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

[Singer3000]

Quite a celebratory mood from this group on Musk's SEC rebuttal letter. To add another data point for everyone, the summary view from a lawyer friend (financial rather than constitutional law) with no financial or emotional skin in the game: It's a nice try but pretty sure he'll be held in contempt. Resorting to the first amendment argument seems a bit desperate.

My advice to all you options players is to tread carefully unless you really know your legal onions.

 

[Tenable]

If anyone else has an extra +1 Model Y invite (after DaveT gets one) I’d be thrilled to fly out last minute. Dinner and drinks on me.

 

[Antares Nebula]

To me, this is one of the most important aspects of Musk's filing today, which shows the tweet to be non-material:

"Prior to Musk’s posting of the 7:15 tweet, the subject matter and substance of the tweet— i.e., Tesla’s projected production and rates of production for 2019—had been publicly disclosed in multiple documents and discussed at length in an earnings call. As noted above, on January 2, 2019, Tesla filed a Form 8-K reporting its Q4 2018 production of “25,161 Model S and X vehicles, consistent with our long-term run rate of approximately 100,000 per year.” Ex. 1 at 5. Then, during the January 30 Earnings Call, Musk stated that Model 3 production in 2019 would be on the order of “350,000 to 500,000” vehicles. Ex. 3 at 8. Tesla similarly disclosed in its January 30 Update and February 19 Form 10-K that it was “targeting annualized Model 3 output in excess of 500,000 units sometime between Q4 of 2019 and Q2 of 2020.” Ex. 4 at 3. Thus, whether one adds the production estimates for the three models (S, X, and 3) together or even considers projections for the Model 3 alone, Musk’s statement that Tesla would make “around 500k” “cars” in 2019 was within previously disclosed ranges. The tweet simply was not “news.” Because this constitutes “information already known on the market,” it is “immaterial.”

I actually posted comments to this effect here, at Seeking Alpha, as well as sent emails to Musk/Tesla. The SEC, along with the bears and the media, and even many bulls, in their impatience to scold Musk once again, missed the nuances in these numbers: the CC numbers vs the earnings report/10k, M3 vs total vehicles, and even production vs delivery. I'm so glad that his legal team clarified these nuances and laid out all the numbers.

 

[kyzhk]

Not a lawyer... having said that:

I think the most important part of the response is the part about the pre-approval only being valid for 2 days, because that goes to the heart of the SEC's case. There is a lot of language trying to get this thrown out altogether, which is fine and compelling however should we allow for the government's interpretation of this rule it would clearly be a full and complete gag order and would not allow Musl to discuss anything related to Tesla.

The SEC's interpretation would mean that if he wanted to refer to e.g. 2011 data he would need to seek pre-approval on something that has been public knowledge for 8 years. This would mean he could never give an interview as the CEO as anything he discusses would need to be constantly preapproved.

The way Tesla interprets it says that for NEW & MATERIAL information he needs to release it within 2 days of the approval. This actually makes sense.

I imagine it would be quite easy to get around.

Maintain a gigantic document of all facts about Tesla, share the doc out for continuous approval. Any time a new piece of info gets added the committee is notified to review the changes. Re-approve the doc every 2 days when there is no change.

Anything from the continuously approved document would be okay for EM to speak of.

Of course, I hope Tesla won't ever have to resort to this which is just silly and shows how absurd SEC is.

 

[Antares Nebula]

These two passages were also critical to the defense, IMO:

"The immateriality of the 7:15 tweet is confirmed by an analysis of the after-hours trading market. See generally Noe Decl. ¶¶ 14-34. After Musk posted the 7:15 tweet, there was no noticeable change in either the after-hours trading price or volume. Id. ¶¶ 21-22 (noting a .09% change in the stock price after the 7:15 tweet, and that after-hours trading volume after the 7:15 tweet was less than .01% of the shares of outstanding common stock). This is probative evidence that the 7:15 tweet was not material to shareholders. Id. ¶ 23.4

