, the tweet is even more of a non-issue (not just without an intent to manipulate markets, but, additionally, consistent with such guidance from the call). In this case, the Tesla lawyer jumping in with concerns re the SEC agreement actually added confusion by creating the second tweet that comes across as a correction... of an already valid statement.
- Tesla appears pretty unwise not to error towards caution re Elon’s twitter account in the wake of the settlement and the general climate of many actors looking to see the company trip up (including trying to make such an event happen)
Not a great look all around, but, I really don’t see any intent to manipulate markets in that tweet.
Hopefully reason and calmer minds prevail, and the SEC and Tesla de-escalate. I realize that sounds naive, but, if all concerned are fortunate, the Judge might lead Tesla and the SEC towards that sort of more helpful resolution.
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I think the point you miss is that the SEC is asking the court to enforce an agreement ro which Musk is a party and which was then ratified and put intp effect by an order of the court.
Can we please stop confusing things?
Q4 letter: 360-400k vehicle deliveries
Q4 call: 350-500k Model 3s produced
Tweet: around 500k vehicles produced
I assume that everyone here knows the difference between production and delivery, and between "Model 3s" and "vehicles"?
I think the point that you miss is that the SEC asking the court to "enforce" an agreement to which Musk is not in violation is at best poor judgement, and at worst, malicious prosecution.
Fact Checking
Well-Known Member
I'm not missing any of that, the decision tree examines the facts relevant to the interpretation of the settlement agreement(s) and of the relevant law.
What the SEC desires is not relevant, the judge will use the agreement, the law and the facts of the case to make a decision about the SEC motion, and intent will be a central theme in all but one of the branches of the decision tree.
The conclusion remains: your argument that Elon's intent doesn't matter to the court's adjudication of the SEC's motion is a grossly and willfully false statement.
Antares Nebula
Active Member
Hi folks, I'm new here. I've been following in the shadows for a while, but never posted. But I actively post on Seeking Alpha in a (perhaps vain) effort to fight Tesla FUD. After the recent SEC news, I decided to finally become a member and contribute a "small" post. Nothing really original, but basically a summary of my understanding based on what I've read from others here and elsewhere. Also, I'm not a legal expert.
First:
In the Q4 Investor Letter and 10K, TOTAL deliveries were mentioned at 360-400k. In the CC, deliveries of M3 alone were estimated by Musk at 350-500k, depending on China and other factors (as analysts questioned him on the difference between his estimate and the Q4 letter). The midpoint of the CC M3 estimate is 425k. After adding in ~75k conservatively for S and X, you get 500k deliveries. So, there is some variability there as far as total deliveries go, anywhere from 360 to 600k.
Second:
In the first tweet in question, Musk was not talking about deliveries, but production ("make") and it was only an approx number ("around"):
"Tesla made 0 cars in 2011, but will **make around** 500k in 2019"
Production is often higher than deliveries, especially in 2019 with the more complex logistics of international deliveries (as Tesla previously pointed out). Even regardless of this assumption, if you put the first tweet together with the investor letter and CC call, you get:
*** In 2019, Tesla will make approx 500k total cars and deliver anywhere from 360 to 600k cars. So there is nothing inaccurate nor conflicting about the first tweet vs what was conveyed in the investor letter and conference call, as the SEC alleges. ***
Analysts and the public understand that there could certainly be a large variability (of say approx +-100k) in the production and delivery forecast for 2019, given all the many variables (China, tariffs, timeline of low-cost M3, etc.). In the investor letter and second (clarifying) tweet, Tesla/Musk was being more conservative, whereas in the CC call and first tweet they were being less conservative, more ambitious.
Furthermore, since (given the above) nothing new was conveyed in the first tweet, that tweet hence did not contain any material info -- it was all prior public knowledge. And so it did not require further pre-approval from Tesla legal counsel.
In summary, I think the SEC erred because they did not take into account what was said in the CC call, nor did they take into account the difference between "production" numbers vs "delivery" numbers.
