Tesla CEO Elon Musk’s Battle With Short Sellers Is Personal

Tesla

JUN 22 2018 BY EVANNEX 31

FOR TESLA’S ELON MUSK, TAKING DOWN THE SHORT SELLERS IS PERSONAL

Dating back to the early days of Model S production, Elon Musk has been feuding with Tesla short sellers. Back then, Musk cautioned those betting against Tesla stock that a “tsunami of hurt” was coming their way. Sure enough, it did. Tesla’s stock skyrocketed. And last year, when the stock was surging, Musk taunted shorts on Twitter, “Stormy weather in shortville…” According to Zero Hedge, “Elon Musk’s feud with Tesla shorts is not business, it’s just personal.”

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Matt Pressman. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: For Elon Musk, this is personal (Image: The Verge)

In a dangerous signal to shorts, the taunting started again: “One month ago… [on Twitter] Musk first warned shorts that ‘oh and uh short burn of the century comin soon. Flamethrowers should arrive just in time’, then followed it up just hours later with another taunt on the coming short squeeze which ‘Looks like sooner than expected. The sheer magnitude of short carnage will be unreal. If you’re short, I suggest tiptoeing quietly to the exit…'”

Then, “on May 7, Musk tripled down, and put money where his trash-talking mouth is, revealing that in a clear attempt to create an upside burst in an illiquid market, Musk bought about $9.85 million worth of Tesla shares in the pre-market just so his limited purchase could have the most outsized impact possible on the price, and force a burst of short-covering which has become Musk’s favorite way of keeping the stock levitating.”

Above: Elon Musk’s ever-increasing stake in the company is putting increased pressure on Tesla’s short sellers (Source: Market Realist)

Musk also made a highly-visible sacrifice to push the company towards profitability. He let go of 9% of the workforce in order to cut costs. In a letter to the staff, Musk admitted, “we will never achieve [Tesla’s] mission unless we eventually demonstrate that we can be sustainably profitable.” These cost-cutting measures (and rhetoric) signal yet another source of anxiety for the shorts as “Tesla remains dead set on achieving profitability,” according to Daniel Sparks at Motley Fool.

If that wasn’t enough, “Musk has done it again, and literally tripled down in his crusade against the company’s short sellers when he bought $24.9 million in TESLA stock, or 72,500 shares… [and] what is notable is that Musk no longer even pretends that he is looking for value, purchasing $25M in stock when it is trading near the highest level of the year.” The result: Tesla’s short sellers have now lost more than $2 Billion betting against Musk this month.

Above: CNBC’s Jim Cramer calls Elon Musk “masterful” in how he fights against Tesla shorts (Source: CNBC)

At the end of the day, “for Musk, who is already Tesla’s largest shareholder with a stake approaching 20%, the [$25M] purchase was merely theatrical – and he knew it – and meant to strike even more fear among the shorts.” On CNBC, a befuddled Jim Cramer (a consistent Tesla-critic) started comparing him to Mohammed Ali saying, “No one has been as masterful. Elon Musk is masterful. He’ll take the shorts… He floats like a butterfly, stings like a bee.”

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Sources: Zero HedgeCNBCMotley FoolMarket Realist

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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31 Comments on "Tesla CEO Elon Musk’s Battle With Short Sellers Is Personal"

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Texas Leaf

Tesla stock has been bouncing for the last year and still doesn’t have any fundamentals. Tesla stock may be a good stock to play options on but I certainly would not buy it long term, it’s still just too risky and I still don’t like the business model.

jelloslug

People have been saying this for almost 10 years now. It was listed at it’s IPO at $17 a share.

tm

People have been saying the same about every stock bubble or financial pyramid for centuries.
Yet every time crowds of gullible bring their money to be burned on the same old story.
You should watch the Wolf of Wall Street

Cyberhawk9

Yeah, so don’t sell when all the idiots does, right? Ok, noted.

ffbj

It hardly compares to any of them. The South Sea Islands, Mexican Railroads, Tulips, The Match King, or Billy Sol Estes, or the various boiler-room scandals, such as one in Wolf of Wall Street. Which one would you compare it too? Also it has no relationship, even remotely, to a pyramid scheme.
In other words you don’t know what you’re talking about.

Pushmi-Pullyu

TSLA is an extremely volatile stock, and the overwhelming consensus of analysts is that the stock is priced far above its value. Even Elon has indicated the same more than once. So investing in TSLA at the current price — either long or short — is a high-risk bet.