Moreover, the 7:15 tweet was not posted in a vacuum. Just minutes earlier, at 7:02 p.m., Musk tweeted, “4000 Tesla cars loading in SF for Europe.” Musk. Decl. ¶ 8. Attached to that tweet was a photograph of thousands of Tesla vehicles on a dock on the San Francisco Bay, ready for shipping abroad. Id. The message was that Tesla has come a long way and is now flourishing globally. At 7:15 p.m., Musk tweeted—in a tweet linked in a chain to the 7:02 tweet—“Tesla made 0 cars in 2011, but will make around 500k in 2019.” Id. This was a celebratory string of tweets, expressing excitement about Tesla’s success since 2011 and pride for what Tesla anticipated achieving in 2019. Id. To any reasonable observer, this is a statement of pride and optimism, not of guidance."

Overall, I thought the defense was excellent. In my humble non-legal opinion, I don't see how the judge does not throw out this case. The SEC has clearly over-reached, while failing to due their proper homework, and has nothing here. Excellent rebuttal! Congrats to Musk and his legal team!!

 

[Fact Checking]

The way Tesla interprets it says that for NEW & MATERIAL information he needs to release it within 2 days of the approval. This actually makes sense.

Exactly. I made this argument before - and it's the ONLY way to interpret the agreement that doesn't create a prior restraint on Elon's speech by a U.S. government agency, which kind of prior restraint would be slapped down by a federal judge faster than you can say "First Amendment".

Note that the SEC is perfectly aware of this and they didn't even argue that interpretation in their contempt motion (instead, in cooperation with all the TSLAQ trolls the SEC argued that the 'about 500k' tweet was material non-public information) - which not just mortally weakens the SEC's case but makes the SEC motion borderline frivolous...

I haven't read the full motion yet, only skimmed it, will do a more careful read and will post about it later - but from what I've read so far it's the kind of masterpiece of fine legal work I expected it to be, and Elon's legal arguments appear to be even stronger than I initially believed them to be (!).

There's a lot of depth to this filing, I'm quite sure that this isn't the end of it.

Just a quick nugget: Elon's response cites more than 40 cases...

The First Amendment is one of the strongest enforced constitutional protections, it's one of the steepest constitutional barriers for a U.S. Government agency such as the SEC to cross. I believe the SEC is going to regret the day they filed the September lawsuit. Back then Tesla and Elon was essentially coerced into settling by the daunting prospect of 3-5 years of civil litigation which the SEC could have dragged out by a few more years once they realized that they were losing.

But contempt of court motions under an already agreed upon settlement on the other hand are processed at an accelerated schedule - for example once the contempt hearing is over the judge has a 60 days deadline to rule. This could be over in weeks or months, modulo appeals - and I believe Elon can argue most of his constitutional rights via this venue as well.

When Tesla and Elon is done with the SEC we might see a new, strong precedent reigning in an out of control SEC.

 

[dddaaa0]

Fred thinks that his content based on publicly available tweets and articles are proprietary. Everyone who refers to same publicly available tweets and articles has to give attribution to Fred's "original" content. Such a whiny jackass!
Edit: Also, what Ryan suggested in his first tweet isn't some crazy out-of-the-box idea that only a genius like Fred can come up with.

 

[Pezpunk]

what a jackass Fred Lambert is. a true stain on the Tesla community.

 

[mrdoubleb]

Fred thinks that his content based on publicly available tweets and articles are proprietary. Everyone who refers to same publicly available tweets and articles has to give attribution to Fred's "original" content. Such a whiny jackass!
Edit: Also, what Ryan suggested in his first tweet isn't some crazy out-of-the-box idea that only a genius like Fred can come up with.

View attachment 385643

OMG. Fred is getting more and more insufferable by the day.

And the funniest part is he is the king of using uncredited sources...

 

[lascavarian]

When Tesla and Elon is done with the SEC we might see a new, strong precedent reigning in an out of control SEC.

