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The sad piece of karma in all of this is that Musk tweeted in an effort to destroy the shorts. His tweet turned out to: - give the shorts a big dip in his sto

The sad piece of karma in all of this is that Musk tweeted in an effort to destroy the shorts. His tweet turned out to: - give the shorts a big dip in his stock, - an investigation by the SEC - an investigation by the DOJ - the backing off of a deep pocketed investor in the Saudis - Him potentially being personally liable, which would mean having to step away from SpaceX and Tesla if he was found guilty of fraud. This could be the biggest thing to come out of all of this. Imagine Elon getting a 2 year ban on begin an executive in a company. Or SpaceX not being able to bid on government contracts because their CEO is a felon. There is going to be a lot of backroom dealing to do everything they can to prevent Elon from being charged. - A lawsuit that is seeking class action status for anyone who was short at the time of his tweet. - this is speculation, but it must have really strained his relationship with the board. I mean you can only fight so many battles at once, you'd think you'd want to have the board on your side All to screw with the shorts, who really have no power what-so ever to hinder Telsa. If he had just not used twitter he and Tesla would be better off and the shorts would be worse off.

TAForObvReasons 8y ago
> All to screw with the shorts, who really have no power whatso ever to hinder Telsa. If Tesla wasn't burning through cash and didn't need an ever-inflating stock price in order to keep the house in order, the shorts would be powerless and in all honestly would back off. The only reason the shorts have power is that Tesla's future is currently heavily dependent on its stock price.
- beaner 8y ago
  Can you explain how that works? I thought that once a company's stock was listed, third parties just trade it amongst themselves. How does that activity affect Tesla in terms of how they're able to execute?
  - romed 8y ago
    Public companies can raise money through "secondary" offerings of stock. That's why an IPO is called an "initial" offering.
  - whatok 8y ago
    Tesla has various options for raising cash including selling stock or bonds. In the case of stock, a secondary offering would come at a price relative to the current stock price. In the case of bonds, bonds are in almost all cases higher in the capital structure than equity. Having a large "equity cushion" makes bonds more attractive because there is someone else that will take losses before the bondholders.
  - aslkdjaslkdj1 8y ago
    There's a clause in Tesla's debt that if the share price is >$360, they can pay their bond notes with stock shares. If it is <$360, they have to pay their debt payments in cash. This obviously has a massive impact on Tesla's already precarious cash position.
- Nasrudith 8y ago
  Stocks prices are based off of two things really - current earning and perception of potential earnings in the future. Tech stocks are infamously based largely on the second more than the first. Many do go reinvestment heavy like Amazon did for years before they started to post more profits. Given the feedback loop impact things get weirdly circular in potential for success based upon others. Not in a something from nothing sense but in a giving what it takes to succeed sense.
rigsby50 8y ago
Yes, it's called market manipulation.
simias 8y ago
I'm not super knowledgeable in the stock market, what would he have gained from destroying the shorts? I understand that shorts are effectively a bet that the stock will go down but do they actually damage the company in any way? At a glance it sounds like trying to break the thermometer because you think it's too cold out there, the stock wasn't at risk because of the shorts, instead there were shorts because some investors though that the stock was at risk. What am I missing? Also even if destroying the shorts was a positive outcome for Must and Tesla how does that excuse his behaviour? Isn't that textbook market manipulation?
- zwerdlds 8y ago
  Shorts drive the price down, making it more expensive for the company to borrow from the market by selling stock. They have to sell more shares to receive a similar amount.
  - simias 8y ago
    I obviously lack a piece of the puzzle here, let me see if I get this right: a short means borrowing stock, selling it then rebuying it later (betting that the price would have fallen in order to turn a profit) before giving it back to its original owner. I suppose if everybody shorts at the same time the huge amount of stock being sold could drive the price momentarily down, but then again the opposite happens when the stock is re-bought. So in the end it should be effectively zero-sum? Or is it just that a huge amount of people started shorting the stock at the same time which made it a sort of self-fulfilling prophecy?
    - cardiffspaceman 8y ago
      Hopefully, the sale to start the position and the purchase to close it do not move the market themselves. People do long positions without moving the market (affecting the price). Sorry if I explained anything to anyone who already knew it.
    - r2d2-c3po 8y ago
      They wouldn't have to buy it back immediately. Short sellers would borrow the stock from a long and pay a predetermined interest rate for however long they're borrowing it. They technically don't have to rebuy the stock unless they get margin called (if the collateral posted is no longer deemed sufficient for the counterparty to allow the borrowing position) or need to close out positions because of some risk tolerance threshold being met. Usually when this happens to a bunch of shorts at the same time they must all rebuy, driving prices higher, which is called a short squeeze, but it is usually determined by someone cutting losses on a short position or positive news coming out driving prices up.
Asparagirl 8y ago
Yes. I saw a tweet the other day that essentially said that the very worst thing you could do to Elon Musk would be to lock him in a comfortable conference room with plenty of food and water and excellent WiFi signal...and his phone. I can think of a political figure for whom this would be true, too.
