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I shorted (a very small amount) from about $320 down to about $270. That's when Elon had his very standoffish and defiant earnings call. After that I exited at

I shorted (a very small amount) from about $320 down to about $270. That's when Elon had his very standoffish and defiant earnings call. After that I exited at a profit because I didn't think the downward reaction was severe enough. People were asking legitimate questions about orders and finances and he told them to shut up, while directly insulting their intelligence. That was an extremely bad sign to me. When I saw that even after that, there was still support in the $270s, I declared the market too bullish for my liking and was no longer comfortable being short. As far as I'm concerned TSLA has to turn a profit in the next couple of quarters or they're just not going to be able to be competitive enough with the additional financing they're going to require. Elon promises they won't need to raise capital. If he's right, great. But I'm not betting on it one way or the other.

ggm 8y ago
You're telling two stories. One is, that you have antipathies to the CEO because he behaves badly. Well, thats market-effecting, so its information you can (and did) use to inform your investment decisions. But, its a short-term investment process. This doesn't really inform deliverables in the medium to long term, or the fundamentals of the company. The second story is structural debt burden and the effect on profitability. I am not an economist, but I think you may have over-stated this. I think it would be a mistake to make investment decisions based on your information, absent clear signals from people who ARE economists about the effect on short, medium and longterm investment outcomes. If (as I suspect) you are looking for short term profits, well and good, you can use this rationally to say "dispationately I don't think I can see a return on my investment by value gain or dividend, so I won't invest" But if somebody is a non-dispassionate investor, in for the medium to long term because of a belief building the EV market has wider outcomes which WILL raise their stock value, or return dividends, then this debt burden is a risk-side decision: Is the risk of a problem sufficient to outweigh the chance of the upside in the longer term?
kjksf 8y ago
GM just had their annual meeting for shareholders. They said they'll increase production of Bolt but refused to say by how much and by when. In contrast, Tesla lays out their future plans months, sometimes years in advance. Tone aside, it seems to me that Tesla is being measured here by a completely different stick. Compared to all other public companies they provide vastly more "legitimate" information. Just for a few examples of "legitimate" questions that well known companies refuse to answer, even if politely: * GM won't tell you any details about future plans for Bolt and other EVs. Tesla: "we'll make 10k by end of 2018". GM: we'll increase production, don't ask us when or by how much" * Amazon only recently disclosed number of Prime subscribers, and only total number, not breaking down e.g. US from international * Netflix won't tell shareholders viewing numbers for any of their shows I could go on talking about information that companies don't share. It's just bizarre that people expect Tesla will just disclose anything that's asked.
- daveguy 8y ago
  Tesla is held to a different standard is precisely because they have been so forthcoming in the past. If a company is giving regular updates on production and targets and then gets weird about it for one meeting then you can expect a drop. It looks like they are back on track (and are again open about production), but you can bet if they get cagey about it again their stock is going to take a hit. They might be able to transition to less openness if they want to (so they only reveal what they want and don't spook investors), but not one extreme to the other in just one shareholders meeting.
  - cptskippy 8y ago
    Seems like a great way to make money. Train everyone to be weary if you're cagey answering questions. 1) Short your stock. 2) Hold press event. 3) Get cagey about questions. 4) Profit.
    - dragonwriter 8y ago
      And that is a perfect example of why corporate management and other insiders are subject to all kinds of restriction on trading their company’s stock.
      - cptskippy 8y ago
        That's only if they give false or misleading statements or trading on non-publicly disclosed information. Does it count if you intentionally manipulate your body language or tone in intentionally misleading ways while still presenting factual and correct information? For example giving an uncharacteristic pregnant pause when answering a straight forward question or becoming agitated when normally you're subdue?
  - njarboe 8y ago
    I think the reason Musk and Tesla are very sensitive about production numbers right now is that they want to hit their 200k electric car production number at just the right time. The way the $7500 federal tax credit works (and I am pretty certain this is right. Happy to follow a link to the actual law) is that after a company makes 200k qualifying vehicles, for the rest of that quarter and the quarter after that people still get the tax credit. So depending on when they hit the 200,000th car, the full tax credit will last between 3 and 6 months. Tesla would like to get the Model 3 production ramped up to a high level but not hit the 200k total production until right after the start of a quarter. It looks like they are going to do just that. Tesla is very close to 200k this month and that is probably partly why they shut down to "improve production rate". Slow down production in June to not hit 200k until after July 1. They have also been playing with exporting more cars to hit the 200k number at just the right time. Having the maximum 6 months instead of the minimum 3 months will be a lot of extra cars/people getting the tax credit. If they average 6000 cars a week over that time (12 weeks x 6000 x $7500) that is an extra $540 million. Then the tax credit goes in half for the next two quarters and in half again ($7500/4) for the next 2 quarters. Seems a bit strange for the law not just to say the credit extends for 6 months after the 200,000th car is built, but who knows how such laws get crafted.
jakecrouch 8y ago
The book "The Seven Signs of Ethical Collapse" tells the stories of companies that suddenly collapsed due to hidden issues, like Enron and Worldcom. Tesla fits every sign: larger-than-life CEO with massive executive turnover, board of directors very deferential to the CEO, conflicts of interest (Solarcity acquistion), "innovation like no other", attempts to silence criticism, pressure to maintain numbers (Model 3 production and resulting problems with factory workers, firing employees and contractors to reach profitability). I find the fact that they have an executive departure rate on par with what Enron and Valeant had most concerning - when large numbers of senior people don't vest their stock grants, it's normally because they know there's very something wrong that's not yet public. It's especially suggestive that the VP of finance and chief accounting officer left in March, at the same time as the Fremont factory was put up for collateral and a "special purpose entity" was created to hold $546m in car sales, presumably to make the company appear more creditworthy.
- abc_lisper 8y ago
  Enron is not remotely comparable to Tesla. Tesla makes first class products, products the world didn't know could be made. Everything else follows that. It may bear superficial resemblance to chosen points of Enron, but that is just pattern matching mammalian brain at work.
mcv 8y ago
I was considering buying Tesla after that, but didn't. A decision I now obviously regret. Dips like that are always a great time to buy, but I got caught in the fear of the moment I guess. I almost never short. The only time I ever shorted was when earlier this year some bad -- and to a techie, obviously false -- news about AMD hit. Expecting panic from non-tech investors, I bought short turbos for a day, sold them later that day, and would have bought long if it had dropped far enough. But most of the time, I find shorting way to speculative and risky.
paidleaf 8y ago
> I shorted (a very small amount) from about $320 down to about $270. That's when Elon had his very standoffish and defiant earnings call. It's pretty dangerous to short high flying stocks like TSLA in a major bull market. Especially when most of the shares are owned by Musk and his institutional backers. It's not intuitive, but highly shorted stocks like TSLA in a bull market is a recipe for a significant price rise to burn the shorts and steal their money. > Elon promises they won't need to raise capital He's been saying that for a while and he keeps raising capital and diluting the shareholders. > If he's right, great. I suspect TSLA's recent layoffs are to work some accounting magic and show "profits" in the coming quarters. If so, it'll get big pops come earnings. > But I'm not betting on it one way or the other. In the long term, I'd watch oil prices and FED rates. If energy prices stay relatively low, if governments end subsidies and of course the FED decides to pop this bubble, I could see TSLA bankrupt in 5 - 10 years ( like it was in 2008 before the bailout ). Maybe after a big price spike flushes the shorts, then it might be time to start averaging in short positions. But either way, it's a gamble.

