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> 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 un

> 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. This is a public company, not an Avengers movie trailer. They can't just conjure arbitrarily positive numbers out of thin air. Their statements to investors and potential-investors must be fact based and made in good faith. Otherwise, what's wrong with Musk's tweet? I'm sure there was "an iota of a possibility" that someone crazy enough would buy Tesla at $420. There's "an iota of a possibility" for a lot of far-fetched scenarios, but public companies must be truthful and reasonable in their statements made to the investing public - especially when they err on the side of optimism.

jklinger410 8y ago
Reasons not to take your company public.
- sandworm101 8y ago
  Well, misleading statements to your shareholders can still result in lawsuits. Lawsuits over this stuff regularly happen even within closely-help family companies. If you really want freedom to make up numbers the only thing to do is not have shareholders. Keep the company all within a single individual. But at that point why even bother making official projections.
- rchaud 8y ago
  You make it sound like Tesla's hypothetical private investors wouldn't have legal recourse if the CEO missed his production target by 96%.
  - joering2 8y ago
    The probably wouldn’t bother going into many years of legal battle knowing they are cutting the branch of three they sitting on. With public company all you have to do is conplain to SEC in hopes to i.e. remove CEO from his duties and get going with someone else in charge. Clearly there is huge advantage of getting access to hundreds of millions of dolars in capital to spend, but that’s usually where advantages ends.
- weliketocode 8y ago
  Tesla has, by and large, benefited tremendously from the funding and support it has received as a public company.
- dantillberg 8y ago
  Reasons for an _honest_ person not to take their company public. Doesn't seem to have stopped Elon Musk.
hn_throwaway_99 8y ago
Musk's tweet would have been totally OK if it didn't include the words "funding secured". That is a past-tense statement that was clearly false. If he said "I'm planning to take Tesla private" that would have been fine, even if the likelihood of Tesla going private was very remote.
- Someone 8y ago
  “Funding secured” made it much worse, but it wasn’t fine without it. Tesla told the SEC that Musk’s tweets are company communication (http://ir.tesla.com/static-files/6496fc94-630f-41c7-96c6-94d4cafe4e86 http://ir.tesla.com/static-files/6496fc94-630f-41c7-96c6-94d...: ”For additional information, please follow Elon Musk’s and Tesla’s Twitter accounts: twitter.com/elonmusk and twitter.com/TeslaMotors”). That puts them in a different league.
  - rory096 8y ago
    It's not clear to me that they'd be irrelevant if not explicitly specified as company communication in a shareholder letter. In any case, the past-tense "funding secured" is precisely what makes the statement lose the protection of speculative forward-looking statements. https://en.wikipedia.org/wiki/Forward-looking_statement https://en.wikipedia.org/wiki/Forward-looking_statement
- brazzledazzle 8y ago
  It may be a regional thing but it's pretty normal in my experience to see a solution to a problem be put out there with the following statement be a statement of confidence in the past tense. For example: "We have to increase our bandwidth. Problem solved." That's how I read it anyway.
- hervature 8y ago
  This completely misses the mark that "I'm planning to take Tesla private" is in fact a factual statement as there is possibility inherently built into the statement. Of course it is ok to say facts. On the other hand, if he would have said "I'm taking Tesla private", we once again get into murky waters.
mmsimanga 8y ago
As an IT person, my observation is public companies make similar claims when it comes to IT projects. Claims like we are going to use IBM Watson to improve our call resolution speed by 80%. Only for the project to fail after millions spent with no consequences. Many ERP projects are late and cost twice the budgeted amount. The point I am trying to make is executives always exaggerate.
- rchaud 8y ago
  It would be an issue if the cost of the project had a material impact on the company's finances. Usually the auditors work with the CFO to determine materiality. It goes without saying that stating a production capacity of 20k/month and barely making 10% of that, is more likely to be a material misstatement.
- ucaetano 8y ago
  IT and Finance are completely different fields with very different rules. One can't simply apply one's understanding of one field to the other (which, sadly, seems to be the rule on HN).
  - mmsimanga 8y ago
    I am genuinely interested, would you mind explaining why the rules are different? Should they be different?
    - ucaetano 8y ago
      The first reason why rules are different is because in one case (IT) you're dealing with a seller-customer relationship, and in the second (Finance) you're dealing with a investor-company relationship. Second, public equity markets are a heavily regulated environment, for many reasons, and require strict rules to function to avoid widespread fraud, market manipulation, insider trading, etc. This is similar to Healthcare as well. You can't just go selling a random untested drug claiming that it cures cancer. And they should be different because of different configurations of power and impact. Investing isn't just buying a product or a service, it is allowing someone to use your money freely within certain conditions.
deleted 8y ago
[deleted]
tjoff 8y ago
I'm sure there was "an iota of a possibility" that someone crazy enough would buy Tesla at $420. Yes, but that is far cry from funding secured. Which company doesn't try to convey the image that they are the best thing the world has ever had the fortune of experiencing? I'm reminded of the Itanium Sales Forecast graph: https://commons.wikimedia.org/wiki/File:Itanium_Sales_Forecasts_edit.png https://commons.wikimedia.org/wiki/File:Itanium_Sales_Foreca...
- dunpeal 8y ago
  Right, the claim was that he should be allowed to make any statement as long as there's "an iota of possibility" that it is or will be true. That's obviously not the case.
xiphias2 8y ago
Elon's using optimistic projections all the time to motivate the company and all other companies working with Tesla as well. The problem is that - as with any project - if the stated goals would be less, the real outcome would decrease as well. Of course weather it's legal to be optimistic or not is an orthogonal question, but it makes sense in leading a business.
- deleted 8y ago
  [deleted]
- threeseed 8y ago
  In business it makes sense to under promise and over deliver. Not the other way around.
  - elif 8y ago
    No, it is a nuanced issue specific to each business.
  - tomp 8y ago
    Maybe for normal businesses, but overpromising and underdelivering still made SpaceX and Tesla deliver more than any other business.
    - Swenrekcah 8y ago
      Now, I know what you are saying and I’m all for Musk and SpaceX but... it’s a bit funny to think of rocket launches as a buisness where over promising and under delivering makes sense!
      - tomp 8y ago
        Yeah it reflects the terrible state of the rest of the industry... I really hope that Tesla and SpaceX weren’t so exceptional, but just two of many...
jsight 8y ago
That is true, but you know what else is true? This is a public company, not an Avengers movie trailer. Their critics can't just make up criticisms that make no sense. They stated clearly that the number and rate of improvement could shift to the right and the long-term material impact to their business would be negligible. They were right.
ericb 8y ago
We hear about companies who "missed their numbers" daily. What we don't hear is news of the CEO being given jail time.