- nickik 8y ago
  The problem I have with statments like this is that is twitter is often awesome as well. Getting great updates about technologies in SpaceX, Tesla or Boring. He also answers questions of podcasters and journalists.
  - vkou 8y ago
    He also goes on personal crusades against members of the press, or just some random people that have said something mean, but true about him. (Vern Unsworth) He is very open to fans who give him good press, but closes up, and dismisses boring questions from haters and non-believers and shorts. Now, there is certainly a bit of a track record with a recent American presidents for this sort of thing. I'm not sure you want to double-down on that.
    - dmix 8y ago
      What is the middle ground here? Are all public figures supposed to completely hold back all views and follow some unspoken social rules? It's one thing not to make dumb mistakes that hurt your company but the end result of this outrage/apology tour culture we're developing and forever expanding the scope of is going to create a completely risk averse, milquetoast, and boring culture where honesty from public figures is rare and withheld as it was in the Victorian era. I'm happy there are people like Musk who push back on this idea. He's still human, this is how he actually feels, and he has nothing left to prove to the world as a billionaire with multiple successful companies. Plus measuring a private citizens communication to the same degree as a presidents is a bad idea. And it's like a good reason why Elon wants to take his company private as well. I'm okay with having red lines but everyone seems so eager to make those red lines one step above corporate-speak filtered through a PR firm and a focus-group. At some point we need to push back on this and tell everyone to calm down, the world isn't ending because someone tweeted something you find (the key word here) mildly offensive.
thedaemon 8y ago
Please define shorts. Google was unable to figure it out.
- ComputerGuru 8y ago
  People short selling the stock.
- Invictus0 8y ago
  Short-sellers: people that bet that the price of Tesla stock would go down.
- mcbits 8y ago
  Short sellers. People who sell something they don't own, speculating that they will be able to buy it later at a lower price. If so, they make money. If not and the price goes up a bit, some shorts are forced to buy at the higher price to limit their losses. That pushes the price up further, forcing more shorts to buy, etc., causing a "short squeeze" where the price rapidly shoots up very high, "destroying" a lot of shorts.
  - kasey_junk 8y ago
    Pedantically shorting doesn’t have to be borrowing the underlying instrument. Put options are another way to trade on the idea that a stock will go down. I’d actually bet it’s the more common way. It would still be colloquially referred to as being short.
    - mikestew 8y ago
      That's actually the opposite of "pedantically" given that you're playing loose with the definition. Pedantically, shorting is selling a financial instrument you don't own, with the idea (though it is not a requirement to fit the definition) that you'll give it back later by buying at a price lower than it is now. What you described is options trading, one method of which hedges against declines in stock price. Yeah, one could take a "short" position by buying puts, but it can be argued that a short position is not what puts were originally designed for. In contrast to short sellers who obviously intend for the price to go down, or they won't make any money. I do question whether puts are the "more common way" given that they have an expiration. You can hold on to a short sell as long as you can pay the interest and the loaning party doesn't want their shares back.
Asparagirl 8y ago
It’s important to note that Elon screwed over the “longs” (people holding TSLA stock) too, not just the shorts. Many people and funds bought more TSLA stock in the $350’s range on the assumption that of course the company could/would go private at $420/share. After all, hadn’t the CEO just said so?
- danso 8y ago
  I was reading r/TeslaMotors that day and a long made the astute observation that shorting the stock after Musk's announcement when it hit around $380 was the most logical thing to do, because at most you'd be out 10% if Musk were telling the truth. If I had a trading account I think I might have gone for that.
  - whatok 8y ago
    Max loss being 10% is absolutely not accurate at all in that scenario. Taking the company private would still be up to a shareholder vote and shareholders could determine that the price offered was not sufficient. In that case, there are a lot of ways the stock could trade above the takeout price.
    - danso 8y ago
      Isn't it possible to set the short order at a max limit to cut your losses? (this shows how little I know about having a trading account)
      - whatok 8y ago
        This might help: https://www.investopedia.com/articles/active-trading/091813/which-order-use-stoploss-or-stoplimit-orders.asp https://www.investopedia.com/articles/active-trading/091813/... The problem with stops is that you run the risk of the price gapping up or down and your stop getting filled at a much different price than expected.
        8y ago
deleted 8y ago
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ProAm 8y ago
I think he's out at the CEO of Tesla soon anyways. Regardless of this mess.
- Latteland 8y ago
  Why? He's succeeded against all odds in making a fantastic car, that's not in dispute, and they'll be profitable almost in q3 and definitely in q4.
  - carlivar 8y ago
    Just making profitability is irrelevant if they can't pay back the enormous loans coming due over the next year. (Also I don't think they'll be profitable)
    - Latteland 8y ago
      Nothing is guaranteed, but can you explain why they won't be? Selling lots more cars, they cost less than they sell them for, that should at the very least greatly reduce their loss,they think it will be enough to make them profitable. So what's your take?
      - carlivar 8y ago