ggm 8y ago

You're telling two stories. One is, that you have antipathies to the CEO because he behaves badly. Well, thats market-effecting, so its information you can (and did) use to inform your investment decisions. But, its a short-term investment process. This doesn't really inform deliverables in the medium to long term, or the fundamentals of the company. The second story is structural debt burden and the effect on profitability. I am not an economist, but I think you may have over-stated this. I think it would be a mistake to make investment decisions based on your information, absent clear signals from people who ARE economists about the effect on short, medium and longterm investment outcomes. If (as I suspect) you are looking for short term profits, well and good, you can use this rationally to say "dispationately I don't think I can see a return on my investment by value gain or dividend, so I won't invest" But if somebody is a non-dispassionate investor, in for the medium to long term because of a belief building the EV market has wider outcomes which WILL raise their stock value, or return dividends, then this debt burden is a risk-side decision: Is the risk of a problem sufficient to outweigh the chance of the upside in the longer term?

kjksf 8y ago

GM just had their annual meeting for shareholders. They said they'll increase production of Bolt but refused to say by how much and by when. In contrast, Tesla lays out their future plans months, sometimes years in advance. Tone aside, it seems to me that Tesla is being measured here by a completely different stick. Compared to all other public companies they provide vastly more "legitimate" information. Just for a few examples of "legitimate" questions that well known companies refuse to answer, even if politely: * GM won't tell you any details about future plans for Bolt and other EVs. Tesla: "we'll make 10k by end of 2018". GM: we'll increase production, don't ask us when or by how much" * Amazon only recently disclosed number of Prime subscribers, and only total number, not breaking down e.g. US from international * Netflix won't tell shareholders viewing numbers for any of their shows I could go on talking about information that companies don't share. It's just bizarre that people expect Tesla will just disclose anything that's asked.

