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Short sellers have been causing the company a lot of trouble, Musk is correct in pointing them out so that their activities become known.

vikramkr 7y ago
No, they really haven't. The best way to deal with shorts is to have a good quarter and crush them all. Or wait for a short squeeze. Lots of companies have misinformation spread by shorts all the time, but very few companies engage and attack shorts.
- kemiller 7y ago
  Tesla’s stock is shorted FAR more than any other company with comparable market cap. 30% of outstanding shares are shorted. It’s bonkers.
  - kec 7y ago
    But which is the more likely causes of this: That TSLA is the victim of an evil coordinated effort to cause the company to take, or just that 30% of the market genuinely believes they're overvalued. Given they have a higher market cap than either Ford or Honda, I'd be betting on the latter....
    - Retric 7y ago
      ~“Markets can stay irrational longer than you can stay solvent.” Shorting a stock is not just a statement that you think the stock is overvalued. It’s a statement you think the stock will soon drop, because each short costs money and expires. Eventually being correct is useless. If for example it performs poorly over the next 20 years and never actually drops you will lose everything.
      - AndrewBissell 7y ago
        Shorting Tesla actually pays a rebate right now, because the stock is cheaper to borrow than the interest paid on the cash proceeds from selling it up front.
        maest 7y ago
        Tesla is one of the most shorted stocks around. There is no way you can get a rebate just by shorting the name. You're probably thinking of the rebate rate, which is the money received by people long Tesla who are lending it out.
        AndrewBissell 7y ago
        Tesla is also one of the most widely held stocks around which means there is an ample float to borrow for shorting. Interactive Brokers pays a rebate.
    - smallgovt 7y ago
      It's not either or. It's safe to assume the vast majority of TSLA shorts believe the stock is overvalued. In addition, some minority of shorts take overt actions to hurt the company's share value.
    - kemiller 7y ago
      When you consider how rich and well-connected the players who stand to lose if Tesla wins, I don’t think it’s at all crazy to suggest that they are using some of that wealth to slow them down. If you happen to have 10 billion hanging around and there are billions more on the line, it’d almost be stupid not to. There’s no law against malicious short selling assuming you’re not outright lying about them in print. Oil companies have a the means, motive, and opportunity. Exxon Mobil alone made $20b in profit last year. 30% of TSLA is 12b or so. If they can delay the electric transition by a couple of years by kicking in a few billions along with the other big ones, that’s a great return on investment even if they take a huge bath on the shorts. Can I prove that’s what’s going on? No, I’m just some dude on the internet. But it really is not implausible at all.
      - maest 7y ago
        Are you suggesting Exxon Mobil is placing huge short bets on Tesla? How would that affect the company apart from deflating the share price? At a stretch, it might make it more difficulmore expensive for Tesla to refinance/raise capital via issuing stock, but that sounds like really bad ROI for billions of dollars.
      - refurb 7y ago
        Wouldn’t a public company like Exxon need to disclose any massive short position on it’s quarterly public statements? I think someone would have noticed if Exxon’s balance sheet said something like “Derivative securities - $2.8B”.
      - gamblor956 7y ago
        Exxon mobile also has a heavy investment in clean energy. Bigger than the total value of the Tesla shorts. They're not just oil anymore.
    - r00fus 7y ago
      That’s not a dichotomy. Literally they could be both. Big money has a lot of legal levers to keep their investments in dirty economy profitable that also make sense for them financially.
    - ikiris 7y ago
      This isn't about a coordinated conspiracy although there have been multiple examples of such in the past in other situations. Multiple independent malicious actors through their own self interest if sufficiently capitalized can easily destroy a company through actions like this purely in the persuit of self profit. Especially if they are competing in the same space. The 80s was rife with things like this, to the point many became famous for it.
    - bryanlarsen 7y ago
      Equity value (market cap + debt) the real measure of company valuation, since debt holders are owners too. Ford's EV is 145B (42B market cap + 103B debt). Tesla's EV is 56B (44.5B market cap + 11.5B debt). Ford and Honda are still valued considerably higher than Tesla.
      - deleted 7y ago
        [deleted]
      - reitzensteinm 7y ago
        Ford has over 250 billion in assets. Quoting enterprise value without context is highly misleading. Ford's debt and assets are largely from its financing arm. It doesn't make the car making part of Ford worth more.
        bryanlarsen 7y ago
        Investors have valued Ford at $141B. Assets doesn't affect that statement one bit. It's a piece of evidence that investors might be wrong. It's an easy double. Buy Ford, sell of the assets, pay off the debt and pocket $110B for a cost of $42B. Since that's not happening, nor anything like it, investors don't think Ford assets are worth $250B.
        reitzensteinm 7y ago
        Sure, the statement is correct, but misleading. An apples to apples comparison between Ford and Tesla to compare valuation means teasing out the part of Ford that actually makes cars. Lumping in the financial services arm makes no sense if intellectual honesty is the goal. And in any case, EV isn't at all the final word you're making it out to be. If Ford takes on $100bn of debt to finance $100bn of cars with zero margin in order to move metal, now Ford has a $241bn EV. Is Tesla now suddenly even-more-undervalued compared to Ford? Nope. You're right that Ford probably can't be broken up and liquidated at book value, but my argument doesn't hinge on that.
        7y ago
  - wpietri 7y ago