        I don't think they will be profitable enough to pay back the staggering loans coming due. Even if they manage, I fail to see why they should be priced much differently than GM, Ford, BMW, Mercedes, Toyota as far as long-term stock valuation goes. The "synergy" promised from SolarCity and Powerwall and so on doesn't seem to be a thing any longer.
  - jazzyjackson 8y ago
    I don't think a giant touchscreen for an interface has broad appeal but we'll see how they sell. iirc there aren't even buttons to lock the doors? talk about cheap.
- mirceal 8y ago
thomaskcr 8y ago
I opened my first actual short position that day (instead of just buying puts). He literally set an upper limit on how much money you could lose and I just felt really confident he was full of crap. Got out of the position at a bit under $310 so left a lot on the table but was happy. He literally handed people considering opening a short position on the stock a gift.
- Asparagirl 8y ago
  ...and those of us who bought puts, because we don't feel comfortable actually shorting a stock. :-) (Congrats on your successful trade!)
danso 8y ago
The small upside of this is that maybe Musk will be convinced to settle the libel suit that was announced yesterday [0]. For the suit filed in the UK, the max loss would be ~$400K (unless it goes to trial and he ends up paying Vern Unsworth's legal costs), and it would spare us the sad spectacle of Musk trying to prove that Unsworth is a pedo. [0] https://www.buzzfeednews.com/article/ryanmac/cave-rescuer-sues-elon-musk-pedophile https://www.buzzfeednews.com/article/ryanmac/cave-rescuer-su...
- polkapolka 8y ago
  I give Musk a little bit more credit than brutely calling someone a pedo without any proof. If you are as rich as Musk, there must be someone you can pay to dig up dirt on your opponents. Now there may be more trouble in showing that proof than settling. 400k is nothing for Musk, but principles and hurt ego are priceless.
  - JumpCrisscross 8y ago
    > dig up dirt on your opponents How does a man risking his life to save children halfway across the planet qualify as an opponent?
    - tomovo 8y ago
      He said Elon's rig was total shit.
      - tedunangst 8y ago
        Seems like a better response would be to prove your submarine is awesome than claim the detractor is a pedo. But I'm not the smartest man in the world.
        omegaworks 8y ago
        It'll be interesting to see if Elon Musk, darling of startup entreprewannabes, gets a pass here. I hope his followers understand the precedent this sets. Are they truly about engineering solutions to tough problems (as they claim they are), or are they just a cult of personality cultivated to protect a thin-skinned master?
x0x0 8y ago
Not to mention the lawsuit for calling that diver in Thailand a pedo. Right or wrong (the dude certainly seems not to be a pedo), Musk is the ceo of a currently near-failing company unable to produce and deliver cars as promised. And a defamation suit is what he's spending his time on? I'd be livid were I an employee.
- ebiggs 8y ago
  He's seeking just a mere $75k in damages.. there's no reason for Elon to not just pay that and move on, given lawyers would cost more. This frankly looks like Unsworth looking for a modest handout, betting that Musk wouldn't spend more money trying to prove he is in fact a pedo. On a totally unrelated note, how many child prostitutes could you buy with $75k? Just randomly curious.
  - camjohnson26 8y ago
    That's not true, $75,000 is the minimum amount to make this a federal case so the lawsuit is just saying it was at least that. He'll almost certainly have to pay a lot more. The actual lawsuit is damning: https://www.documentcloud.org/documents/4895828-2018-09-17-Complaint-for-Defamation-Stamped.html https://www.documentcloud.org/documents/4895828-2018-09-17-C...
saudioger 8y ago
I seriously hope that through this Elon Musk learns that he's not an expert at everything and sometimes he needs to shut up and listen, but I doubt it. If he can't weasel his way out of this, I imagine he'll continue to spiral and lash-out... all this because he just can't shut up.
pmcollins 8y ago
> Musk tweeted in an effort to destroy the shorts Is there any evidence that this was his intent? How do you know that he didn't actually intend to take the company private?
- dforrestwilson 8y ago
  A long list of investors publicly denied any talks with Tesla. All potential banks expressed puzzlement with the tweet as well. One of them would absolutely have to be involved for a deal of this size and none were. Reporters asked everyone and found 0 evidence.
  - acct1771 8y ago
    Did they ask the Saudi crown?
    - dforrestwilson 8y ago
      Yes they did. PIF, the sovereign fund, stated that they had no intention to go beyond their initial 5% investment. Last week they invested $1b in a Tesla rival, Lucid.
      - acct1771 8y ago
        Thanks
- lmm 8y ago
  He's said a lot of anti-short-seller things on twitter. Even if he genuinely wanted to take the company private, it's hard to see the "funding secured" statement as anything other than a lie.
bduerst 8y ago
>- the backing off of a deep pocketed investor in the Saudis Musk is responsible for this because he actually rejected this deal, not because the Saudis were involved, but because it involved partnering with VW.
Timmah 8y ago
Such a great land we live in where a CEO is investigated within weeks by criminal justice agencies for making a few tweets, but during the 2008 crisis other kinds of fraud (approving loans without verifying income, robo signing of "contracts") that cost people jobs, homes, and even lives, got CEOs unprecedented bonuses and billions in interest free loans to keep their ships afloat. God bless the USA.
- gamblor956 8y ago
  The CEO in question may have violated multiple state and federal laws. The problem during the crisis was that many of the things you listed weren't illegal because the laws and regulations that would have made them illegal had been rescinded in the years or decades prior. Thus, the CEOs got to keep their jobs and their bonuses and their freedom because even though what they were doing was highly immoral, it wasn't illegal.
  - Timmah 8y ago
    Laws that exclusively protect shareholders. That's the problem. And most of the population doesn't have the resources to lobby Congress to roll back those laws the way financial laws were rolled back. The fault for that inequality lays squarely on our nation.
