That last is exactly why I find the "all delays caused by naked shorts" theory confusing. Whoever had a large stable of naked short shares must have known it, and had more than a week to tally up how many shares they were, uh, short, and buy them on the open market. Why wait until after the split takes effect and they can't distribute (the missing) shares properly? Wouldn't that just be drawing a big red arrow to themselves saying "hey everyone, WE have a naked short problem!" Why risk that exposure instead of just biting the bullet and buying however many shares were needed before the 31st, so everything looked smooth upon distribution and nobody investigated?
It seems like the naked short theory is alleging even greater incompetence than the "it was all caused by incompetence" theory.
Not greater incompetence, greater greed. Here's the theory built upon the known facts:
The market makers are the naked short sellers. This activity, done excessively, gives them the ability to move the share price when desired and provides them with more profit opportunities. When Tesla announced the 5:1 stock split the price jumped and the naked short positions were caught with their pants down. This is multiple entities (market makers) since greed is rampant.
The obvious question at that point is whether the market makers had enough market power to control the beast that news of the stock split unexpectedly unleashed. And they are now in competition with one another for all the shares they need. While a profitable situation has now turned unprofitable, greed doesn't go away - they all want to limit losses as much as possible. But they know the sooner they all collectively cover their naked shorts, the higher the share price goes - they want to avoid a short squeeze. Their cohorts in the financial media pump the story that a stock split changes nothing fundamental and the price is acting irrationally but the price keeps rising. So individual market makers bite the bullet and cover their shorts which pushes the price even higher. Soon the price is so high they realize it won't take much to trigger a sudden correction. So they wait. And wait. Some of the less brazen would rather cover their shorts in time than be caught with their hand in the cookie jar so the price keeps rising. The more brazen are more comfortable with taking risk and lying and cheating so they decide it will be less expensive to fail to deliver, lie and blame it others and wait for a correction so they can cover with smaller losses. They can limit the damage of these failure to delivers by lying and blaming others for their failure to come up with the shares.
There seems to be some misconceptions about the Depository Trust Clearing Corporation (central clearing house for stock shares). The DTCC is wholly owned by the brokerages and market makers - it's a classic example of the
wolf guarding the hen house. I recommend reading up on it:
Depository Trust & Clearing Corporation - Wikipedia
This is a story of pervasive greed, not incompetence. The DTCC assists by looking the other way while their owners/masters get everything tidied up with as little damage as possible. In this case, the damage is substantial and probably consumed their naked shorting profits for a few months, if not much longer.
Elon and Hiro have won another decisive victory in this round! It went down almost exactly as planned. From the looks of it, most of the naked short shares have been covered (at great cost to the market makers) but there are likely to be some odd lots that the most powerful and brazen market makers will be tidying up this week at lower prices. This surprise stock split followed by a capital raise going into battery day, S&P and Q3 results demonstrates brilliant vision, timing and execution on the part of Tesla. Having a management willing and able to enter battle and come out in a stronger position increases the value of our investment greatly over time.
The smoke over the battlefield has mostly dissipated, blood and bodies are everywhere, the devastation is breathtaking, and you would think the market makers would have learned not to mess with Elon Musk. However, greed is a powerful and habitual force. They will be more cautious and less brazen for some time (particularly with Battery Day, S&P and Q3 P&D and Earnings reports all looming) but, over time, they will feel their mojo return and take advantage of opportunities as they arise (just in a more cautious manner and with a correspondingly weaker effect). Elon stands victorious and commands more respect than ever.
