7 ms·

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

by 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

by kec 7y ago

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