hef19898 8y ago
One of the episodes on the Netflix documentary Dirty Money is about short sellers with regards to certain pharma stocks (the one click baiting with Skreli in the thumbnail but not in the story, otherwise it is a great watch). And one thing that struck about me about the short seller they interviewed was her analytical and systematic approach to it. What she was looking for was yet to be recognized flaws in a certain company that can only result in falling stocks in the long run. And than acting on them in concert with others. A mean thing to do? Maybe. Or you could call it natural selection in some cases. Going back to Tesla and Musk, I think his behaviour in the last couple of weeks, and all the information that surfaced since, probably just convinced every short seller out there that they are onto something. EDIT: fixed some typos.
- Fricken 8y ago
  Short sellers are not mean, it's a good thing they exist. They're calling out companies they believe have serious problems, to the benefit of shareholders who are being misled.
  - pcollins123 8y ago
    Except when they're actively expounding upon and peddling bad news to ensure the stock price drops at the right time. That is what Musk is most frustrated by. In my mind, all negative news about Tesla is now called into doubt as being news peddled by shorts. This is the challenge of declining journalism standards: all news now has someone with a vested interest behind it.
    - hef19898 8y ago
      I havr to disagree here. Considering all the real trouble Tesla is currently in, not to mention Musk himself, and with otger car makers catching up electrical vehicles there is undeniably some doubt about Tesla as a company. On top that you have shaky financials and the departure of important executives, also in financial department. So yes, just looking at that without any hard number crunching and financial analysis the picture is not rousy. All of which is sad, Tesla really had and still has some appeal to it. I don't think that appeal in itself is enough for a public company. And by the way, not all negative reporting is automatically bad journalism or even fake news.
jimmaswell 8y ago
It would be a (possibly huge) blow to our future as a planet if he were banned from being an executive of a company for even just 2 years. I hope for humanity's sake that it doesn't come to that.
- WoahNow 8y ago
  What makes you believe that? All the major car companies are making EVs and there are several SpaceX competitors (Blue Origin in particular). The SolarCity side of Tesla's business is declining, but there are still many companies offering solar installations.
  - jimmaswell 8y ago
    Besides that I feel Elon's companies are the more important industry leaders in those areas, is anyone else working on high speed underground transportation around the US or space tourism?
    - tedunangst 8y ago
      Musk won't be banned from tweeting ideas about hyperloop or whatever, so other ceos can still build those things after analyzing the cost.
- jazzyjackson 8y ago
  get a better future
rayiner 8y ago
All great points. This is a lot worse than it probably seems to most people on HN. Imagine a prosecutor telling a jury that Elon funds a lavish lifestyle (with lots of details of the excess) with loans against his Tesla stock. That shorts of the stock threatened him personally, because of those loans, and alleging that he threw the $420 figure out there to counter-act the shorts. That’s a terrible narrative to have to deal with. The responses are not exactly things that would play well to a jury (“no, it was a marijuana joke!”).
- onetimemanytime 8y ago
  >> Imagine a prosecutor telling a jury that Elon funds a lavish lifestyle (with lots of details of the excess) with loans against his Tesla stock. Not going anywhere. Even if Tesla goes to zero, Musk still is a billionaire, 10 times over with SpaceX. https://en.wikipedia.org/wiki/SpaceX#Ownership,_funding_and_valuation https://en.wikipedia.org/wiki/SpaceX#Ownership,_funding_and_... It's not greed, he just hates that some don't bow to him.
  - meddlepal 8y ago
    Hubris.
    - stephengillie 8y ago
      Is it schadenfreude to hate hubris?
  - bdcravens 8y ago
    Indeed, and to that end, the punishment could be that he is barred from serving as an executive or board member. I think that would be a far deeper punishment to him than if you took every penny of his.
    - Jach 8y ago
      It would sting, but I doubt he would find it that hard to start again in another country if he had to.
Keyframe 8y ago
If it comes to worst, would it be possible for that single tweet to have started a damage chain worth far greater than actual Twitter market cap?
joering2 8y ago
> Imagine Elon getting a 2 year ban on begin an executive in a company. Its not that big of a deal - other execs at SpaceX recently came and say company run great and they are mostly in charge anyways. > There is going to be a lot of backroom dealing to do everything they can to prevent Elon from being charged. Are you saying there are bribes or something? Can you please clarify?
stockdollars 8y ago
>The sad piece of karma in all of this is that Musk tweeted in an effort to destroy the shorts. Its not about trying to destroy or support the shorts its about having an effect on the stock price at all. Its some insider type stuff. He cant do that. The reason we like Musk so much is the same reason hes "failing". Hes not the typical CEO and he really doesnt want to be. I dont think he like being the boss, I think he rather build the cool stuff. I think the money went to his head he is realizing that there is another tier to being rich and powerful that he still needs to climb in order to support the projects that drive his ambition.
kamaal 8y ago
>>Imagine Elon getting a 2 year ban on begin an executive in a company. In the US. I'm sure there are a lot of countries that would be more than happy to invite such a hardworking, ambitious and industrious man to set up company like SpaceX in their countries. If you make these sort of things impossible in your country, they will just happen else where.

