TSLA Market Action: 2018 Investor Roundtable

[msvoyager]

I personally don't think journalists treat Tesla differently because it doesn't advertise. And I think that's an unfortunate reading of the situation.

That said, I do think many people tasked with covering Tesla are out of their depths. They don't have time to learn everything we've read and are more easily duped by "experts" in arenas they don't understand.

Well, I laid out my case here, so I won't spend time doing so again: Tesla Shorts Are Scared, Exposed, & Desperate — Memo To Media: Don't Be Duped | CleanTechnica

That piece has gotten some nice traction, largely via Google & Google News, so let's hope some of the people covering Tesla are more considerate and investigate more.

Hi Zach, Great piece, thanks for doing that! I was just wondering about the very last sentence of it.
I dont understand that last bit at all. I also think it is too bad to conclude such a great and objective piece with these last words, as that is what sticks after done reading it. Just my two cents.

 

[Boomer19]

they added 4,782,204 shs in q2 as of 6/30 filing bringing their total to 15,645,133

 

[electracity]

I agree, I think everything Elon states in terms of targets and time-lines he genuinely believes is possible. To be fair to him, he's getting better with his forecasting and being more cautious now, but at no point do I think he's ever said something in order to deceive.

This lawsuit looks like an opportunistic money-grab to me.

"Musk attended a meeting with CFO Jason Wheeler, in late April or early May of 2016...where he was directly informed by FE1, Director of Manufacturing at Tesla’s Fremont plant, that “there was zero chance that the plant would be able to produce 5,000 M3/week by the end of 2017.”


I have no doubt that events similar to what is reported above occurred in many critical areas, including AP2 deliverables.

 

[scaesare]

I personally don't think journalists treat Tesla differently because it doesn't advertise. And I think that's an unfortunate reading of the situation.

There is a lot of research that would indicate otherwise.

I've not read them all, but enough to know that advertising media bias exists as a real thing.

 

[EinSV]

There is a lot of research that would indicate otherwise.

I've not read them all, but enough to know that advertising media bias exists as a real thing.

I agree. There are also marketing/PR experts who recommend that companies target advertising buys to ensure favorable media coverage.

 

[bdy0627]

"Musk attended a meeting with CFO Jason Wheeler, in late April or early May of 2016...where he was directly informed by FE1, Director of Manufacturing at Tesla’s Fremont plant, that “there was zero chance that the plant would be able to produce 5,000 M3/week by the end of 2017.”


I have no doubt that events similar to what is reported above occurred in many critical areas, including AP2 deliverables.

That demonstrates a difference of opinion about production timelines and capabilities. Elon obviously had a more optimistic expectation than others. However, it's still a large gap getting from there to proving that Elon knowingly and intentionally misled investors. How do you prove one of the most optimistic scientist entrepreneurs in the world wasn't continuing to be optimistic about the model 3 timeline, even when it looked extremely unlikely, but instead was actually lying about it? I'm sure Elon has heard many many times from his employees that something couldn't be done within a certain timeframe, but in many instances they have been proven wrong in the end rather than him.

 

[scaesare]

Thanks. Useful perspective.

Long series of tweets from this guy quoting the filing seems to lay out the argument: Paul Huettner, CFA (@Paul_M_Huettner) | Twitter

Basically, seems to argue that Elon, Deepak, Tesla claimed production was possible that wasn't possible, and that they misled investors on a few occasions about the state of their progress and potential. I'm no lawyer, but my logical response would be that Elon & Tesla routinely pushed boundaries beyond what people said was "possible," didn't accept mediocre targets, and the investment community knows this about the company. In other words, they were trying their best to push everyone to push the boundaries of what's possible. In some of these cases, the targets were missed, but it's on investors to judge how much faith to put in a company's targets. Sometimes they succeed, sometimes they don't.

Well, ol' Paul there, who on Twitter fancies himself a financial advisor, has a day gig working for a company which touts it's expertise in working with the Oil & Gas industry.

