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> Now Tesla shareholders, who overwhelmingly voted for the merger, made a big mistake. But Tesla shareholders own the company, they are allowed to make whatever

by xkjkls 7y ago

> Now Tesla shareholders, who overwhelmingly voted for the merger, made a big mistake. But Tesla shareholders own the company, they are allowed to make whatever decisions they want. They voted for the merger based on Musk's claim that SolarCity had a good financial position and that they were releasing a revolutionary solar shingle product. Both of those were wrong.

dragontamer 7y ago
Note: the financial positioning of SolarCity was obvious to anyone who could read a 10k. SolarCity never made a profit, and it spent tons of money chasing imaginary products (similar to a lot of other Musk-based properties). 10k documents exist for a reason. https://www.sec.gov/Archives/edgar/data/1408356/000156459017003084/scty-10k_20161231.htm https://www.sec.gov/Archives/edgar/data/1408356/000156459017... In 2016, SolarCity lost a full, solid, $Billion. The Tesla investors who voted for SolarCity / Tesla merger has no excuse on this part: all information was public, and no fraud has been detected in any of these numbers (yet). > and that they were releasing a revolutionary solar shingle product That one... I'll blame Musk for for sure. But investors really should have done their own proper leg-work and analyzed SolarCity's financial position on their own.
- rurp 7y ago
  As you say, investors should do their research but, I don't think that absolves Musk from making false or misleading statements. If someone claims to be a Nigerian prince who just needs a few hundred dollars to give away their fortune, the potential customers/marks should certainly do their research and can easily learn that the offer is a scam, but the scammer is still in the wrong both legally and ethically.
- FPGAhacker 7y ago
  > In 2016, SolarCity lost a full, solid, $Billion. Amateurs. Uber does that every quarter.
  - dehrmann 7y ago
    I'd love to see Uber's projections on what fare chances to do the demand curve. How much would they have to raise fares (accounting for decreased demand) to break even? If it's <5%, they're actually in a pretty good spot.
    - dragontamer 7y ago
      Uber doesn't have a yearly 10k yet. But their 10Q (quarterly) data for first-half (aka: 1H) 2019 is as follows: $6.2 Billion in revenue, $(6.2) Billion in net loss. So Uber roughly, has to increase prices by 100% to break even. http://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/bb9ba252-3fd3-4633-b57e-2de50831f71d.pdf#FY2019Q2FINANCIALSTATE_HTM_SA42F159CECEB567FB9E80911DB0CB0E7 http://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/bb9ba252... I wish I were kidding. But that's what the data says. Page 5 of the above link, Revenue: $6,265 and Net (6,262) if you want to ctrl-F things. Uber spent $6 Billion more this half-year on Cost-of-Sales, R&D, and Administrative costs (compared to the 1H 2018). ------------ Operational income / Operational Margins are negative as well. Sooo... yeah... somewhere around 100% price increases across the board for Uber to break even. Realistically, Uber will only become profitable if they cut back on marketing (aka: giving incentives to drivers), raise rates, and cut back on their R&D spending (all this self-driving car nonsense... Uber isn't rich enough to fund such a project).
- duckymcduckface 7y ago
  Worth noting that when a merger or acquisition happens the company sends you a big ass document with details of everything
coldtea 7y ago
>They voted for the merger based on Musk's claim that SolarCity had a good financial position and that they were releasing a revolutionary solar shingle product. Both of those were wrong. Well, if the arguments at the time were good enough to convince them, sucks to be them. What are they gonna do? Unless they were given tampered numbers or false factual information, Musk could oversell SolarCity prospects six ways from Sunday and they can't do anything about it.
- dragonwriter 7y ago
  > Unless they were given tampered numbers or false factual information, Musk could oversell SolarCity prospects six ways from Sunday and they can't do anything about it. That would be true if Musk had owned SolarCity but not been CEO of Tesla: puffery short of actual fraud would be fine. As Tesla CEO, though, Musk has a fiduciary duty to Tesla shareholders, which means his (enforceable, legal) obligation is greater than just avoiding outright fraud.
- xkjkls 7y ago
  > Well, if the arguments at the time were good enough to convince them, sucks to be them. What are they gonna do? If the arguments and timelines were knowingly dishonest, then that's fraud. Hence the lawsuit. > Unless they were given tampered numbers or false factual information, Musk could oversell SolarCity prospects six ways from Sunday and they can't do anything about it. If you release a fake product on stage and announce timelines you know there is no possibility of meeting, then yeah, there are a lot of legal ramifications to that. Especially given a case where there are so many personal financial entanglements.