TAForObvReasons 8y ago

> All to screw with the shorts, who really have no power whatso ever to hinder Telsa. If Tesla wasn't burning through cash and didn't need an ever-inflating stock price in order to keep the house in order, the shorts would be powerless and in all honestly would back off. The only reason the shorts have power is that Tesla's future is currently heavily dependent on its stock price.

beaner 8y ago
Can you explain how that works? I thought that once a company's stock was listed, third parties just trade it amongst themselves. How does that activity affect Tesla in terms of how they're able to execute?
- romed 8y ago
  Public companies can raise money through "secondary" offerings of stock. That's why an IPO is called an "initial" offering.
- whatok 8y ago
  Tesla has various options for raising cash including selling stock or bonds. In the case of stock, a secondary offering would come at a price relative to the current stock price. In the case of bonds, bonds are in almost all cases higher in the capital structure than equity. Having a large "equity cushion" makes bonds more attractive because there is someone else that will take losses before the bondholders.
- aslkdjaslkdj1 8y ago
  There's a clause in Tesla's debt that if the share price is >$360, they can pay their bond notes with stock shares. If it is <$360, they have to pay their debt payments in cash. This obviously has a massive impact on Tesla's already precarious cash position.
Nasrudith 8y ago
Stocks prices are based off of two things really - current earning and perception of potential earnings in the future. Tech stocks are infamously based largely on the second more than the first. Many do go reinvestment heavy like Amazon did for years before they started to post more profits. Given the feedback loop impact things get weirdly circular in potential for success based upon others. Not in a something from nothing sense but in a giving what it takes to succeed sense.

rigsby50 8y ago

Yes, it's called market manipulation.

simias 8y ago

I'm not super knowledgeable in the stock market, what would he have gained from destroying the shorts? I understand that shorts are effectively a bet that the stock will go down but do they actually damage the company in any way? At a glance it sounds like trying to break the thermometer because you think it's too cold out there, the stock wasn't at risk because of the shorts, instead there were shorts because some investors though that the stock was at risk. What am I missing? Also even if destroying the shorts was a positive outcome for Must and Tesla how does that excuse his behaviour? Isn't that textbook market manipulation?

zwerdlds 8y ago
Shorts drive the price down, making it more expensive for the company to borrow from the market by selling stock. They have to sell more shares to receive a similar amount.
- simias 8y ago
  I obviously lack a piece of the puzzle here, let me see if I get this right: a short means borrowing stock, selling it then rebuying it later (betting that the price would have fallen in order to turn a profit) before giving it back to its original owner. I suppose if everybody shorts at the same time the huge amount of stock being sold could drive the price momentarily down, but then again the opposite happens when the stock is re-bought. So in the end it should be effectively zero-sum? Or is it just that a huge amount of people started shorting the stock at the same time which made it a sort of self-fulfilling prophecy?
  - cardiffspaceman 8y ago
    Hopefully, the sale to start the position and the purchase to close it do not move the market themselves. People do long positions without moving the market (affecting the price). Sorry if I explained anything to anyone who already knew it.
  - r2d2-c3po 8y ago
    They wouldn't have to buy it back immediately. Short sellers would borrow the stock from a long and pay a predetermined interest rate for however long they're borrowing it. They technically don't have to rebuy the stock unless they get margin called (if the collateral posted is no longer deemed sufficient for the counterparty to allow the borrowing position) or need to close out positions because of some risk tolerance threshold being met. Usually when this happens to a bunch of shorts at the same time they must all rebuy, driving prices higher, which is called a short squeeze, but it is usually determined by someone cutting losses on a short position or positive news coming out driving prices up.

Asparagirl 8y ago

Yes. I saw a tweet the other day that essentially said that the very worst thing you could do to Elon Musk would be to lock him in a comfortable conference room with plenty of food and water and excellent WiFi signal...and his phone. I can think of a political figure for whom this would be true, too.