jklinger410 8y ago

Reasons not to take your company public.

sandworm101 8y ago
Well, misleading statements to your shareholders can still result in lawsuits. Lawsuits over this stuff regularly happen even within closely-help family companies. If you really want freedom to make up numbers the only thing to do is not have shareholders. Keep the company all within a single individual. But at that point why even bother making official projections.
rchaud 8y ago
You make it sound like Tesla's hypothetical private investors wouldn't have legal recourse if the CEO missed his production target by 96%.
- joering2 8y ago
  The probably wouldn’t bother going into many years of legal battle knowing they are cutting the branch of three they sitting on. With public company all you have to do is conplain to SEC in hopes to i.e. remove CEO from his duties and get going with someone else in charge. Clearly there is huge advantage of getting access to hundreds of millions of dolars in capital to spend, but that’s usually where advantages ends.
weliketocode 8y ago
Tesla has, by and large, benefited tremendously from the funding and support it has received as a public company.
dantillberg 8y ago
Reasons for an _honest_ person not to take their company public. Doesn't seem to have stopped Elon Musk.

hn_throwaway_99 8y ago

Musk's tweet would have been totally OK if it didn't include the words "funding secured". That is a past-tense statement that was clearly false. If he said "I'm planning to take Tesla private" that would have been fine, even if the likelihood of Tesla going private was very remote.