    It's not bonkers at all. Musk's strategy from the beginning has been hype-driven. This gives him low cost of marketing and low cost of capital. But the downside is that the stock will appear overvalued to observers who don't buy the hype. This would be true even if things were going well and Musk were going from strength to strength. But Tesla has had a whole raft of problems, many of them self-inflicted. This is catnip to shorts. Further, part of Musk's strategy has been to bank on the genius-founder stereotype. It has clearly paid off as well; I'd bet that that there's an order-of-magnitude difference between the percentage of people who can name Tesla's CEO and that of any other car company. But again, it's risky; if Musk quit or were forced out, confidence in the company would collapse. And he has made a number of unforced errors; no other car company CEO is in dutch with the SEC. This kind of risk is also hugely appealing to shorts. It's also worth noting that the shorts were right. Tesla's managed to lose half its value from the peak, and it's still down something like 30%. Some of them have surely made a ton of money.
  - true_tuna 7y ago
    It’s not if the stock is overvalued. Time will tell. I’m actually a Tesla shareholder. I bought it when I believed in their vision. Musk’s antics have caused me to rethink the wisdom of my position though. I wouldn’t be surprised by a crash in share price. Then again I’m not betting on it either.
  - philwelch 7y ago
    Because the market cap itself is bonkers. For every short seller there’s three to five fanboy speculators propping the stock price up.
- lazyjones 7y ago
  I wish a single day would pass with me not having to read advice from random people how to better run Tesla (and probably SpaceX too) than Elon does. It gets old quickly...
  - deleted 7y ago
    [deleted]
- goshx 7y ago
  I don’t have any problem with someone shorting a stock if they don’t engage in spreading lies and trying to take the company down. If you don’t see what shorts are doing against Tesla, I recommend reading articles about them more often.
  - goshx 7y ago
    https://cleantechnica.com/2019/07/21/were-cnbc-sources-tesla-employees-funded-by-tslaq/ https://cleantechnica.com/2019/07/21/were-cnbc-sources-tesla...
- sjwright 7y ago
  I think it's fair to say that Tesla managed to do both. https://www.forbes.com/sites/antoinegara/2019/03/05/after-horrendous-investing-run-david-einhorn-exits-billionaire-club/ https://www.forbes.com/sites/antoinegara/2019/03/05/after-ho...
- drusepth 7y ago
  Why don't more companies "engage and attack shorts"? Aren't people taking short positions on companies effectively lowering the stock price of the company compared to someone just not buying their stock, and therefore doing potential damage to that company's valuation and future? I'm surprised any company has the time to engage and attack those kinds of threats, but I'm not surprised there is an incentive for them to do so. Is it just the lack of time (or maybe optics, for whatever reason) that other companies don't "fight back"?
  - Lazare 7y ago
    > Why don't more companies "engage and attack shorts"? Because it's incredibly pointless, an utter waste of time, a distraction from things which actually matter, and can veer all-to-quickly into illegal actions as Musk has already found out? (His "taking Tesla private" tweet seemed to have been driven, in part, by a desire to punish shorts. It was later found, of course, to be illegal stock manipulation, and it wiped billions of dollars off Tesla's market cap.) > Aren't people taking short positions on companies effectively lowering the stock price of the company compared to someone just not buying their stock, and therefore doing potential damage to that company's valuation and future? In much the same way that people choosing not to buy Tesla shares do, yes. The effect is real, but even in extreme cases, trivial. It is quite clear that Musk has done vastly more damage to Tesla by worrying about short sellers than the short sellers themselves could have possibly done (eg, with his "taking Tesla private" tweet, but there are many other examples). > I'm not surprised there is an incentive for them to do so There is no incentive to do so. It is actively harmful.
  - refurb 7y ago
    If you want to see the correct way to deal with a short seller, look up what HerbalLife did against Pershing capital’s massive short. They basically continued to grow and show positive financials. Eventually Pershing exited his position. It’s not worth playing a PR game. You’re just asking to get called out on some statement you made. The proof is in the pudding. Sell lots of cars. Don’t claim your going to sell 500,000 vehicles this year, then come back and say “oh, I meant if you annualized our peak month”.
twblalock 7y ago
There is nothing wrong with shorting Tesla. Short selling is a necessary corrective to overhyped stocks. If the short sellers are wrong about Tesla being overpriced, they will pay for it. They are taking all of the risk, and they are not hurting anything except Musk's feelings.
- fouc 7y ago
  Apparently there's a bit more to that. Tesla is very leveraged right now and apparently it would be an issue if the share price dropped too much, forcing Tesla to do some sort of liquidity event? So the big short sellers are trying to force the share prices down enough that Tesla is forced to deal with this, which would push the share prices down even more and let them profit hugely.
  - JackFr 7y ago
    > Apparently there's a bit more to that. Tesla is very leveraged right now and apparently it would be an issue if the share price dropped too much, forcing Tesla to do some sort of liquidity event? Umm, yeah. There is nothing special about that. In fact that is the point.
  - solveit 7y ago
    That kind of scheme fails spectacularly if people know it's happening. It's really really hard to make money by deliberately mispricing something.
  - __blockcipher__ 7y ago
    > Tesla is very leveraged right now and apparently it would be an issue if the share price dropped too much In other words, the shorts are totally right to be taking their position? A company that depends on its stock price to stay afloat is not a healthy company. Let’s take AAPL as an example. Their stock could plunge to $1/share and they would be absolutely fine because they have positive free cash flow, and thus don’t need to rely ok raising capital via selling shares.
    - 7y ago
sjwright 7y ago
Interesting that this post is getting voted down. What did it say that offended so many people? > Short sellers have been causing the company a lot of trouble That seems objectively correct. The Tesla stock has been weighed down by an unprecedented amount of shorting—regardless whether or not you agree with the associated predictions. > Musk is correct in pointing them out so that their activities become known. This is an opinion. I suppose you could dispute the opinion that Musk should be doing that. But that's a reasonable opinion, isn't it? I'm confused.
true_tuna 7y ago
Deliberately manipulating his stock price to damage short sellers is profoundly unprofessional behavior though. And apparently just a little bit illegal.