Those who invested early in TSLA have seen a ten-fold or better increase in the value of the stock. That’s an astounding success story. But betting that you’ll make money with a long-term investment at the price TSLA has seen over the past several years… not so likely. So the market for TSLA stock is dominated by short-term traders, which is a large part of why it’s so volatile.

But I don’t think this has much if anything to do with why Elon has a personal grudge against TSLA shorters. The amount of counter-factual FUD churned out by them, on a daily basis, is simply astounding, and unfortunately their FUD is spread all across social media. Sadly, much of it is repeated even on InsideEVs. 🙁

Nix

“priced far above its value.” Yes, TSLA shares have future successes already baked into the price. That is the very definition of long term investment. Right now long-term institutional investors (the majority TSLA stockholders) have determined that when Tesla achieves those successes, they will not be able to buy TSLA at the current price, and they will be locked out of investing into TSLA. Their analysis is for higher prices by then. The price they pay now reflects this future expectation.

Every stock is priced the exact same way. The price current buyers are willing to pay is a reflection of where they expect the stock price to be over the time period they plan to hold or sell the stock. That makes stocks a leading indicator of future value. Quarterly SEC reports are the opposite. They are a lagging indicator, showing where the company was in the past.

Some people falsely believe they should be able to buy into a company’s future based upon the value they were in the past. They often get angry when they can’t.

Pushmi-Pullyu

Is there any other company that is attacked by FUDsters on a daily basis, the way Tesla is? I don’t think there is. I don’t think any other company comes even close to the level of attempts to use propaganda and outright lies to tear down a company’s good name.

I don’t see Elon’s grudge, or even personal campaign, against FUDsters to be at all surprising, and I don’t think there is any question that most (not all, but most) of the anti-Tesla FUD is created and spread by short sellers. If anything, it’s surprising that Elon doesn’t talk about the situation even more than he does.

GE

With a basic knowledge of physics, my assessment is that if Tesla and other disrupters of the fossil fueled status quo fail, all of humanity will fail long term. 20 shares TSLA

Lamata

not even a drop ,in a Very large Bucket..

carcus

It’s personal. Because he personally owns and plays with the stock?

DrDauger

Why doesn’t someone just ask Elon (via twitter) if his fight against TSLA short sellers is personal?

Pushmi-Pullyu

Well of course Elon Musk takes it personally when short-selling FUDsters use every propaganda trick in the book, inventing lies and conspiracy theories, posting literally scores or hundreds of Tesla-bashing and Elon-bashing comments to Seeking Alpha and other social media every single day.

They attack him personally. Tesla is a company that’s actually trying to make the world a better place, but the FUDsters try to paint this noble endeavour as some sort of pyramid scheme or Ponzi scheme, as if making and selling highly desirable, top-rated cars was just window dressing for a scam.

I think it’s safe to say that no other CEO of any other company has so many lies told about him, and so much wholly undeserved abuse posted to social media, every single day. I don’t think any other CEO endures anything in the ballpark of that level of abuse! Why wouldn’t Elon take all that personally? Wouldn’t you, if you were him?

Why would anyone need to ask Elon about this on Twitter? Just apply some critical thinking and some common sense.

DrDauger
Google “tesla dauger” to see my words on work by Tesla and Elon. It’s a long read, so don’t you dare answer this post until you’ve read _all_ of it. The problem with your attitude is yours feeds the FUDsters’ narrative that Tesla’s supporters are an unthinking cult who attack anyone inconsistent with the Tesla creed including any questions you don’t want to hear, including the question I raised. It was a simple question. More often the questions that seem to have obvious answers are the ones that need to be raised. Are you attacking me, someone who puts his money where his mouth is enjoys his Model S and has been long TSLA for 5+ years? Really? I ask one question and you shoot back an undeserved four-paragraph screed? You need to see how many FUDsters I’ve fought online. You should be ashamed of yourself and apologize for jumping to conclusions and attacking me. I can think of two other companies and their CEOs, at a different time, who also endured such negative sentiment. The difference is that social media then wasn’t powerful enough to resonate and amplify it as much as today. Remember the word “beleaguered”? That was… Read more »
Pushmi-Pullyu

I didn’t attack you; I directed no pejorative in your direction. I expressed a different opinion. There’s no good reason to be so thin-skinned.