Chilmark Oil & Gas

I am shocked by his take on the lawsuit...

 

[bdy0627]

@JustinPulitzer
$TSLA still chopping BELOW channel. My fingers are crossed for a flush AHEAD of their earnings to set-up for a squeeze… but given the hatred of this stock lately, could squeeze ahead of schedule. I’m still just an interested observer for now though. I’ll discuss in next video

 

[Alketi]

"Musk attended a meeting with CFO Jason Wheeler, in late April or early May of 2016...where he was directly informed by FE1, Director of Manufacturing at Tesla’s Fremont plant, that “there was zero chance that the plant would be able to produce 5,000 M3/week by the end of 2017.”


I have no doubt that events similar to what is reported above occurred in many critical areas, including AP2 deliverables.

I don't doubt that at all. Especially regarding AP2.

However, if you add up circumstantial evidence regarding Elon's past firings, it also suggests that Doug Fields may have said something similar to Elon about hitting 5K by the end of June. Doug was subsequently placed on leave, while Elon assumed all of his duties in addition to his own, a tent was built and made somewhat functional in 3 weeks, and with a 24/7 effort, the goal was met. And Doug subsequently disappeared.

I'm pointing this out not to defend Elon's ridiculous grasp of time/magnitude, but to show that other examples could be used very effectively in his defense. Someone's view of "zero chance" is ultimately just an opinion, not a fact.

 

[WarpedOne]

I gave up on the hope of profitability changing anything.

The longs are moving the goal posts just like the shorts are. And they are also totally oblivious of the deed.

There was "after they start M3 production the SP will rise". Nope, it didn't.
There was "after the people start experiencing the M3, the SP will rise". Nope, it didn't.
There was "after they hit 2k/w production, the SP will rise". Nope, it didn't.
And the latest - "after they hit 5k/w, the SP will rise". Nope, it didn't.
And it won't when they hit 10k/w, it wont when they hit their forth consecutive profitable quarter, and it won't when they announce the fifth GF.

The problem is - the market in general does not want TSLA to succeed.
Tesla's big success means big failure of too much of other parts of the market, to many participants loose.

Forget about the short squeeze, the shorts will not run out of the money to cover, forget about the margin calls.
This war will not end soon, there will be a lot of blood to come.
Be free to be naive, I refuse to continue being naive.

Tesla is not too big to fail, it is too big to succeed.

 

[neroden]

That demonstrates a difference of opinion about production timelines and capabilities. Elon obviously had a more optimistic expectation than others. However, it's still a large gap getting from there to proving that Elon knowingly and intentionally misled investors. How do you prove one of the most optimistic scientist entrepreneurs in the world wasn't continuing to be optimistic about the model 3 timeline, even when it looked extremely unlikely, but instead was actually lying about it? I'm sure Elon has heard many many times from his employees that something couldn't be done within a certain timeframe, but in many instances they have been proven wrong in the end rather than him.

Yep. This. What happened to "FE1"? Did Elon say "No, we're going to do this, and you can quit if you don't think it's possible"? Because that *sounds like* Elon. And we know he sacked a bunch of people!

To prove the case they'd have find evidence that Elon said "Yes, I believe you, but we'll lie to the public" -- I can't believe that happened.

 

[EinSV]

There is a lot of research that would indicate otherwise.

I've not read them all, but enough to know that advertising media bias exists as a real thing.

This abstract has a decent summary of the problem:

