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The following two things can both be true: 1) The short sellers exist to build bad press to drive down valuations so they profit by short-selling and engage is

The following two things can both be true: 1) The short sellers exist to build bad press to drive down valuations so they profit by short-selling and engage is very shady practices to do so. 2) Fraud has occurred at Nikola. Unlike Tesla and the never-ending $TSLAQ "Tesla is nothing but fraud", it appears that they really have something here with Nikola, even though my knee-jerk reaction to the short-sellers is one of mostly disgust.

ForHackernews 6y ago
Why do you dislike short-sellers? I think it's wonderful when they're pointing out the emperor has no clothes! In order to have a functioning market, we need to base valuations on more than just "stonks go up".
- skrtskrt 6y ago
  Seriously Wirecard was sniffed out by so many short sellers, and eventually shorting it was banned... look at it now.
  - rootsudo 6y ago
    Same rhetoric, companies, securities, politics. Everyone with the right ideas, the right motions, is always attempted to be silenced. Life really is a circle.
  - charwalker 6y ago
    The regulatory process failed but was revealed. Hopefully Germany will do better. But the US has more companies and activities going on and likely more fraud just by volume if not the regulatory capture and other issues from the current administration like secretaries who want to dismantle their departments. The administration itself is fraudulent, laundering campaign money to private property or court/lawyer costs, or simply rewarding friends like the current USPS head donating a bunch of money to the GOP then getting their position while holding millions in stock of USPS competitors. It's just so blatant and corrupt but nothing happens.
- dasudasu 6y ago
  A big part of private equity getting to insane valuations like WeWork is that nobody can short it.
- deleted 6y ago
  [deleted]
- imglorp 6y ago
  Nothing wrong with healthy debate and dragging things into the sunshine. And there's obviously some fraud going on here. But when shorts simply make up stories out of spite or manipulation, like those guys screwing with Tesla calling it fraudulent, it's exactly like pump and dump in reverse. The difference might be that shorts are stuck when a stock is rising legitimately and have no recourse but to use fabrication. "Pump-and-dump is an illegal scheme to boost a stock's price based on false, misleading or greatly exaggerated statements" - Investopedia
  - CarelessExpert 6y ago
    > But when shorts simply make up stories out of spite or manipulation Well it's a good thing that's illegal and there are whole departments in the US government that exist to deal with it. Funny, though, that there hasn't been (edit: m)any securities fraud investigations of short sellers in recent memory. Makes you wonder who the real liars are: the shorts, or the targets of them?
    - imglorp 6y ago
      Can't leave that hanging... have any details?
      - CarelessExpert 6y ago
        Details about what? Examples where the shorts were right and the targeted companies were full of it? Is Nikola and Wirecard enough, or do you want me to go digging for more examples?
        imglorp 6y ago
        No, wondering about the case where the shorts were acting in a public and illegal manner and the SEC did not indict anyone. Is that not an SEC priority or is there a policy to let it go? Is there more "untouchable" aspect going on? Is the bar of proof too high? They certainly have gone after insider trading in recent times.
- bob33212 6y ago
  Creating a successful business is hard enough. The last thing you need is someone trying to make the case that you are going to fail at every turn. It is one thing to point out fraud like Theranos and NKLA, it is another thing to kick someone when they are down especially if your attack pushed the company into bankruptcy.
  - mikeg8 6y ago
    That comes with the territory of entering public markets though. If you don;t want to handle that kind of scrutiny, stay private and raise private equity or aim for a slower growth rate you can fund. Short sellers are good for the nature of the market they participate in.
  - dylan604 6y ago
    >The last thing you need is someone trying to make the case that you are going to fail at every turn. Isn't that called your mom for deciding not to become a doctor?
  - CarelessExpert 6y ago
    > Creating a successful business is hard enough. The last thing you need is someone trying to make the case that you are going to fail at every turn. Funny how the business gets all the sympathy, here. Meanwhile, the stockholders--i.e. all of us--get screwed if a fraudulent company doesn't get exposed. If a company goes public, the public has every right to scrutinize it and ensure they're above board. Short sellers play a critical role in providing that kind of scrutiny.
  - lerchmo 6y ago
    Companies can profit through abuse of an information imbalance. The short sellers have an economic incentive to look behind the curtain and find these abuses. They can provide a service to the market or,they can act unethically and put out false information.
mtgx 6y ago
Following that logic all companies are moral but short-sellers are not? Surely that can't be true. So they may "exaggerate" some facts. Doesn't the company itself do that on a daily basis through marketing, allowing it to grow so big in the first place? Why have outsized hate for the third-parties pointing out flaws or potential flaws than the company itself lying its entire path to wealth?
tenpies 6y ago
> Unlike Tesla and the never-ending $TSLAQ "Tesla is nothing but fraud" I think the problem is people don't understand what fraud is. Fraud does not mean fake. A company can have products and still be a fraud. A CEO can lead a multi-billion market cap company and still be a fraud. In fact the most successful frauds rely on having a real semi-viable company built around the fraud because it becomes easier to perpetuate the fraud. Nikola was on that path too. How far would it have gotten without the vehicle demo? Without the factory? In there, there's quite likely the seeds of a viable company, but they did not achieve escape velocity (e.g. sheer cash reserves, cult of personality, and share price) fast enough to keep the press away from fraud. If financial journalists were as vicious with other companies that the short seller community has mountains of evidence against, then half the Chinese companies on the US markets would be gone.
- nickik 6y ago
  But there were no legitimate reasons to believe that Tesla committed any kind of fraud.

