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> adversaries They are literally paying you, the Tesla long/holder, for the privilege of borrowing your shares or buying options that you are selling. If you

> adversaries They are literally paying you, the Tesla long/holder, for the privilege of borrowing your shares or buying options that you are selling. If you own shares and believe in the company, you should be absolutely in love with short sellers because their activities net you money. Nothing a short seller can do will destroying a financially secure, sound company. Nothing. Meanwhile you get to collect interest on borrow rates for your shares, or write options that will expire worthless, netting you tremendous premium. I honestly think that most retail investors do not understand short selling at all. They just think "they want the stock to go down = bad" without considering how costly being a short seller is. Short sellers are constantly on a fuse, but if you're long your time horizon is much more forgiving. Now if you are afraid that the company shares you own could become worthless tomorrow because of cashflow issues, huge debt burden, and a CEO with a notorious history of being unable to tell the truth - that's a completely different issue. It's not really the short sellers who caused any of those issues now is it?

datathe1st 7y ago
Tesla will likely need to raise around $5-10B to complete all of the capital investments they need to perform over the next few years. If short sellers use negative news to bring the stock price down it raises the dilutive cost to Tesla of raising more capital. Secondly there are people who are incredibly intelligent but just too busy living their life to do in depth research about every article they read online, especially if it's from a trusted source. These negative articles have actually prevented people from buying the car because they think the company won't be around to service them in a year or two. Fake news and a barrage of "sponsored" negative headlines can lead to Tesla actually going bankrupt.
- AndrewBissell 7y ago
  What "fake news" are you talking about, exactly? If you go digging through Tesla short Twitter you can find all kinds of apocalyptic musings, but that's not what's being printed at TheDrive or CNBC or Bloomberg. Musk himself told Axios that Tesla was "single digit weeks from dying" in the summer of 2018. Wall Street has had well founded concerns about Tesla's liquidity and viability (to say nothing of corporate governance and internal controls) at numerous points in its history. Is the financial press supposed to just not report those concerns out of fear it might discourage someone from buying the cars? To say nothing of the fact that, on balance, Tesla and Elon Musk have actually been the beneficiaries of an enormous amount of complacent and at times even fawning press coverage.
- gamblor956 7y ago
  There are many people who already have Teslas that can't get them repaired after nearly a year in the shop due to parts shortages... Tesla's biggest problem is current owners with outstanding Tesla issues. If you can't take care of the people who already open your products why would a potential buyer think you'd take care of them?
syshum 7y ago
>>Nothing a short seller can do will destroying a financially secure, sound company. Nothing. That is factually wrong. In today's news cycle, Cancel Culture, and panicky investors there are all kinds of ways a malicious actor can and do manipulate stock prices that have exactly ZERO to do with the companies finances To believe otherwise is utterly naive
- sfifs 7y ago
  > there are all kinds of ways a malicious actor can and do manipulate stock prices that have exactly ZERO to do with the companies finances Over a time horizon of a year to a few years, short selling cannot artificially depress stock price relative to market. So if you are truly long it should make no difference and you should probably cash in by writing options.
- mruts 7y ago
  The biggest determinant of a company's stock price is not the company. It's beta, interest rates, and a multitude of other factors. The idiosyncratic return and variance of most companies is quite small compared to the systematic return and variance described by other factors.
jfengel 7y ago
In the long term, people shorting for bad reasons only hurt themselves. But in the short term, it does harm people who are long in the stock. People sell for a variety of reasons: unexpected unemployment, retirement, emergencies, home improvements, etc. They may simply want to rebalance their portfolios, and don't want to wait a decade for the shorts to get caught with their pants down. That's not an argument for banning shorts, which are a necessary part of the market. But it may contribute to a case for regulating prominent news sources which may have a conflict of interest. The SEC regulates pump-and-dump schemes, so there are precedents. Again, not claiming that this is the case here. (I have dark suspicions that there are political and ideological motivations, rather than profit.) But it's important to recognize that short selling, and slanting the news to depress the price, are not without short-term consequences.
mruts 7y ago
This is all true, but short sellers can (and do) depress the price of a stock in the short-term through the act of selling.

datathe1st 7y ago

Tesla will likely need to raise around $5-10B to complete all of the capital investments they need to perform over the next few years. If short sellers use negative news to bring the stock price down it raises the dilutive cost to Tesla of raising more capital. Secondly there are people who are incredibly intelligent but just too busy living their life to do in depth research about every article they read online, especially if it's from a trusted source. These negative articles have actually prevented people from buying the car because they think the company won't be around to service them in a year or two. Fake news and a barrage of "sponsored" negative headlines can lead to Tesla actually going bankrupt.

AndrewBissell 7y ago
What "fake news" are you talking about, exactly? If you go digging through Tesla short Twitter you can find all kinds of apocalyptic musings, but that's not what's being printed at TheDrive or CNBC or Bloomberg. Musk himself told Axios that Tesla was "single digit weeks from dying" in the summer of 2018. Wall Street has had well founded concerns about Tesla's liquidity and viability (to say nothing of corporate governance and internal controls) at numerous points in its history. Is the financial press supposed to just not report those concerns out of fear it might discourage someone from buying the cars? To say nothing of the fact that, on balance, Tesla and Elon Musk have actually been the beneficiaries of an enormous amount of complacent and at times even fawning press coverage.
gamblor956 7y ago
There are many people who already have Teslas that can't get them repaired after nearly a year in the shop due to parts shortages... Tesla's biggest problem is current owners with outstanding Tesla issues. If you can't take care of the people who already open your products why would a potential buyer think you'd take care of them?

syshum 7y ago

>>Nothing a short seller can do will destroying a financially secure, sound company. Nothing. That is factually wrong. In today's news cycle, Cancel Culture, and panicky investors there are all kinds of ways a malicious actor can and do manipulate stock prices that have exactly ZERO to do with the companies finances To believe otherwise is utterly naive

sfifs 7y ago
> there are all kinds of ways a malicious actor can and do manipulate stock prices that have exactly ZERO to do with the companies finances Over a time horizon of a year to a few years, short selling cannot artificially depress stock price relative to market. So if you are truly long it should make no difference and you should probably cash in by writing options.
mruts 7y ago
The biggest determinant of a company's stock price is not the company. It's beta, interest rates, and a multitude of other factors. The idiosyncratic return and variance of most companies is quite small compared to the systematic return and variance described by other factors.

jfengel 7y ago

In the long term, people shorting for bad reasons only hurt themselves. But in the short term, it does harm people who are long in the stock. People sell for a variety of reasons: unexpected unemployment, retirement, emergencies, home improvements, etc. They may simply want to rebalance their portfolios, and don't want to wait a decade for the shorts to get caught with their pants down. That's not an argument for banning shorts, which are a necessary part of the market. But it may contribute to a case for regulating prominent news sources which may have a conflict of interest. The SEC regulates pump-and-dump schemes, so there are precedents. Again, not claiming that this is the case here. (I have dark suspicions that there are political and ideological motivations, rather than profit.) But it's important to recognize that short selling, and slanting the news to depress the price, are not without short-term consequences.

mruts 7y ago

This is all true, but short sellers can (and do) depress the price of a stock in the short-term through the act of selling.