Recent studies have shown that consumers' product choices are significantly influenced by media coverage and recommendations in various media outlets. Unlike advertising, consumers perceive these sources as neutral and more credible because they usually presume that editorial content and product coverage in newspapers and magazines are independent and free from advertisers' influence. In this article, the authors show how advertising activities of firms may influence media coverage to the firms' advantage. They analyze a recent (2002–2003) large data set comprising 291 fashion companies based in Italy and their advertising and product coverage data published in newspapers and magazines of 123 publishers from Italy, France, Germany, the United Kingdom, and the United States. Controlling for firm heterogeneity, endogeneity, and the simultaneity of advertising and coverage, the authors find that, overall, (1) there is evidence of a strong positive influence of advertising on coverage, (2) publishers that depend more on a specific industry for their advertising revenues are prone to a higher degree of influence from their corporate advertisers than others, (3) peer pressures from competing publishers affect coverage decisions, (4) larger and more innovative companies are at an advantage for obtaining coverage for their products, and (5) the effects of corporate advertising influence exist in both Europe and the United States. These findings raise concerns about the independence of editorial content and coverage of magazines. An Error Occurred Setting Your User Cookie​

 

[neroden]

"Musk attended a meeting with CFO Jason Wheeler, in late April or early May of 2016...where he was directly informed by FE1, Director of Manufacturing at Tesla’s Fremont plant, that “there was zero chance that the plant would be able to produce 5,000 M3/week by the end of 2017.”

I have no doubt that events similar to what is reported above occurred in many critical areas, including AP2 deliverables.

Certainly -- we all know Musk's infamous optimism. But Elon has a record of firing people who say that things are impossible and replacing them, and sometimes he made the "impossible" happen. To prove a case about forward-looking statements the plaintiffs would have to prove a claim about Elon's state of mind, which is essentially impossible. This is why you can't win cases on forward-looking statements. The plaintiffs have to find a claim about the PAST which is false.

 

[30seconds]

Yeah -- basically they have to prove that Musk concealed something material about the production line -- statements about the future won't win that case. I mean, the plaintiffs are alleging that, with all the claims of Model 3s being "all hand built" and so forth, but Tesla is disputing this: Tesla claims they were using the automated production line and it was just stopping a lot (as the robot vision failed to spot things, etc.) I tend to believe Tesla's claim that they were using the automated line and parts of it weren't working.

Plus they hit the 5000/ week target within 6 months of the December target. So they may have gotten the exact timing wrong, but have already demonstrated that they can meet the guidance. Plus all of the repeated communications regarding "production hell" and that S-curves are hard to predict, etc..

 

[NicoV]

I don't doubt that at all. Especially regarding AP2. However, if add up circumstantial evidence regarding Elon's past firings, it also suggests that Doug Fields may have said something similar to Elon about hitting 5K by the end of June. Doug was subsequently placed on leave, while Elon assumed all of his duties in addition to his own, a tent was built and made somewhat functional in 3 weeks, and with a 24/7 effort, the goal was met. And Doug subsequently disappeared.

I'm pointing this out not to defend Elon's ridiculous grasp of time/magnitude, but to show that other examples could be used very effectively in his defense. Someone's view of "zero chance" is ultimately just an opinion, not a fact.

Also that persons opinion of “zero chance” may have assumed “with reasonable effort”. When Elon takes the lead, he authorises “unreasonable effort (example: use a tent as (temporary) production hall), which changes the odds.
In my personal experience I’ve always been positively surprised that when a project goes so FUBAR that senior management takes over the daily management of the project (by definition, that ‘s when the sugar has hit the fan) almost anything becomes possible purely because the senior management has the authority to take drastic decisions.

 

[Dan Detweiler]

I gave up on the hope of profitability changing anything.

The longs are moving the goal posts just like the shorts are. And they are also totally oblivious of the deed.

There was "after they start M3 production the SP will rise". Nope, it didn't.
There was "after the people start experiencing the M3, the SP will rise". Nope, it didn't.
There was "after they hit 2k/w production, the SP will rise". Nope, it didn't.
And the latest - "after they hit 5k/w, the SP will rise". Nope, it didn't.
And it won't when they hit 10k/w, it wont when they hit their forth consecutive profitable quarter, and it won't when they announce the fifth GF.

The problem is - the market in general does not want TSLA to succeed.
Tesla's big success means big failure of too much of other parts of the market, to many participants loose.

Forget about the short squeeze, the shorts will not run out of the money to cover, forget about the margin calls.
This war will not end soon, there will be a lot of blood to come.
Be free to be naive, I refuse to continue being naive.