vikramkr 7y ago

No, they really haven't. The best way to deal with shorts is to have a good quarter and crush them all. Or wait for a short squeeze. Lots of companies have misinformation spread by shorts all the time, but very few companies engage and attack shorts.

kemiller 7y ago
Tesla’s stock is shorted FAR more than any other company with comparable market cap. 30% of outstanding shares are shorted. It’s bonkers.
- kec 7y ago
  But which is the more likely causes of this: That TSLA is the victim of an evil coordinated effort to cause the company to take, or just that 30% of the market genuinely believes they're overvalued. Given they have a higher market cap than either Ford or Honda, I'd be betting on the latter....
  - Retric 7y ago
    ~“Markets can stay irrational longer than you can stay solvent.” Shorting a stock is not just a statement that you think the stock is overvalued. It’s a statement you think the stock will soon drop, because each short costs money and expires. Eventually being correct is useless. If for example it performs poorly over the next 20 years and never actually drops you will lose everything.
    - AndrewBissell 7y ago
      Shorting Tesla actually pays a rebate right now, because the stock is cheaper to borrow than the interest paid on the cash proceeds from selling it up front.
      - maest 7y ago
        Tesla is one of the most shorted stocks around. There is no way you can get a rebate just by shorting the name. You're probably thinking of the rebate rate, which is the money received by people long Tesla who are lending it out.
        AndrewBissell 7y ago
        Tesla is also one of the most widely held stocks around which means there is an ample float to borrow for shorting. Interactive Brokers pays a rebate.
  - smallgovt 7y ago
    It's not either or. It's safe to assume the vast majority of TSLA shorts believe the stock is overvalued. In addition, some minority of shorts take overt actions to hurt the company's share value.
  - kemiller 7y ago
    When you consider how rich and well-connected the players who stand to lose if Tesla wins, I don’t think it’s at all crazy to suggest that they are using some of that wealth to slow them down. If you happen to have 10 billion hanging around and there are billions more on the line, it’d almost be stupid not to. There’s no law against malicious short selling assuming you’re not outright lying about them in print. Oil companies have a the means, motive, and opportunity. Exxon Mobil alone made $20b in profit last year. 30% of TSLA is 12b or so. If they can delay the electric transition by a couple of years by kicking in a few billions along with the other big ones, that’s a great return on investment even if they take a huge bath on the shorts. Can I prove that’s what’s going on? No, I’m just some dude on the internet. But it really is not implausible at all.
    - maest 7y ago
      Are you suggesting Exxon Mobil is placing huge short bets on Tesla? How would that affect the company apart from deflating the share price? At a stretch, it might make it more difficulmore expensive for Tesla to refinance/raise capital via issuing stock, but that sounds like really bad ROI for billions of dollars.
    - refurb 7y ago
      Wouldn’t a public company like Exxon need to disclose any massive short position on it’s quarterly public statements? I think someone would have noticed if Exxon’s balance sheet said something like “Derivative securities - $2.8B”.
    - gamblor956 7y ago
      Exxon mobile also has a heavy investment in clean energy. Bigger than the total value of the Tesla shorts. They're not just oil anymore.
  - r00fus 7y ago
    That’s not a dichotomy. Literally they could be both. Big money has a lot of legal levers to keep their investments in dirty economy profitable that also make sense for them financially.
  - ikiris 7y ago
    This isn't about a coordinated conspiracy although there have been multiple examples of such in the past in other situations. Multiple independent malicious actors through their own self interest if sufficiently capitalized can easily destroy a company through actions like this purely in the persuit of self profit. Especially if they are competing in the same space. The 80s was rife with things like this, to the point many became famous for it.
  - bryanlarsen 7y ago
    Equity value (market cap + debt) the real measure of company valuation, since debt holders are owners too. Ford's EV is 145B (42B market cap + 103B debt). Tesla's EV is 56B (44.5B market cap + 11.5B debt). Ford and Honda are still valued considerably higher than Tesla.
    - deleted 7y ago
      [deleted]
    - reitzensteinm 7y ago
      Ford has over 250 billion in assets. Quoting enterprise value without context is highly misleading. Ford's debt and assets are largely from its financing arm. It doesn't make the car making part of Ford worth more.
      - bryanlarsen 7y ago
        Investors have valued Ford at $141B. Assets doesn't affect that statement one bit. It's a piece of evidence that investors might be wrong. It's an easy double. Buy Ford, sell of the assets, pay off the debt and pocket $110B for a cost of $42B. Since that's not happening, nor anything like it, investors don't think Ford assets are worth $250B.
        reitzensteinm 7y ago