Since the Tesla interpretation of their pre-approval process is part of the filing, I wonder if the finding of the court favors Tesla, that the Tesla method then has the blessing of the court?

 

[Fact Checking]

And the funniest part is he is the king of using uncredited sources...

I can personally attest to the fact that Fred makes significant edits to his stories without noting the correction history in the article, and without crediting the person who pointed out the (significant, story-changing) mistake in the original article. [Which was me fact checking him, in at least one case. ]

So if I was Fred I wouldn't be throwing stones in his glass house of journalistic ethics...

I think Fred might still be smarting from the fact that two weeks ago CleanTechnica, InsideEV, Teslarati and other EV news-sites were invited to that private conference call with Elon and were allowed to ask questions (@ZachSachan asked a couple of good ones!), but not Electrek.

 

[Alphacrux]

Damn you - I just went and bought FSD now.

I just purchased it as well. 100% margin to Tesla. Curious to see if they’ll announce any new S/X at the Y unveiling now that I’ve invested more $$$ in my current model.

 

[Carl Raymond]

I just purchased it as well. 100% margin to Tesla. Curious to see if they’ll announce any new S/X at the Y unveiling now that I’ve invested more $$$ in my current model.

It buys you the HW3 motherboard upgrade when it’s available, yes? So a bit less than 100% margin. They would have to account for the later upgrade cost now.

 

[Alphacrux]

It buys you the HW3 motherboard upgrade when it’s available, yes? So a bit less than 100% margin. They would have to account for the later upgrade cost now.

You are right of course.

 

[Antares Nebula]

Man, I hate to jump on the Fred bandwagon, but he's gone kamikaze with his latest article:

Tesla is bringing Autopilot prices ‘back to normal’, Elon Musk admits mistake

It's clear now that if Fred doesn't make peace with Tesla, Musk, and the EV community, that the editors should fire him. Otherwise, this is wound that's just going to keep on festering.

 

[Antares Nebula]

On another note: can we get to Thursday, already!!!!!!!!!!

 

[WarpedOne]

Frends don't let frends read fred.

 

[SPadival]

If anyone has a +1 available for the Model Y event, please let me know by PM’ing me. Willing to pay.

If anyone else has an extra +1 Model Y invite (after DaveT gets one) I’d be thrilled to fly out last minute. Dinner and drinks on me.

Even invited +1s could not RSVP due to the event being full. So I doubt your chances. All the best.

 

[elliott82]

Lol what kind of ads are being displayed here??

It says in bad german:
Tesla loses Elon Musk
„Elon Musk is being terminated. Is that the end for Tesla? “

Is that some sort of bot-ad??

I don’t want such bs being displayed here.

 

[SPadival]

Not a lawyer... having said that:

I think the most important part of the response is the part about the pre-approval only being valid for 2 days, because that goes to the heart of the SEC's case. There is a lot of language trying to get this thrown out altogether, which is fine and compelling however should we allow for the government's interpretation of this rule it would clearly be a full and complete gag order and would not allow Musl to discuss anything related to Tesla.

The SEC's interpretation would mean that if he wanted to refer to e.g. 2011 data he would need to seek pre-approval on something that has been public knowledge for 8 years. This would mean he could never give an interview as the CEO as anything he discusses would need to be constantly preapproved.

The way Tesla interprets it says that for NEW & MATERIAL information he needs to release it within 2 days of the approval. This actually makes sense.

I have said the same thing already. But unlike Fwed "Whiney" Lambert, I won't accuse you of plagiarism

That's not what the policy says (from SEC's 'I am telling mommy' complaint):

View attachment 380657

Point ii is the relevant section that Mr cleanair is referring to - this should be correctly interpreted as requiring pre-approval AGAIN if there is a delay > 2 days BETWEEN getting pre-approval AND releasing MATERIAL information. (or as per point i, if there are further edits)

Once the material information is released, only an idiot would interpret as material, re-releasing the same info again! This is as good as saying a photocopy is the same as the original.

SEC is deliberately misinterpreting and worse, misrepresenting information.