nickik 8y ago
The problem I have with statments like this is that is twitter is often awesome as well. Getting great updates about technologies in SpaceX, Tesla or Boring. He also answers questions of podcasters and journalists.
- vkou 8y ago
  He also goes on personal crusades against members of the press, or just some random people that have said something mean, but true about him. (Vern Unsworth) He is very open to fans who give him good press, but closes up, and dismisses boring questions from haters and non-believers and shorts. Now, there is certainly a bit of a track record with a recent American presidents for this sort of thing. I'm not sure you want to double-down on that.
  - dmix 8y ago
    What is the middle ground here? Are all public figures supposed to completely hold back all views and follow some unspoken social rules? It's one thing not to make dumb mistakes that hurt your company but the end result of this outrage/apology tour culture we're developing and forever expanding the scope of is going to create a completely risk averse, milquetoast, and boring culture where honesty from public figures is rare and withheld as it was in the Victorian era. I'm happy there are people like Musk who push back on this idea. He's still human, this is how he actually feels, and he has nothing left to prove to the world as a billionaire with multiple successful companies. Plus measuring a private citizens communication to the same degree as a presidents is a bad idea. And it's like a good reason why Elon wants to take his company private as well. I'm okay with having red lines but everyone seems so eager to make those red lines one step above corporate-speak filtered through a PR firm and a focus-group. At some point we need to push back on this and tell everyone to calm down, the world isn't ending because someone tweeted something you find (the key word here) mildly offensive.

thedaemon 8y ago

Please define shorts. Google was unable to figure it out.

ComputerGuru 8y ago
People short selling the stock.
Invictus0 8y ago
Short-sellers: people that bet that the price of Tesla stock would go down.
mcbits 8y ago
Short sellers. People who sell something they don't own, speculating that they will be able to buy it later at a lower price. If so, they make money. If not and the price goes up a bit, some shorts are forced to buy at the higher price to limit their losses. That pushes the price up further, forcing more shorts to buy, etc., causing a "short squeeze" where the price rapidly shoots up very high, "destroying" a lot of shorts.
- kasey_junk 8y ago
  Pedantically shorting doesn’t have to be borrowing the underlying instrument. Put options are another way to trade on the idea that a stock will go down. I’d actually bet it’s the more common way. It would still be colloquially referred to as being short.
  - mikestew 8y ago
    That's actually the opposite of "pedantically" given that you're playing loose with the definition. Pedantically, shorting is selling a financial instrument you don't own, with the idea (though it is not a requirement to fit the definition) that you'll give it back later by buying at a price lower than it is now. What you described is options trading, one method of which hedges against declines in stock price. Yeah, one could take a "short" position by buying puts, but it can be argued that a short position is not what puts were originally designed for. In contrast to short sellers who obviously intend for the price to go down, or they won't make any money. I do question whether puts are the "more common way" given that they have an expiration. You can hold on to a short sell as long as you can pay the interest and the loaning party doesn't want their shares back.

Asparagirl 8y ago

It’s important to note that Elon screwed over the “longs” (people holding TSLA stock) too, not just the shorts. Many people and funds bought more TSLA stock in the $350’s range on the assumption that of course the company could/would go private at $420/share. After all, hadn’t the CEO just said so?

danso 8y ago
I was reading r/TeslaMotors that day and a long made the astute observation that shorting the stock after Musk's announcement when it hit around $380 was the most logical thing to do, because at most you'd be out 10% if Musk were telling the truth. If I had a trading account I think I might have gone for that.
- whatok 8y ago
  Max loss being 10% is absolutely not accurate at all in that scenario. Taking the company private would still be up to a shareholder vote and shareholders could determine that the price offered was not sufficient. In that case, there are a lot of ways the stock could trade above the takeout price.
  - danso 8y ago
    Isn't it possible to set the short order at a max limit to cut your losses? (this shows how little I know about having a trading account)
    - whatok 8y ago
      This might help: https://www.investopedia.com/articles/active-trading/091813/which-order-use-stoploss-or-stoplimit-orders.asp https://www.investopedia.com/articles/active-trading/091813/... The problem with stops is that you run the risk of the price gapping up or down and your stop getting filled at a much different price than expected.
      - 8y ago

deleted 8y ago

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ProAm 8y ago

I think he's out at the CEO of Tesla soon anyways. Regardless of this mess.

Latteland 8y ago
Why? He's succeeded against all odds in making a fantastic car, that's not in dispute, and they'll be profitable almost in q3 and definitely in q4.
- carlivar 8y ago
  Just making profitability is irrelevant if they can't pay back the enormous loans coming due over the next year. (Also I don't think they'll be profitable)
  - Latteland 8y ago
    Nothing is guaranteed, but can you explain why they won't be? Selling lots more cars, they cost less than they sell them for, that should at the very least greatly reduce their loss,they think it will be enough to make them profitable. So what's your take?
    - carlivar 8y ago
      I don't think they will be profitable enough to pay back the staggering loans coming due. Even if they manage, I fail to see why they should be priced much differently than GM, Ford, BMW, Mercedes, Toyota as far as long-term stock valuation goes. The "synergy" promised from SolarCity and Powerwall and so on doesn't seem to be a thing any longer.
- jazzyjackson 8y ago
  I don't think a giant touchscreen for an interface has broad appeal but we'll see how they sell. iirc there aren't even buttons to lock the doors? talk about cheap.
mirceal 8y ago

thomaskcr 8y ago

I opened my first actual short position that day (instead of just buying puts). He literally set an upper limit on how much money you could lose and I just felt really confident he was full of crap. Got out of the position at a bit under $310 so left a lot on the table but was happy. He literally handed people considering opening a short position on the stock a gift.