I don’t think your examples of individuals trash-talking other individuals are a drop in the bucket compared to the highly organized propaganda and FUD campaigns against Tesla Inc. and Elon Musk which are seen daily on Seeking Alpha, and to a lesser extent also seen here at InsideEVs.

You are, of course, entitled to your opinion on the matter. And so am I.

Dave K

I’m not a stockholder, shame, but I advise you to never bet against Elon! Who would have believed Tesla would still be here? Who would have believed he could start his own space program? Who would have believed his tunnel boring scheme would work? (Chicago!) Who believed in PayPal for that matter? Never bet against Elon, so far he is batting 1000. What is the best predictor of future behavior? Past behavior.

Mark.ca

It’s the “this time is different” crowd that keeps getting axed. They tend to be slow learners.

GE

Elon’s goal is to save humanity by transitioning our economy away from fossil fuels. It’s pretty sick to bet against that.

Lamata

Sick & Greedy

Mister G

sick + greedy= conservative ideology
GO ELON GO KICK SOME ARSE LOL co2.earth

Magnus H

You do believe that, don’t you? Is he a new Messiah, perhaps?

It’s only 20 years since the dotcom era, don’t you remember how the new technology should change everything?

Mister G

The new technology did change everything LOL wake up co2.earth

ffbj

I think FMV is $320 per share, raised from $270 which has been my valuation for the past year.
In regards to Musk and the shorts I think he has been playing them like a fiddle, but they are not dumb just perhaps too stubborn and entrenched in their positions. The stock atm is down due to some negative news, but there is fundamentally nothing unfavorable for the company. Short thesis are feces, in my opinion, as almost everything they rely on as being foundationally correct is wrong, and therefore based on false premises and can’t be correct, no matter how many problems you stack up, which is their MO, if they are incorrect that they are not solvable, it doesn’t matter. A common tactic called listing.
Their fault lies in their inability to apply the same stringent analysis to their own ideas as they do to Tesla’s claims of what they can and will do.

arne-nl

“…dumb…”

“…too stubborn and entrenched in their positions…”

What’s the difference?

Nix

It is the shorters who have made it personal, attacking Musk personally on a regular and constant basis. Often with anonymously posted sleazy falsehoods that prior to social media would have drawn SEC/legal attention.

Now with much of the internet working on a false equivalency of “both sides” being equal, the same way Trump talked about KKK marchers and counter-protesters being no different on “both sides” (good people?!?), such that there are no consequences for endlessly posting falsehoods. Now known admitted shorters who have proven to be posting intentional falsehoods (who are no different than those intentional liars on Facebook last election cycle) are given unfettered platform for their falsehoods.

Facebook is broken. Social media is broken. The false-equivalency of “both sides” being applied blindly where known propagandists like the Russia trolls and TSLA shorters are blindly given carte-blanche access for their campaigns of propaganda is broken. And then people pretend to be shocked when people like Musk are left no other option than to take on personally those who brought the rot into social media in the first place with their steady stream of intentional falsehoods.

Ron M

Of course he takes in personally and it’s incredible the number of short sellers that are Americans. Hoping an American company that employees 40,000 people directly and hoping that it will fail.

I suspect Koch Brothers and the Coal Barons and people who don’t believe in climate change are leading the misinformation revolution. I wonder if Scott Pruitt is shorting Tesla seems like something right up his alley.

This is a fight between Climate Change Supporters (The Rest of the World) and the Fossil Fuel Dinosaurs ( Donald Trump and his supporters)

Magnus H

“Hoping an American company that employees 40,000 people directly and hoping that it will fail.” What about the rest of the American car industry, and the people that hope it goes bankrupt?

Ron M

The rest of the car industry needs to make the change from ICE to electric vehicles.

Nix

You mean the same car makers who have already cut way, way more than 40K US workers through decades of shutting down factories and moving production of ICE cars for the US car market outside the US?

I think it would be great if those jobs were brought back to the US through Tesla building EV’s that beat those ICE cars they are building outside of the US. That would be a two-fer. Not only would it improve US air quality in cities, it would bring back some jobs to the US that those “American” car makers (one now owned by Fiat) had already exported years ago.

David Hrivnak

I purchased a Roadster and was so impressed with the car and service that I then bought some stock. I later bought a Model 3 and am much more impressed and so I bought more stock as Tesla really has a winner in the 3

Mister G

You have connected the dots congratulations thanks for caring about our planet even if you really don’t care lol