        Sure, the statement is correct, but misleading. An apples to apples comparison between Ford and Tesla to compare valuation means teasing out the part of Ford that actually makes cars. Lumping in the financial services arm makes no sense if intellectual honesty is the goal. And in any case, EV isn't at all the final word you're making it out to be. If Ford takes on $100bn of debt to finance $100bn of cars with zero margin in order to move metal, now Ford has a $241bn EV. Is Tesla now suddenly even-more-undervalued compared to Ford? Nope. You're right that Ford probably can't be broken up and liquidated at book value, but my argument doesn't hinge on that.
        7y ago
- wpietri 7y ago
  It's not bonkers at all. Musk's strategy from the beginning has been hype-driven. This gives him low cost of marketing and low cost of capital. But the downside is that the stock will appear overvalued to observers who don't buy the hype. This would be true even if things were going well and Musk were going from strength to strength. But Tesla has had a whole raft of problems, many of them self-inflicted. This is catnip to shorts. Further, part of Musk's strategy has been to bank on the genius-founder stereotype. It has clearly paid off as well; I'd bet that that there's an order-of-magnitude difference between the percentage of people who can name Tesla's CEO and that of any other car company. But again, it's risky; if Musk quit or were forced out, confidence in the company would collapse. And he has made a number of unforced errors; no other car company CEO is in dutch with the SEC. This kind of risk is also hugely appealing to shorts. It's also worth noting that the shorts were right. Tesla's managed to lose half its value from the peak, and it's still down something like 30%. Some of them have surely made a ton of money.
- true_tuna 7y ago
  It’s not if the stock is overvalued. Time will tell. I’m actually a Tesla shareholder. I bought it when I believed in their vision. Musk’s antics have caused me to rethink the wisdom of my position though. I wouldn’t be surprised by a crash in share price. Then again I’m not betting on it either.
- philwelch 7y ago
  Because the market cap itself is bonkers. For every short seller there’s three to five fanboy speculators propping the stock price up.
lazyjones 7y ago
I wish a single day would pass with me not having to read advice from random people how to better run Tesla (and probably SpaceX too) than Elon does. It gets old quickly...
- deleted 7y ago
  [deleted]
goshx 7y ago
I don’t have any problem with someone shorting a stock if they don’t engage in spreading lies and trying to take the company down. If you don’t see what shorts are doing against Tesla, I recommend reading articles about them more often.
- goshx 7y ago
  https://cleantechnica.com/2019/07/21/were-cnbc-sources-tesla-employees-funded-by-tslaq/ https://cleantechnica.com/2019/07/21/were-cnbc-sources-tesla...
sjwright 7y ago
I think it's fair to say that Tesla managed to do both. https://www.forbes.com/sites/antoinegara/2019/03/05/after-horrendous-investing-run-david-einhorn-exits-billionaire-club/ https://www.forbes.com/sites/antoinegara/2019/03/05/after-ho...
drusepth 7y ago
Why don't more companies "engage and attack shorts"? Aren't people taking short positions on companies effectively lowering the stock price of the company compared to someone just not buying their stock, and therefore doing potential damage to that company's valuation and future? I'm surprised any company has the time to engage and attack those kinds of threats, but I'm not surprised there is an incentive for them to do so. Is it just the lack of time (or maybe optics, for whatever reason) that other companies don't "fight back"?
- Lazare 7y ago
  > Why don't more companies "engage and attack shorts"? Because it's incredibly pointless, an utter waste of time, a distraction from things which actually matter, and can veer all-to-quickly into illegal actions as Musk has already found out? (His "taking Tesla private" tweet seemed to have been driven, in part, by a desire to punish shorts. It was later found, of course, to be illegal stock manipulation, and it wiped billions of dollars off Tesla's market cap.) > Aren't people taking short positions on companies effectively lowering the stock price of the company compared to someone just not buying their stock, and therefore doing potential damage to that company's valuation and future? In much the same way that people choosing not to buy Tesla shares do, yes. The effect is real, but even in extreme cases, trivial. It is quite clear that Musk has done vastly more damage to Tesla by worrying about short sellers than the short sellers themselves could have possibly done (eg, with his "taking Tesla private" tweet, but there are many other examples). > I'm not surprised there is an incentive for them to do so There is no incentive to do so. It is actively harmful.
- refurb 7y ago
  If you want to see the correct way to deal with a short seller, look up what HerbalLife did against Pershing capital’s massive short. They basically continued to grow and show positive financials. Eventually Pershing exited his position. It’s not worth playing a PR game. You’re just asking to get called out on some statement you made. The proof is in the pudding. Sell lots of cars. Don’t claim your going to sell 500,000 vehicles this year, then come back and say “oh, I meant if you annualized our peak month”.

