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Tesla Faces Criminal Probe Over Whether It Misstated Production Figures
- rukittenme 8y agoI am never taking a company public. Why would anyone subject themselves to this?
- lallysingh 8y agoYou want to grow your company and need a ton of money.
- tareqak 8y agoGetting access to public investment?
- deleted 8y ago[deleted]
- Mikeb85 8y agoSubject themselves to what? Having to be transparent and tell the truth in exchange for massive amounts of funding?
- itsslo 8y agoNaive. How about short sellers spreading fake news (or blowing news out of proportion) to suppress the price of your stock?
- Mikeb85 8y agoShort sellers keep prices in check and offer a healthy degree of scepticism. Also, short squeezes are plenty of fun when you're on the long side.
- happytoexplain 8y agoYour proposition might have legs, but I don't think the parent post was malicious enough to deserve prefacing your reply with such a curt criticism.
- ceejayoz 8y agoIt seems a bit silly to bash shorts for "spreading fake news" in defense of a CEO that settled with the SEC for demonstrably spreading fake news to combat shorts he perceives as persecuting his company.
- hnbroseph 8y agotwo wrongs don't make a right, or so the saying goes
- ceejayoz 8y agoI haven't seen much evidence the shorts have committed a wrong.
- FireBeyond 8y agoWhere's the -evidence-, as opposed to theories, that short sellers are actively and illegally manipulating the stock price with demonstrably false statements? False statements like "I've secured funding to take Tesla private", for example...
- itsslo 8y agoI disagree, it was of the same nature and tone.
- GenericsMotors 8y agoJust don't accuse upstanding citizens of being pedos, or try to manipulate your company's stock price with false promises of buying it back at a premium and you'll be fine.
- lamlam 8y agoNo one takes a company public for fun. They do it for funds. Especially for something like a car company that requires a lot of initial investment to get going. They can't start making money right away like a SaaS company might.
- paulddraper 8y agoNot wanting to take a company public reminds me of the story of one of Schwarzenegger's critics. "I never want to you look like you." "Don't worry, you never will."
- dmitrygr 8y agoIt is hard to pay market rates in cash when you're a startup, and nobody wants to own shares they cannot sell; allowing sales without being public gets messy quickly; and there is also a limit to the number of shareholders before you are required to go public.
- noblethrasher 8y ago> and there is also a limit to the number of shareholders before you are required to go public. You're never forced to go public, but you will be required to disclose financial data to the public if you have more than 1,999 individual shareholders and assets with a value that is greater than or equal to 10 million dollars.
- sambull 8y agoYou won't. Your investors will.
- azylman 8y agoLying to investors is illegal regardless of whether your company is public or private
- _Microft 8y ago"It sucks to run a public company" - ...someone
- happytoexplain 8y agoI think you're implying that, #1: There is a trend where public companies face unreasonable or unfair accountability laws, and #2: This case is an example of that. Am I off base? If not, #1 sounds like a reasonable argument could be made, though it would be better made explicitly rather than implicitly. #2, on the other hand, definitely needs elaboration.
- pkaye 8y agoJust don't take any investor money and you will be fine.
- DannyBee 8y agoYour private investors could sue you for this just as much! You may also some day want employees, and it seems unlikely you will be able to compete in compensation on the private side.
- rchaud 8y agoIf you are a CEO who's partial to headline-grabbing stunts over listening to what your corporate counsel is telling you about what you can legally announce, then yeah, you shouldn't go public.
- RivieraKid 8y agoTesla and Musk are doing a lot of shady, semi-legal stuff. Public companies have a harder time getting away with that. So in this regard, yes, staying private is better.
- rburhum 8y agomoney?
- dragontamer 8y agohttps://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001318605&type=424 https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&C... That's why. Filing 424: secondary offerings to the public market. https://www.sec.gov/Archives/edgar/data/1318605/000119312516596657/d185970d424b5.htm https://www.sec.gov/Archives/edgar/data/1318605/000119312516... There's $2,000,000,000 right there raised through the public market. https://www.sec.gov/Archives/edgar/data/1318605/000119312516773745/d270132d424b5.htm https://www.sec.gov/Archives/edgar/data/1318605/000119312516... There's 300-million or so. https://www.sec.gov/Archives/edgar/data/1318605/000119312514077288/d678614d424b5.htm https://www.sec.gov/Archives/edgar/data/1318605/000119312514... There's another $2,000,000,000 raised. -------- Companies go public to raise money. Elon Musk wanted to spend $5 Billion on a Gigafactory. How else was he going to get the money?
- gpm 8y agos/2,000,000,000,000/2,000,000,000/g
- dragontamer 8y agoAh shoot, I miscounted. Thanks for the correction. I've edited my post.