Asparagirl 8y ago
...and those of us who bought puts, because we don't feel comfortable actually shorting a stock. :-) (Congrats on your successful trade!)

danso 8y ago

The small upside of this is that maybe Musk will be convinced to settle the libel suit that was announced yesterday [0]. For the suit filed in the UK, the max loss would be ~$400K (unless it goes to trial and he ends up paying Vern Unsworth's legal costs), and it would spare us the sad spectacle of Musk trying to prove that Unsworth is a pedo. [0] https://www.buzzfeednews.com/article/ryanmac/cave-rescuer-sues-elon-musk-pedophile https://www.buzzfeednews.com/article/ryanmac/cave-rescuer-su...

polkapolka 8y ago
I give Musk a little bit more credit than brutely calling someone a pedo without any proof. If you are as rich as Musk, there must be someone you can pay to dig up dirt on your opponents. Now there may be more trouble in showing that proof than settling. 400k is nothing for Musk, but principles and hurt ego are priceless.
- JumpCrisscross 8y ago
  > dig up dirt on your opponents How does a man risking his life to save children halfway across the planet qualify as an opponent?
  - tomovo 8y ago
    He said Elon's rig was total shit.
    - tedunangst 8y ago
      Seems like a better response would be to prove your submarine is awesome than claim the detractor is a pedo. But I'm not the smartest man in the world.
      - omegaworks 8y ago
        It'll be interesting to see if Elon Musk, darling of startup entreprewannabes, gets a pass here. I hope his followers understand the precedent this sets. Are they truly about engineering solutions to tough problems (as they claim they are), or are they just a cult of personality cultivated to protect a thin-skinned master?

x0x0 8y ago

Not to mention the lawsuit for calling that diver in Thailand a pedo. Right or wrong (the dude certainly seems not to be a pedo), Musk is the ceo of a currently near-failing company unable to produce and deliver cars as promised. And a defamation suit is what he's spending his time on? I'd be livid were I an employee.

ebiggs 8y ago
He's seeking just a mere $75k in damages.. there's no reason for Elon to not just pay that and move on, given lawyers would cost more. This frankly looks like Unsworth looking for a modest handout, betting that Musk wouldn't spend more money trying to prove he is in fact a pedo. On a totally unrelated note, how many child prostitutes could you buy with $75k? Just randomly curious.
- camjohnson26 8y ago
  That's not true, $75,000 is the minimum amount to make this a federal case so the lawsuit is just saying it was at least that. He'll almost certainly have to pay a lot more. The actual lawsuit is damning: https://www.documentcloud.org/documents/4895828-2018-09-17-Complaint-for-Defamation-Stamped.html https://www.documentcloud.org/documents/4895828-2018-09-17-C...

saudioger 8y ago

I seriously hope that through this Elon Musk learns that he's not an expert at everything and sometimes he needs to shut up and listen, but I doubt it. If he can't weasel his way out of this, I imagine he'll continue to spiral and lash-out... all this because he just can't shut up.

pmcollins 8y ago

> Musk tweeted in an effort to destroy the shorts Is there any evidence that this was his intent? How do you know that he didn't actually intend to take the company private?

dforrestwilson 8y ago
A long list of investors publicly denied any talks with Tesla. All potential banks expressed puzzlement with the tweet as well. One of them would absolutely have to be involved for a deal of this size and none were. Reporters asked everyone and found 0 evidence.
- acct1771 8y ago
  Did they ask the Saudi crown?
  - dforrestwilson 8y ago
    Yes they did. PIF, the sovereign fund, stated that they had no intention to go beyond their initial 5% investment. Last week they invested $1b in a Tesla rival, Lucid.
    - acct1771 8y ago
      Thanks
lmm 8y ago
He's said a lot of anti-short-seller things on twitter. Even if he genuinely wanted to take the company private, it's hard to see the "funding secured" statement as anything other than a lie.

bduerst 8y ago

>- the backing off of a deep pocketed investor in the Saudis Musk is responsible for this because he actually rejected this deal, not because the Saudis were involved, but because it involved partnering with VW.

Timmah 8y ago

Such a great land we live in where a CEO is investigated within weeks by criminal justice agencies for making a few tweets, but during the 2008 crisis other kinds of fraud (approving loans without verifying income, robo signing of "contracts") that cost people jobs, homes, and even lives, got CEOs unprecedented bonuses and billions in interest free loans to keep their ships afloat. God bless the USA.

gamblor956 8y ago
The CEO in question may have violated multiple state and federal laws. The problem during the crisis was that many of the things you listed weren't illegal because the laws and regulations that would have made them illegal had been rescinded in the years or decades prior. Thus, the CEOs got to keep their jobs and their bonuses and their freedom because even though what they were doing was highly immoral, it wasn't illegal.
- Timmah 8y ago
  Laws that exclusively protect shareholders. That's the problem. And most of the population doesn't have the resources to lobby Congress to roll back those laws the way financial laws were rolled back. The fault for that inequality lays squarely on our nation.

hef19898 8y ago

One of the episodes on the Netflix documentary Dirty Money is about short sellers with regards to certain pharma stocks (the one click baiting with Skreli in the thumbnail but not in the story, otherwise it is a great watch). And one thing that struck about me about the short seller they interviewed was her analytical and systematic approach to it. What she was looking for was yet to be recognized flaws in a certain company that can only result in falling stocks in the long run. And than acting on them in concert with others. A mean thing to do? Maybe. Or you could call it natural selection in some cases. Going back to Tesla and Musk, I think his behaviour in the last couple of weeks, and all the information that surfaced since, probably just convinced every short seller out there that they are onto something. EDIT: fixed some typos.