twblalock 7y ago

There is nothing wrong with shorting Tesla. Short selling is a necessary corrective to overhyped stocks. If the short sellers are wrong about Tesla being overpriced, they will pay for it. They are taking all of the risk, and they are not hurting anything except Musk's feelings.

fouc 7y ago
Apparently there's a bit more to that. Tesla is very leveraged right now and apparently it would be an issue if the share price dropped too much, forcing Tesla to do some sort of liquidity event? So the big short sellers are trying to force the share prices down enough that Tesla is forced to deal with this, which would push the share prices down even more and let them profit hugely.
- JackFr 7y ago
  > Apparently there's a bit more to that. Tesla is very leveraged right now and apparently it would be an issue if the share price dropped too much, forcing Tesla to do some sort of liquidity event? Umm, yeah. There is nothing special about that. In fact that is the point.
- solveit 7y ago
  That kind of scheme fails spectacularly if people know it's happening. It's really really hard to make money by deliberately mispricing something.
- __blockcipher__ 7y ago
  > Tesla is very leveraged right now and apparently it would be an issue if the share price dropped too much In other words, the shorts are totally right to be taking their position? A company that depends on its stock price to stay afloat is not a healthy company. Let’s take AAPL as an example. Their stock could plunge to $1/share and they would be absolutely fine because they have positive free cash flow, and thus don’t need to rely ok raising capital via selling shares.
  - 7y ago

sjwright 7y ago

Interesting that this post is getting voted down. What did it say that offended so many people? > Short sellers have been causing the company a lot of trouble That seems objectively correct. The Tesla stock has been weighed down by an unprecedented amount of shorting—regardless whether or not you agree with the associated predictions. > Musk is correct in pointing them out so that their activities become known. This is an opinion. I suppose you could dispute the opinion that Musk should be doing that. But that's a reasonable opinion, isn't it? I'm confused.

true_tuna 7y ago

Deliberately manipulating his stock price to damage short sellers is profoundly unprofessional behavior though. And apparently just a little bit illegal.