- mlpinit 8y agohttps://outline.com/YuuEJJ https://outline.com/YuuEJJ - avoid paywall
- thinkloop 8y agoHow does outline get the content, are they subscribers of all the paywalls?
- TekMol 8y agoProbably similar to how Google gets the content.
- antpls 8y agoTLDR : "Tesla didn’t immediately respond to a request for comment. The Justice Department and SEC declined to comment." Edit : I'm not sure about why I'm downvoted. This article behind a paywall doesn't provide much more information than a freely accessible new agency. You would expect more information than just "X didn't respond to a request for comment". I'm denouncing the paywall here.
- QuantumGood 8y agoYou have to enter the link from the homepage; the link doesn't work on its own (today, from Chrome).
- deleted 8y ago[deleted]
- hn_throwaway_99 8y agoI think the title of the article slightly overstates what is being reported. "Misstated Production Figures" makes it sound as if Tesla lied about what it had produced, as opposed to just giving unrealistically rosy projections. I can definitely see how Musk's "funding secured" tweet crossed the line into potentially criminal behavior, but honestly, I have a hard time seeing how overly optimistic projections can be criminal if there is even an iota of a possibility that they could be met, no matter how unlikely.
- discodave 8y agoIf they knew they were rosy, or didn't make an honest effort to get them right, then it's intentionally mislaeding the stock market.
- mattigames 8y agoWhat would happen if Bill Gates says "Windows 10 is the best windows ever", is he misleading the stock market? What if he doesn't actually believe its the best Windows? Seems like trying to see a line between optimism and projections an that's idiotic. Seems to me that legally an accusation of misleading the stock market should happen only when putting fake data on official marketing reports or sales reports not about CEO's tweets.
- rpeden 8y ago"Windows 10 is the best Windows ever" isn't a projection, though. People wouldn't rush out to buy MS stock based on a statement like this. I hope not, anyway. "We're going to sell 800 million Windows 10 licenses this quarter" would be a projection. People might buy MS stock based on something like this. Publicly traded companies routinely provide earnings guidance based on production/sales forecasts. And earnings guidance absolutely has an impact on share price. So if a company is knowingly providing unlikely guidance figures, they're also knowingly misleading the market. I'm just speaking generally here. I don't know enough about the Tesla case to comment one way or another.
- picsao 8y agoAlready a criminal probe. Sniff. they grow up s fast.
- TekMol 8y agoI'm not getting the article, just a teaser which is 381 chars long. Yet the html alone of this page ist over 1 megabyte. The meta tags make up 7200 bytes. 20 times more metatags then content.
- gumby 8y agostandard paywall avoider: https://archive.is/3FHRo https://archive.is/3FHRo Mods: could you update link?
- dang 8y agoWe don't change links like that because it's important for users to see what site an article is from. But it's ok to post workarounds in the threads, as you and others did. https://news.ycombinator.com/newsfaq.html https://news.ycombinator.com/newsfaq.html https://news.ycombinator.com/item?id=10178989 https://news.ycombinator.com/item?id=10178989
- gumby 8y agoThanks for the explanation.
- nlowell 8y agoThis twitter thread has some additional information from Wochos vs Tesla in which twelve different former employees told either Musk or Ahuja (CFO) that their production plans were impossible. https://twitter.com/orthereaboot/status/1046754488353271808?s=19 https://twitter.com/orthereaboot/status/1046754488353271808?...
- torpfactory 8y agoI’ve been in plenty of meetings where engineering says something isn’t possible. We (I’m one of the engineers) aren’t always right. It’s a defense mechanism so we don’t agree to something we think will _probably_ fail and thus sacrifice credibility.
- rchaud 8y agoWhat should Musk argue in his defense then? "My engineers are too modest about their abilities, so I took their estimations and multiplied them by 1,000, because I truly believed they could do it?"
- torpfactory 8y agoYeah, 1000x seems a little out there. What if it was 2x? What about 5x? How accurate are the projections required to be? If Musk truly believed they could do it and the multiplier was 2x, who is at fault? I'm not sure it would be a crime if Musk believed there was possibility (lacking intent to deceive, also I'm definitely not a lawyer...).
- digikata 8y agoAnd is it production estimate, or a production goal? If someone gives you a goal of 1000x the current production, assuming you can request/specify whatever you need to get there, that's very different than if they say, given the exact production line we have now, what is the estimate of what we can produce. Tesla was somewhere in between given they were at the stage of thinking about setting up the production lines and going to setup them up simultaneously.