Fricken 8y ago
Short sellers are not mean, it's a good thing they exist. They're calling out companies they believe have serious problems, to the benefit of shareholders who are being misled.
- pcollins123 8y ago
  Except when they're actively expounding upon and peddling bad news to ensure the stock price drops at the right time. That is what Musk is most frustrated by. In my mind, all negative news about Tesla is now called into doubt as being news peddled by shorts. This is the challenge of declining journalism standards: all news now has someone with a vested interest behind it.
  - hef19898 8y ago
    I havr to disagree here. Considering all the real trouble Tesla is currently in, not to mention Musk himself, and with otger car makers catching up electrical vehicles there is undeniably some doubt about Tesla as a company. On top that you have shaky financials and the departure of important executives, also in financial department. So yes, just looking at that without any hard number crunching and financial analysis the picture is not rousy. All of which is sad, Tesla really had and still has some appeal to it. I don't think that appeal in itself is enough for a public company. And by the way, not all negative reporting is automatically bad journalism or even fake news.

jimmaswell 8y ago

It would be a (possibly huge) blow to our future as a planet if he were banned from being an executive of a company for even just 2 years. I hope for humanity's sake that it doesn't come to that.

WoahNow 8y ago
What makes you believe that? All the major car companies are making EVs and there are several SpaceX competitors (Blue Origin in particular). The SolarCity side of Tesla's business is declining, but there are still many companies offering solar installations.
- jimmaswell 8y ago
  Besides that I feel Elon's companies are the more important industry leaders in those areas, is anyone else working on high speed underground transportation around the US or space tourism?
  - tedunangst 8y ago
    Musk won't be banned from tweeting ideas about hyperloop or whatever, so other ceos can still build those things after analyzing the cost.
jazzyjackson 8y ago
get a better future

rayiner 8y ago

All great points. This is a lot worse than it probably seems to most people on HN. Imagine a prosecutor telling a jury that Elon funds a lavish lifestyle (with lots of details of the excess) with loans against his Tesla stock. That shorts of the stock threatened him personally, because of those loans, and alleging that he threw the $420 figure out there to counter-act the shorts. That’s a terrible narrative to have to deal with. The responses are not exactly things that would play well to a jury (“no, it was a marijuana joke!”).

onetimemanytime 8y ago
>> Imagine a prosecutor telling a jury that Elon funds a lavish lifestyle (with lots of details of the excess) with loans against his Tesla stock. Not going anywhere. Even if Tesla goes to zero, Musk still is a billionaire, 10 times over with SpaceX. https://en.wikipedia.org/wiki/SpaceX#Ownership,_funding_and_valuation https://en.wikipedia.org/wiki/SpaceX#Ownership,_funding_and_... It's not greed, he just hates that some don't bow to him.
- meddlepal 8y ago
  Hubris.
  - stephengillie 8y ago
    Is it schadenfreude to hate hubris?
- bdcravens 8y ago
  Indeed, and to that end, the punishment could be that he is barred from serving as an executive or board member. I think that would be a far deeper punishment to him than if you took every penny of his.
  - Jach 8y ago
    It would sting, but I doubt he would find it that hard to start again in another country if he had to.

Keyframe 8y ago

If it comes to worst, would it be possible for that single tweet to have started a damage chain worth far greater than actual Twitter market cap?

joering2 8y ago

> Imagine Elon getting a 2 year ban on begin an executive in a company. Its not that big of a deal - other execs at SpaceX recently came and say company run great and they are mostly in charge anyways. > There is going to be a lot of backroom dealing to do everything they can to prevent Elon from being charged. Are you saying there are bribes or something? Can you please clarify?

stockdollars 8y ago

>The sad piece of karma in all of this is that Musk tweeted in an effort to destroy the shorts. Its not about trying to destroy or support the shorts its about having an effect on the stock price at all. Its some insider type stuff. He cant do that. The reason we like Musk so much is the same reason hes "failing". Hes not the typical CEO and he really doesnt want to be. I dont think he like being the boss, I think he rather build the cool stuff. I think the money went to his head he is realizing that there is another tier to being rich and powerful that he still needs to climb in order to support the projects that drive his ambition.

kamaal 8y ago

>>Imagine Elon getting a 2 year ban on begin an executive in a company. In the US. I'm sure there are a lot of countries that would be more than happy to invite such a hardworking, ambitious and industrious man to set up company like SpaceX in their countries. If you make these sort of things impossible in your country, they will just happen else where.