First:
In the Q4 Investor Letter and 10K, TOTAL deliveries were mentioned at 360-400k. In the CC, deliveries of M3 alone were estimated by Musk at 350-500k, depending on China and other factors (as analysts questioned him on the difference between his estimate and the Q4 letter). The midpoint of the CC M3 estimate is 425k. After adding in ~75k conservatively for S and X, you get 500k deliveries. So, there is some variability there as far as total deliveries go, anywhere from 360 to 600k.
Second:
In the first tweet in question, Musk was not talking about deliveries, but production ("make") and it was only an approx number ("around"):
"Tesla made 0 cars in 2011, but will **make around** 500k in 2019"
Production is often higher than deliveries, especially in 2019 with the more complex logistics of international deliveries (as Tesla previously pointed out). Even regardless of this assumption, if you put the first tweet together with the investor letter and CC call, you get:
*** In 2019, Tesla will make approx 500k total cars and deliver anywhere from 360 to 600k cars. So there is nothing inaccurate nor conflicting about the first tweet vs what was conveyed in the investor letter and conference call, as the SEC alleges. ***
Analysts and the public understand that there could certainly be a large variability (of say approx +-100k) in the production and delivery forecast for 2019, given all the many variables (China, tariffs, timeline of low-cost M3, etc.). In the investor letter and second (clarifying) tweet, Tesla/Musk was being more conservative, whereas in the CC call and first tweet they were being less conservative, more ambitious.
Furthermore, since (given the above) nothing new was conveyed in the first tweet, that tweet hence did not contain any material info -- it was all prior public knowledge. And so it did not require further pre-approval from Tesla legal counsel.
In summary, I think the SEC erred because they did not take into account what was said in the CC call, nor did they take into account the difference between "production" numbers vs "delivery" numbers.
Fact Checking
Well-Known Member
Very well put, was just about to post this info.
Note that Tesla also guided about ~20k Model S/X deliveries for Q1, which would be annualized to around 80k/year.
So the total vehicles production range for 2019 would be 430k-580k.
(For Model S/X deliveries and production are very close, as the international delivery pipeline is filled already.)
Artful Dodger
"Neko no me"
TSLA After-hrs Summary.2019-02-19.19-15.png
Nothingburger Highlights:
- less than 10% of After-hrs trading occured after 'The Tweet'
- the rate of trades per minute after the Tweet was HALF the rate before
- the last trade before the Tweet ($307.10 at 7:13 pm) was exactly 14 cents less than the average selling price after the Tweet
- overall volume was exceptionally low throught the entire after-hrs session compared to other "News" events during After-hrs trading
Time to drain the moat.
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You're missing one big thing here - the 350-500k EC guidance was for M3 alone, in Elon's tweet he was referring to S3X production.
So assuming 100k SX you can modify the EC statement to 450-600k, then to say "around 500k", sounds about right to me.
SebastianR
Active Member
A few funny things: If we want to nitpick, I think the SEC should go after Elon since of course in 2011 Tesla produced more than "0" cars - the Roadster production stopped some time in 2012.
Tesla Roadster (2008) - Wikipedia
Secondly, what I find interesting is the following (all the past few days)
1) Reports on fire don't move the stock price at all (any longer)
2) CR gets (too) many posts in this forum, but doesn't move the price more than 5%
3) The SEC kerfuffle is the short's best chance this week with a moderate price drop (so far, who knows what will come next).
In short: the more "meta" the news gets (i.e. the further away from the actual product) the more there is movement in the stock. Which seems to indicate to me that the products are just great and everybody knows that. The rest seems more "what people think about Tesla" in one way or the other. While that's annoying, I can't believe it will have long-lasting effects...
I can't wait for 1 March to come around...