by xkjkls 7y ago

dragontamer 7y ago

Note: the financial positioning of SolarCity was obvious to anyone who could read a 10k. SolarCity never made a profit, and it spent tons of money chasing imaginary products (similar to a lot of other Musk-based properties). 10k documents exist for a reason. https://www.sec.gov/Archives/edgar/data/1408356/000156459017003084/scty-10k_20161231.htm https://www.sec.gov/Archives/edgar/data/1408356/000156459017... In 2016, SolarCity lost a full, solid, $Billion. The Tesla investors who voted for SolarCity / Tesla merger has no excuse on this part: all information was public, and no fraud has been detected in any of these numbers (yet). > and that they were releasing a revolutionary solar shingle product That one... I'll blame Musk for for sure. But investors really should have done their own proper leg-work and analyzed SolarCity's financial position on their own.

rurp 7y ago
As you say, investors should do their research but, I don't think that absolves Musk from making false or misleading statements. If someone claims to be a Nigerian prince who just needs a few hundred dollars to give away their fortune, the potential customers/marks should certainly do their research and can easily learn that the offer is a scam, but the scammer is still in the wrong both legally and ethically.
FPGAhacker 7y ago
> In 2016, SolarCity lost a full, solid, $Billion. Amateurs. Uber does that every quarter.
- dehrmann 7y ago
  I'd love to see Uber's projections on what fare chances to do the demand curve. How much would they have to raise fares (accounting for decreased demand) to break even? If it's <5%, they're actually in a pretty good spot.
  - dragontamer 7y ago
    Uber doesn't have a yearly 10k yet. But their 10Q (quarterly) data for first-half (aka: 1H) 2019 is as follows: $6.2 Billion in revenue, $(6.2) Billion in net loss. So Uber roughly, has to increase prices by 100% to break even. http://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/bb9ba252-3fd3-4633-b57e-2de50831f71d.pdf#FY2019Q2FINANCIALSTATE_HTM_SA42F159CECEB567FB9E80911DB0CB0E7 http://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/bb9ba252... I wish I were kidding. But that's what the data says. Page 5 of the above link, Revenue: $6,265 and Net (6,262) if you want to ctrl-F things. Uber spent $6 Billion more this half-year on Cost-of-Sales, R&D, and Administrative costs (compared to the 1H 2018). ------------ Operational income / Operational Margins are negative as well. Sooo... yeah... somewhere around 100% price increases across the board for Uber to break even. Realistically, Uber will only become profitable if they cut back on marketing (aka: giving incentives to drivers), raise rates, and cut back on their R&D spending (all this self-driving car nonsense... Uber isn't rich enough to fund such a project).
duckymcduckface 7y ago
Worth noting that when a merger or acquisition happens the company sends you a big ass document with details of everything

coldtea 7y ago

>They voted for the merger based on Musk's claim that SolarCity had a good financial position and that they were releasing a revolutionary solar shingle product. Both of those were wrong. Well, if the arguments at the time were good enough to convince them, sucks to be them. What are they gonna do? Unless they were given tampered numbers or false factual information, Musk could oversell SolarCity prospects six ways from Sunday and they can't do anything about it.

dragonwriter 7y ago
> Unless they were given tampered numbers or false factual information, Musk could oversell SolarCity prospects six ways from Sunday and they can't do anything about it. That would be true if Musk had owned SolarCity but not been CEO of Tesla: puffery short of actual fraud would be fine. As Tesla CEO, though, Musk has a fiduciary duty to Tesla shareholders, which means his (enforceable, legal) obligation is greater than just avoiding outright fraud.
xkjkls 7y ago
> Well, if the arguments at the time were good enough to convince them, sucks to be them. What are they gonna do? If the arguments and timelines were knowingly dishonest, then that's fraud. Hence the lawsuit. > Unless they were given tampered numbers or false factual information, Musk could oversell SolarCity prospects six ways from Sunday and they can't do anything about it. If you release a fake product on stage and announce timelines you know there is no possibility of meeting, then yeah, there are a lot of legal ramifications to that. Especially given a case where there are so many personal financial entanglements.