Someone 8y ago
“Funding secured” made it much worse, but it wasn’t fine without it. Tesla told the SEC that Musk’s tweets are company communication (http://ir.tesla.com/static-files/6496fc94-630f-41c7-96c6-94d4cafe4e86 http://ir.tesla.com/static-files/6496fc94-630f-41c7-96c6-94d...: ”For additional information, please follow Elon Musk’s and Tesla’s Twitter accounts: twitter.com/elonmusk and twitter.com/TeslaMotors”). That puts them in a different league.
- rory096 8y ago
  It's not clear to me that they'd be irrelevant if not explicitly specified as company communication in a shareholder letter. In any case, the past-tense "funding secured" is precisely what makes the statement lose the protection of speculative forward-looking statements. https://en.wikipedia.org/wiki/Forward-looking_statement https://en.wikipedia.org/wiki/Forward-looking_statement
brazzledazzle 8y ago
It may be a regional thing but it's pretty normal in my experience to see a solution to a problem be put out there with the following statement be a statement of confidence in the past tense. For example: "We have to increase our bandwidth. Problem solved." That's how I read it anyway.
hervature 8y ago
This completely misses the mark that "I'm planning to take Tesla private" is in fact a factual statement as there is possibility inherently built into the statement. Of course it is ok to say facts. On the other hand, if he would have said "I'm taking Tesla private", we once again get into murky waters.

mmsimanga 8y ago

As an IT person, my observation is public companies make similar claims when it comes to IT projects. Claims like we are going to use IBM Watson to improve our call resolution speed by 80%. Only for the project to fail after millions spent with no consequences. Many ERP projects are late and cost twice the budgeted amount. The point I am trying to make is executives always exaggerate.

rchaud 8y ago
It would be an issue if the cost of the project had a material impact on the company's finances. Usually the auditors work with the CFO to determine materiality. It goes without saying that stating a production capacity of 20k/month and barely making 10% of that, is more likely to be a material misstatement.
ucaetano 8y ago
IT and Finance are completely different fields with very different rules. One can't simply apply one's understanding of one field to the other (which, sadly, seems to be the rule on HN).
- mmsimanga 8y ago
  I am genuinely interested, would you mind explaining why the rules are different? Should they be different?
  - ucaetano 8y ago
    The first reason why rules are different is because in one case (IT) you're dealing with a seller-customer relationship, and in the second (Finance) you're dealing with a investor-company relationship. Second, public equity markets are a heavily regulated environment, for many reasons, and require strict rules to function to avoid widespread fraud, market manipulation, insider trading, etc. This is similar to Healthcare as well. You can't just go selling a random untested drug claiming that it cures cancer. And they should be different because of different configurations of power and impact. Investing isn't just buying a product or a service, it is allowing someone to use your money freely within certain conditions.

deleted 8y ago

[deleted]

tjoff 8y ago

I'm sure there was "an iota of a possibility" that someone crazy enough would buy Tesla at $420. Yes, but that is far cry from funding secured. Which company doesn't try to convey the image that they are the best thing the world has ever had the fortune of experiencing? I'm reminded of the Itanium Sales Forecast graph: https://commons.wikimedia.org/wiki/File:Itanium_Sales_Forecasts_edit.png https://commons.wikimedia.org/wiki/File:Itanium_Sales_Foreca...

dunpeal 8y ago
Right, the claim was that he should be allowed to make any statement as long as there's "an iota of possibility" that it is or will be true. That's obviously not the case.

xiphias2 8y ago

Elon's using optimistic projections all the time to motivate the company and all other companies working with Tesla as well. The problem is that - as with any project - if the stated goals would be less, the real outcome would decrease as well. Of course weather it's legal to be optimistic or not is an orthogonal question, but it makes sense in leading a business.

deleted 8y ago
[deleted]
threeseed 8y ago
In business it makes sense to under promise and over deliver. Not the other way around.
- elif 8y ago
  No, it is a nuanced issue specific to each business.
- tomp 8y ago
  Maybe for normal businesses, but overpromising and underdelivering still made SpaceX and Tesla deliver more than any other business.
  - Swenrekcah 8y ago
    Now, I know what you are saying and I’m all for Musk and SpaceX but... it’s a bit funny to think of rocket launches as a buisness where over promising and under delivering makes sense!
    - tomp 8y ago
      Yeah it reflects the terrible state of the rest of the industry... I really hope that Tesla and SpaceX weren’t so exceptional, but just two of many...

jsight 8y ago

That is true, but you know what else is true? This is a public company, not an Avengers movie trailer. Their critics can't just make up criticisms that make no sense. They stated clearly that the number and rate of improvement could shift to the right and the long-term material impact to their business would be negligible. They were right.

ericb 8y ago

We hear about companies who "missed their numbers" daily. What we don't hear is news of the CEO being given jail time.