Tesla Roadster (2008) - Wikipedia
Secondly, what I find interesting is the following (all the past few days)
1) Reports on fire don't move the stock price at all (any longer)
2) CR gets (too) many posts in this forum, but doesn't move the price more than 5%
3) The SEC kerfuffle is the short's best chance this week with a moderate price drop (so far, who knows what will come next).
In short: the more "meta" the news gets (i.e. the further away from the actual product) the more there is movement in the stock. Which seems to indicate to me that the products are just great and everybody knows that. The rest seems more "what people think about Tesla" in one way or the other. While that's annoying, I can't believe it will have long-lasting effects...
I can't wait for 1 March to come around...
Of course (as always), I respect your right to hold that opinion. Presumably, you must then believe that the SEC is being “grossly and wilfully false” when they write in their complant that “Significantly, a violation need not be wilful in order to find contempt.”?
Fact Checking
Well-Known Member
I think the Q4 CC mentioned 350k-500k Model 3 deliveries. Here's the exact exchange:
@Antares Nebula interpreted it similarly.
Antares Nebula
Active Member
Karen or Fact Checking, you guys are claiming that Musk said 350-500k M3s produced (vs delivered) in CC? That would be even better, but I did not see (or interpret) that. Can either of you clarify where exactly he said that? Honestly asking (uberBull here). From the CC (see my bold emphasis, so I interpret "sell through" and "delivering" to mean deliveries not production):
Colin Rusch
Thanks so much. Can you talk a little bit about the geographic dispersion for the guidance for 2019, where you're expecting the Model 3s to sell through as well as the other models?
Elon Musk
Well, I think we did, actually. Yes, it's clear in our letter.
Deepak Ahuja
We indicated in Q1, we will start delivering Model 3s in Europe and China. And we also shared a chart showing the potential market size for midsized premium sedans in North America, Europe and Asia, suggesting those markets could be even bigger. So I think that gives a good sense of where we'll be. And we'll launch the right-hand drive version at some point to go to the other markets.
Elon Musk
Yes. Maybe in the order of 350,000 to 500,000 Model 3s, something like that this year.
Colin Rusch
Thanks so much. Can you talk a little bit about the geographic dispersion for the guidance for 2019, where you're expecting the Model 3s to sell through as well as the other models?
Elon Musk
Well, I think we did, actually. Yes, it's clear in our letter.
Deepak Ahuja
We indicated in Q1, we will start delivering Model 3s in Europe and China. And we also shared a chart showing the potential market size for midsized premium sedans in North America, Europe and Asia, suggesting those markets could be even bigger. So I think that gives a good sense of where we'll be. And we'll launch the right-hand drive version at some point to go to the other markets.
Elon Musk
Yes. Maybe in the order of 350,000 to 500,000 Model 3s, something like that this year.
Thanks for joining the forum Antares. Welcome!
Antares Nebula
Active Member
Okay thanks Fact Checking. Your post answered my belated question. Karen or anybody else want to clarify further? Regardless, the 350-500k deliveries are still sufficient for Musk to be in the right.
Elon's 350k to 500k number for model 3 deliveries in the conference call is more reasonably interpreted as an error in communication than as any legitimate guidance. It happens to annualize to the exit rate of 7k to 10k/week. I think Elon made essentially the same mental error again with the first tweet.
I think the Judge is likely to find this is all accidental and rather harmless but there is plenty of evidence that Elon could repeat another 420-style tweet of significantly wrong material information, and enforce some more controls.
I also think Elon trying to justify his tweet with the conference call statement to be highly disingenuous unless he honestly thinks 500k is a possible 2019 production target, which he already said he didn't actually mean with the first tweet!
I think the Judge is likely to find this is all accidental and rather harmless but there is plenty of evidence that Elon could repeat another 420-style tweet of significantly wrong material information, and enforce some more controls.
I also think Elon trying to justify his tweet with the conference call statement to be highly disingenuous unless he honestly thinks 500k is a possible 2019 production target, which he already said he didn't actually mean with the first tweet!
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