daveguy 8y ago
Tesla is held to a different standard is precisely because they have been so forthcoming in the past. If a company is giving regular updates on production and targets and then gets weird about it for one meeting then you can expect a drop. It looks like they are back on track (and are again open about production), but you can bet if they get cagey about it again their stock is going to take a hit. They might be able to transition to less openness if they want to (so they only reveal what they want and don't spook investors), but not one extreme to the other in just one shareholders meeting.
- cptskippy 8y ago
  Seems like a great way to make money. Train everyone to be weary if you're cagey answering questions. 1) Short your stock. 2) Hold press event. 3) Get cagey about questions. 4) Profit.
  - dragonwriter 8y ago
    And that is a perfect example of why corporate management and other insiders are subject to all kinds of restriction on trading their company’s stock.
    - cptskippy 8y ago
      That's only if they give false or misleading statements or trading on non-publicly disclosed information. Does it count if you intentionally manipulate your body language or tone in intentionally misleading ways while still presenting factual and correct information? For example giving an uncharacteristic pregnant pause when answering a straight forward question or becoming agitated when normally you're subdue?
- njarboe 8y ago
  I think the reason Musk and Tesla are very sensitive about production numbers right now is that they want to hit their 200k electric car production number at just the right time. The way the $7500 federal tax credit works (and I am pretty certain this is right. Happy to follow a link to the actual law) is that after a company makes 200k qualifying vehicles, for the rest of that quarter and the quarter after that people still get the tax credit. So depending on when they hit the 200,000th car, the full tax credit will last between 3 and 6 months. Tesla would like to get the Model 3 production ramped up to a high level but not hit the 200k total production until right after the start of a quarter. It looks like they are going to do just that. Tesla is very close to 200k this month and that is probably partly why they shut down to "improve production rate". Slow down production in June to not hit 200k until after July 1. They have also been playing with exporting more cars to hit the 200k number at just the right time. Having the maximum 6 months instead of the minimum 3 months will be a lot of extra cars/people getting the tax credit. If they average 6000 cars a week over that time (12 weeks x 6000 x $7500) that is an extra $540 million. Then the tax credit goes in half for the next two quarters and in half again ($7500/4) for the next 2 quarters. Seems a bit strange for the law not just to say the credit extends for 6 months after the 200,000th car is built, but who knows how such laws get crafted.

jakecrouch 8y ago

The book "The Seven Signs of Ethical Collapse" tells the stories of companies that suddenly collapsed due to hidden issues, like Enron and Worldcom. Tesla fits every sign: larger-than-life CEO with massive executive turnover, board of directors very deferential to the CEO, conflicts of interest (Solarcity acquistion), "innovation like no other", attempts to silence criticism, pressure to maintain numbers (Model 3 production and resulting problems with factory workers, firing employees and contractors to reach profitability). I find the fact that they have an executive departure rate on par with what Enron and Valeant had most concerning - when large numbers of senior people don't vest their stock grants, it's normally because they know there's very something wrong that's not yet public. It's especially suggestive that the VP of finance and chief accounting officer left in March, at the same time as the Fremont factory was put up for collateral and a "special purpose entity" was created to hold $546m in car sales, presumably to make the company appear more creditworthy.

abc_lisper 8y ago
Enron is not remotely comparable to Tesla. Tesla makes first class products, products the world didn't know could be made. Everything else follows that. It may bear superficial resemblance to chosen points of Enron, but that is just pattern matching mammalian brain at work.

mcv 8y ago

I was considering buying Tesla after that, but didn't. A decision I now obviously regret. Dips like that are always a great time to buy, but I got caught in the fear of the moment I guess. I almost never short. The only time I ever shorted was when earlier this year some bad -- and to a techie, obviously false -- news about AMD hit. Expecting panic from non-tech investors, I bought short turbos for a day, sold them later that day, and would have bought long if it had dropped far enough. But most of the time, I find shorting way to speculative and risky.

paidleaf 8y ago

> I shorted (a very small amount) from about $320 down to about $270. That's when Elon had his very standoffish and defiant earnings call. It's pretty dangerous to short high flying stocks like TSLA in a major bull market. Especially when most of the shares are owned by Musk and his institutional backers. It's not intuitive, but highly shorted stocks like TSLA in a bull market is a recipe for a significant price rise to burn the shorts and steal their money. > Elon promises they won't need to raise capital He's been saying that for a while and he keeps raising capital and diluting the shareholders. > If he's right, great. I suspect TSLA's recent layoffs are to work some accounting magic and show "profits" in the coming quarters. If so, it'll get big pops come earnings. > But I'm not betting on it one way or the other. In the long term, I'd watch oil prices and FED rates. If energy prices stay relatively low, if governments end subsidies and of course the FED decides to pop this bubble, I could see TSLA bankrupt in 5 - 10 years ( like it was in 2008 before the bailout ). Maybe after a big price spike flushes the shorts, then it might be time to start averaging in short positions. But either way, it's a gamble.