- bob_theslob646 8y agoUPDATE: Tesla says it has not received subpoena on Model 3 production. Seems like very sloppy reporting at the WSJ especially when information like this can move markets. > (Reuters) - Tesla Inc (TSLA.O) said on Friday it had not received a subpoena from the U.S. Department of Justice regarding production guidance for its Model 3 sedans, in response to a Wall Street Journal story that said the electric carmaker was facing a deeper criminal probe.[4] >The FBI is reportedly looking into whether Musk or the company made projections which they knew they couldn’t meet. [2] This is wild! This makes 0 sense because Musk admitted a few months ago that he was wrong about automation at the factories. If that is the case, Musk really did believe he could produce those numbers. How is it possible to try someone of misstating something that was "impossible", when they constantly do the "impossible." This is what he said a few months ago on CBS This Morning on April 12, 2018: "“Excessive automation at Tesla was a mistake,” Musk wrote, responding to a Wall Street Journal reporter’s tweet. “Humans are underrated.” He also talked about this with CBS News’ Gayle King, adding “we had this crazy, complex network of conveyor belts….And it was not working, so we got rid of that whole thing.”"[3] For those that cannot read the WSJ article, this is what I think are the important statements that the WSJ stated: > A few months later in July, Mr. Musk sounded confident that Tesla would be producing 20,000 Model 3s a month in December 2017, in line with his previous pledge of having 5,000 vehicles a week by year’s end. “Looks like we can reach 20,000 Model 3 cars per month in Dec,” he tweeted on July 2, 2017, days before the first Model 3 rolled off the production line.[1] > In the early weeks of production, the company’s body shop, where the skeleton of the cars would take shape, wasn’t fully functional, according to an October 2017 article in The Wall Street Journal. Tesla was still hand-building parts of the Model 3s, and the body shop wasn’t fully installed until September, according to people quoted in the article that were familiar with the situation. [1] > Now the FBI is comparing the company’s statements with its production capability during 2017. [1] [1] (https://www.wsj.com/articles/tesla-faces-deepening-criminal-probe-over-whether-it-misstated-production-figures-1540576636 https://www.wsj.com/articles/tesla-faces-deepening-criminal-...) [2] (https://www.zerohedge.com/news/2018-10-26/fbi-investigating-if-tesla-misstated-info-about-model-3-production https://www.zerohedge.com/news/2018-10-26/fbi-investigating-...) [3] (https://techcrunch.com/2018/04/13/elon-musk-says-humans-are-underrated-calls-teslas-excessive-automation-a-mistake/ https://techcrunch.com/2018/04/13/elon-musk-says-humans-are-...) [4] (https://www.reuters.com/article/us-tesla-probe/tesla-says-it-has-not-received-subpoena-on-model-3-production-idUSKCN1N02LO?utm_source=applenews https://www.reuters.com/article/us-tesla-probe/tesla-says-it...)
- JackFr 8y agoSo if on the misleading investors scale, Theranos is a 10, this seems to be like 3.
- rchaud 8y agoApples to oranges. Theranos was never public, which is why they managed to escape scrutiny for years and "achieve" a multi-billion dollar valuation for a product that didn't even work. Tesla on the other hand has been public for a while and actually makes working cars. They are however strapped for cash and the CEO may have made material misstatements about production capability in order to borrow more money. Theranos' fraud seemed to be driven by simple greed. I don't think Musk is a fraudster, but his ego and immaturity is starting to overshadow what he's trying to accomplish.
- acover 8y agoAren't they no longer strapped for cash?
- Pharmakon 8y agoMaybe? The recent numbers looked really good, so they might be out of the woods. Assuming they can keep the numbers up, and assuming the numbers weren’t the result of accounting tricks, I’d say it’s looking good for Tesla paying off their debts next year. If the numbers were massaged though, or if they aren’t maintained, they could be in trouble. Well have a better idea when independent analysis of the quarter comes out, and a much better idea when they start paying off their debts in 2019. I’d be cautiously optimistic personally, but not shocked if it turns out badly either.
- deleted 8y ago[deleted]
- exabrial 8y agoEvery time I see a negative Tesla headline, I start to watch their stock price. I'm convinced a lot of these sloppily written articles are designed to move markets. https://www.reuters.com/article/us-tesla-probe/tesla-says-it-has-not-received-subpoena-on-model-3-production-idUSKCN1N02LO?utm_source=applenews https://www.reuters.com/article/us-tesla-probe/tesla-says-it...
- rchaud 8y ago86% of Tesla's shares are held by insiders or institutions. I don't know any retail investors that have the WSJ's ear, or think that a news article is all it takes to tank the stock.
- deepGem 8y agoIt may not be the retail investors causing the swings but the algorithms trained to gauge sentiment from news sources and trade based on that sentiment. Wild guess.