Tesla is not too big to fail, it is too big to succeed.

Unfortunately, I'm with you on all of this...until the last line. Jury is still out long term, but short term (next year or so) I see nothing changing the media response to Tesla and the market's response them. Totally bummed.

Dan

 

[neroden]

To put it another way: to win on claims about the future, the plaintiffs have to claim that Tesla executives knowingly misled them. The Tesla executives are going to say "We thought what we were saying was true, but *we were big idiots*." Since Musk has already said "We were big idiots" about the overly-automated production line, this is going to be pretty convincing to any court.

Which reminds me of one of the best features of Musk. He's actually *unusually* good at recognizing when he's made a mistake and reversing course quickly. It is a rare and extremely valuable talent for a CEO.

 

[StockCynic]

Yep. This. What happened to "FE1"? Did Elon say "No, we're going to do this, and you can quit if you don't think it's possible"? Because that *sounds like* Elon. And we know he sacked a bunch of people!

To prove the case they'd have find evidence that Elon said "Yes, I believe you, but we'll lie to the public" -- I can't believe that happened.

I am working through the document right now. While claims about forward guidance are inherently difficult to assess there are several instances that are huge question marks for me:

[Finally, with respect to the automated line in Fremont, Musk stated that there existed "a gigantic machine producing - that's meant for 5,000 vehicles a week and its producing a few hundred vehicles a week"]

I went back and checked the record and he did make that claim, on August 2nd 2017 during the earnings call with analysts. Do you honestly believe that Fremont was producing a few hundred cars a week back in July of last year? I don't.

Securities law is complex, they do not have to find cold hard evidence that Elon knowingly lied. As a public company official SEC filings must be complete and not misleading. Elon, Deepak, and the Board of Directors have a fiduciary responsibility to ACCURATELY portray the status of the company when reporting to investors.

 

[tslagreen]

I gave up on the hope of profitability changing anything.

The longs are moving the goal posts just like the shorts are. And they are also totally oblivious of the deed.

There was "after they start M3 production the SP will rise". Nope, it didn't.
There was "after the people start experiencing the M3, the SP will rise". Nope, it didn't.
There was "after they hit 2k/w production, the SP will rise". Nope, it didn't.
And the latest - "after they hit 5k/w, the SP will rise". Nope, it didn't.
And it won't when they hit 10k/w, it wont when they hit their forth consecutive profitable quarter, and it won't when they announce the fifth GF.

The problem is - the market in general does not want TSLA to succeed.
Tesla's big success means big failure of too much of other parts of the market, to many participants loose.

Forget about the short squeeze, the shorts will not run out of the money to cover, forget about the margin calls.
This war will not end soon, there will be a lot of blood to come.
Be free to be naive, I refuse to continue being naive.

Tesla is not too big to fail, it is too big to succeed.

Easy to get discouraged in the current climate, but as most here know, the SP can turn around on a dime. I don't think the timing is coincidental either, being so close to earnings, for all the negative news. Tesla does face many obstacles and does have many detractors, but the demand for Tesla's product is irrefutable and that will translate to profits soon enough and Wall Street has no soul or heart, but instead looks at $ which will accelerate the SP soon enough.

 

[BozieBeMe2]

Also that persons opinion of “zero chance” may have assumed “with reasonable effort”. When Elon takes the lead, he authorises “unreasonable effort (example: use a tent as (temporary) production hall), which changes the odds.
In my personal experience I’ve always been positively surprised that when a project goes so FUBAR that senior management takes over the daily management of the project (by definition, that ‘s when the sugar has hit the fan) almost anything becomes possible purely because the senior management has the authority to take drastic decisions.

In my opinion, I have found this to be the very case. A junior employee does not have the lee way that the senior manager does, so therefore, the Jr. has to have authority and the funds to carry out the new plan. If you value your 'out of the box idea', you need more than lip service.
How many Jr. Tesla managers could pull off a sprung tent?