3 ms·
Your short anecdote is usually the story of shorts that turn out to be successful. Usually it's a solid company outwardly, maybe a few years less than the grand
by fakedang 6y ago
Your short anecdote is usually the story of shorts that turn out to be successful. Usually it's a solid company outwardly, maybe a few years less than the grandees like Microsoft and IBM, but on strong footing, but as you look deep inside, you'll find a lot of dirt hidden in muddy waters (pun intended).
On the other hand, there are firms like Tesla or Facebook, which have been shorted by a lot of investors, including traditional HF bulwarks like David Einhorn or Jim Chanos, but the firms don't move down because the shorts are often grounded in misguided perception, bias and despise rather than actual facts and data.
Shorts are actually a very reasonable way to put tabs on companies and essentially threaten them to do things right. Where they have failed is when big companies like Facebook can essentially buy their way out of justice from nasty situations (as happened with the Cambridge analytica scandal), thus rendering the short ineffective against companies with large warchests.
Say Tesla actively defrauded investors early on by claiming too lofty things about tech (like an unreasonably effective battery or something). In its early stages, a short against such a situation would have been devastating. As it turned out, they never defrauded and hence they are a sizeable enterprise now and have reached critical mass (and can actively claim stuff about their self-driving cars that need not be true).
- itsoktocry 6y ago>As it turned out, they never defrauded As it turns out, they did defraud shareholders at least one time: https://www.cnbc.com/2018/09/27/tesla-falls-4percent-on-report-elon-musk-sued-by-sec.html https://www.cnbc.com/2018/09/27/tesla-falls-4percent-on-repo... They are currently being sued in Delaware court for another: https://www.pv-magazine.com/2020/06/12/catching-up-on-the-elon-musk-tesla-solarcity-acquisition-case/ https://www.pv-magazine.com/2020/06/12/catching-up-on-the-el...
- fakedang 6y agoYes, that's what I meant. They didn't defraud investors early on, and definitely not by overstating their technical specs and capabilities (hmmm.... NKLA), and now when they have reached critical mass (which happened around the time Tesla began trading at $200ish), they have essentially enough power to buy their way through the courts in lawsuits which will barely scratch them. Hence now they often engage in fraudulent activities, just as Facebook did with CA. I used the words "As it turns out, they never defrauded" because at the time Tesla got into the market and began its uptick, investors like Einhorn often criticized them on their technological standing, which turned out to be solid and not based on lies, unlike what those short sellers were saying.