ForHackernews 6y ago

Why do you dislike short-sellers? I think it's wonderful when they're pointing out the emperor has no clothes! In order to have a functioning market, we need to base valuations on more than just "stonks go up".

skrtskrt 6y ago
Seriously Wirecard was sniffed out by so many short sellers, and eventually shorting it was banned... look at it now.
- rootsudo 6y ago
  Same rhetoric, companies, securities, politics. Everyone with the right ideas, the right motions, is always attempted to be silenced. Life really is a circle.
- charwalker 6y ago
  The regulatory process failed but was revealed. Hopefully Germany will do better. But the US has more companies and activities going on and likely more fraud just by volume if not the regulatory capture and other issues from the current administration like secretaries who want to dismantle their departments. The administration itself is fraudulent, laundering campaign money to private property or court/lawyer costs, or simply rewarding friends like the current USPS head donating a bunch of money to the GOP then getting their position while holding millions in stock of USPS competitors. It's just so blatant and corrupt but nothing happens.
dasudasu 6y ago
A big part of private equity getting to insane valuations like WeWork is that nobody can short it.
deleted 6y ago
[deleted]
imglorp 6y ago
Nothing wrong with healthy debate and dragging things into the sunshine. And there's obviously some fraud going on here. But when shorts simply make up stories out of spite or manipulation, like those guys screwing with Tesla calling it fraudulent, it's exactly like pump and dump in reverse. The difference might be that shorts are stuck when a stock is rising legitimately and have no recourse but to use fabrication. "Pump-and-dump is an illegal scheme to boost a stock's price based on false, misleading or greatly exaggerated statements" - Investopedia
- CarelessExpert 6y ago
  > But when shorts simply make up stories out of spite or manipulation Well it's a good thing that's illegal and there are whole departments in the US government that exist to deal with it. Funny, though, that there hasn't been (edit: m)any securities fraud investigations of short sellers in recent memory. Makes you wonder who the real liars are: the shorts, or the targets of them?
  - imglorp 6y ago
    Can't leave that hanging... have any details?
    - CarelessExpert 6y ago
      Details about what? Examples where the shorts were right and the targeted companies were full of it? Is Nikola and Wirecard enough, or do you want me to go digging for more examples?
      - imglorp 6y ago
        No, wondering about the case where the shorts were acting in a public and illegal manner and the SEC did not indict anyone. Is that not an SEC priority or is there a policy to let it go? Is there more "untouchable" aspect going on? Is the bar of proof too high? They certainly have gone after insider trading in recent times.
bob33212 6y ago
Creating a successful business is hard enough. The last thing you need is someone trying to make the case that you are going to fail at every turn. It is one thing to point out fraud like Theranos and NKLA, it is another thing to kick someone when they are down especially if your attack pushed the company into bankruptcy.
- mikeg8 6y ago
  That comes with the territory of entering public markets though. If you don;t want to handle that kind of scrutiny, stay private and raise private equity or aim for a slower growth rate you can fund. Short sellers are good for the nature of the market they participate in.
- dylan604 6y ago
  >The last thing you need is someone trying to make the case that you are going to fail at every turn. Isn't that called your mom for deciding not to become a doctor?
- CarelessExpert 6y ago
  > Creating a successful business is hard enough. The last thing you need is someone trying to make the case that you are going to fail at every turn. Funny how the business gets all the sympathy, here. Meanwhile, the stockholders--i.e. all of us--get screwed if a fraudulent company doesn't get exposed. If a company goes public, the public has every right to scrutinize it and ensure they're above board. Short sellers play a critical role in providing that kind of scrutiny.
- lerchmo 6y ago
  Companies can profit through abuse of an information imbalance. The short sellers have an economic incentive to look behind the curtain and find these abuses. They can provide a service to the market or,they can act unethically and put out false information.

mtgx 6y ago

Following that logic all companies are moral but short-sellers are not? Surely that can't be true. So they may "exaggerate" some facts. Doesn't the company itself do that on a daily basis through marketing, allowing it to grow so big in the first place? Why have outsized hate for the third-parties pointing out flaws or potential flaws than the company itself lying its entire path to wealth?

tenpies 6y ago

> Unlike Tesla and the never-ending $TSLAQ "Tesla is nothing but fraud" I think the problem is people don't understand what fraud is. Fraud does not mean fake. A company can have products and still be a fraud. A CEO can lead a multi-billion market cap company and still be a fraud. In fact the most successful frauds rely on having a real semi-viable company built around the fraud because it becomes easier to perpetuate the fraud. Nikola was on that path too. How far would it have gotten without the vehicle demo? Without the factory? In there, there's quite likely the seeds of a viable company, but they did not achieve escape velocity (e.g. sheer cash reserves, cult of personality, and share price) fast enough to keep the press away from fraud. If financial journalists were as vicious with other companies that the short seller community has mountains of evidence against, then half the Chinese companies on the US markets would be gone.

nickik 6y ago
But there were no legitimate reasons to believe that Tesla committed any kind of fraud.