- darpa_escapee 8y agoIt's this. They scrape news articles and make trading decisions based off of them. There would be a similar drop from naive systems if someone posted "Tesla Bad :(" on Bloomberg.
- lazyjones 8y agoStock prices don't move only when a large percentage of stock is traded. When a few % are sold based on negative news, the stock price can already take significant hits.
- wbl 8y agoSo you think the reporters are committing security fraud?
- exabrial 8y agoTo be clear about my statement: I think it's totally possible given the sensationalism around Tesla. Whether it is happening or not is a whole different matter. Hence my interest in watching their stock price when this sort news hits the press.
- qaq 8y agoI guess FBI has nothing better to do
- deleted 8y ago[deleted]
- deleted 8y ago[deleted]
- dreamdu5t 8y agoIt'd be great if we held politicians and the news media to the same standard.
- leesec 8y agoPersonal view here but this is insane. Sure many people ( even his own employees ) told him it was impossible. That does not mean Elon thought it was impossible. People have been telling him that for forever now. Why are people so hellbent on attacking this wonderful innovative company?
- deepGem 8y agoPersonal view again. I aM convinced that the shorts are behind these media smear campaigns. Scumbags are guaranteed to lose their bets and they are doing their best to minimise damage. They don’t care abou innovation or climate change. All thy care is about their fucking money. Sorry about the rant and yes I am long TSLA. I have had enough illogical Twitter spats with some noted shorts to come to this conclusion.
- InTheArena 8y agoIt's not just shorts - We know that the Koch Brothers (as much as a boogyman as they normally are) are behind several PR campaigns, we know that Boeing has funded a set of campaigns that attacked Tesla. I remember when Falcon 9H launched, there a coordinate effort to bad-mouth SpaceX, because launching a Rocket with a car was "wasteful".... You kick over a hornets nest, you better have a lot of raid on hand. That said, the NYT has been consistently brutal to Tesla and SpaceX. Part of it is that they leave themselves open. They are being candidly honest and aggressive, and don't always make their goals.. But they shoot for the moon. If they miss, at least they make orbit, as opposed to plummeting back down to the ground.
- deleted 8y ago[deleted]
- threeseed 8y agoThis is fanciful. No short seller held a gun to Musk's head and told him to call people pedophiles, tweet about funding he never had, smoke weed on some idiot's podcast or have the personal life of a hip hop artist. Also just because they're innovative and are solving climate change doesn't mean we all just have to look away all the time.
- Theodores 8y agoThe production line is what you always see on TV when cars are being talked about. Yet this is 'final assembly' and just the integration of the other bits and bobs. Clearly 'final assembly' is important but it is not everything. Components and sub-assemblies matter too. By analogy: Things at Tesla happen in 'Elon time' and most fans of the brand are happy with that. For them it is like having a baby, with hopes that the baby will grow up to be a child reading '5000 words a month' before their first year of school, in a school that isn't fully built yet. They know that there can be problems 'building the school', 'sourcing books' and what-not and are okay with that. So long as they can see progress they are happy. After all the school has done an excellent job of 'educating older kids' albeit a smaller number of them. Yet others who sent their kids to schools that follow a more orthodox curriculum come along wanting to do-down this rival school. They find what hasn't been done and latch on to 'the lack of progress on the main hall'. They ignore the 'well stocked library' and 'completed classrooms' and go running off to the authorities. How can the kids sit their exams with no assembly hall, they ask? And no, a 'hastily elected tent' won't do. The authorities who aren't directly in the teaching game have to take on board the nay-sayers complaints. The opinions of the parents don't matter to them, they are listening to these outsiders wanting to do everything down. They don't know if these are technicalities or whether the parents were tricked into something that was never going to happen. So it all gets serious.
- Latteland 8y agoThis time the shorts have them. This is very different that no demand, out of money in q3, can't make them, Wells notice, break, no batteries available, no lithium, all the execs keep leaving, autopilot broke, there's not really a big waiting list. This time it's different.
- dragontamer 8y agoThis is "news about potential news". > Federal Bureau of Investigation agents are examining whether Tesla misstated information... FBI agents look into a LOT of stuff. That's literally their job. Frankly, I'm not going to think one-way or the other unless the FBI comes up with an official statement. I think investors might need to be worried: you know, buy the rumor sell the news sorta thing. Investors / speculators are super interested in trying to predict the future, even with unreliable information like this one. But for the typical person, we shouldn't make an opinion of the matter until the FBI at least brings forth a case.
- andromedavision 8y agoBeing public seems like such a distraction. Doesn't seem worth it.