The future of Tesla

[Moriarte]

As you may be aware, Elon Musk is serial tweeter. While most of his tweets were harmless, some of them do stand out and make one question his sanity, really. On 1st of April he cracked a little joke that Tesla is going bankrupt. The market was closed, but on the next day shareholders took the joke back at him, sending price down 5%. Funny, right? Nevermind, the stock recovers from that one. Later, in July, he picks it up a notch and attacks a British cave diver in Thailand, who was participating in an effort to save kids stuck in a flooded cave and apparently called Musk's submarine effort "PR stunt". Elon brands him "pedo guy" via twitter.. Mr Unsworth, the diver, files a lawsuit after some deliberation.

And then, on August 7 he cracks the big one: "Am considering taking Tesla private at $420. Funding secured." The stock shoots up 11% that day only to crash in the days that follow due to the deafening silence which drags on to August 24 when Tesla reports that it will remain a public company. And then, "out of the blue", on September 27, The Securities and Exchange Commission (SEC) sues Elon Musk for making "false and misleading" statements to investors. It is now asking a federal judge to prevent Musk from serving as an officer or a director of a public company, among other penalties. The thing is, the SEC might have a point or two here. Tesla have been through rough patch lately, struggling to meet production goals, while posting negative earnings (and rising sales). With roughly 27% of share float "shorted" at the point of August 7 tweet a lot of people got "short squeezed" and were forced to liquidate their stock positions, which can be seen as market manipulation. Especially, with Musk being vocal about his anger directed at the short sellers through his usual means of mass communication.

As a side note, Tesla's stock lost nearly third of it's value following the events of August 7.

So, the questions I leave here for anyone to consider are these: Can such behavior coming from CEO of 45 billion dollar company be acceptable in this day and age? Are they going to replace him? And if they do, does Tesla have a chance, without their scandalous leader, who, as some see, became integral to company's success?

EDIT: https://www.bloomberg.com/news/videos/2018-09-27/sec-sues-elon-musk-for-securities-fraud-video

 

[innonimatu]

Elon Musk must have realized that his promises of profits for the company were infeasible a few months ago, when his magic thinking about automation leading to huge cost reductions was shown to be just that, a fantasy. Before that I can believe he believed he could get away with Tesla, despite his previous failures.

That company was going bankrupt irrespective of Musk's recent crazy behavior. Electric cars are hopelessly expensive still, and depend on batteries that are unpractical for mass use (fire hazards far worse that the fuel cars). It will take a long time until they finally become the main type of car. Tesla could have survived, never at the crazy "valuation" it had, as a manufacturer of luxury cars. But that was not enough to mr. Megalomaniac. And he had to buy out his other bankrupt venture... I hope that fraud gets investigated also.

 

[adcarrymaokai]

I hope Musk jumps into one of his rockets and propels himself into outer space to never ever come back to this Earth.

Thanks for attending my TED talk.

 

[FriendlyFire]

Elon Musk must have realized that his promises of profits for the company were infeasible a few months ago, when his magic thinking about automation leading to huge cost reductions was shown to be just that, a fantasy. Before that I can believe he believed he could get away with Tesla, despite his previous failures.

That company was going bankrupt irrespective of Musk's recent crazy behavior. Electric cars are hopelessly expensive still, and depend on batteries that are unpractical for mass use (fire hazards far worse that the fuel cars). It will take a long time until they finally become the main type of car. Tesla could have survived, never at the crazy "valuation" it had, as a manufacturer of luxury cars. But that was not enough to mr. Megalomaniac. And he had to buy out his other bankrupt venture... I hope that fraud gets investigated also.

As one engineer pointed out Musk isnt mass producing hes electrical cars in an assembly line, he is forcing hes workers to hand make them one by one because the model and design are not finalized yet with hundreds of completed cars needs design fixes
Musk isnt a car manufactorer, Musk is just car designer playing at car manufactoring short of a hail mary design break through there would be no way investors will realize any of the promises. Eventually the bubble is going to bust

 

[Timsup2nothin]

As one engineer pointed out Musk isnt mass producing hes electrical cars in an assembly line, he is forcing hes workers to hand make them one by one because the model and design are not finalized yet with hundreds of completed cars needs design fixes
Musk isnt a car manufactorer, Musk is just car designer playing at car manufactoring short of a hail mary design break through there would be no way investors will realize any of the promises. Eventually the bubble is going to bust

And all of that is, technically, not any sort of legal issue.

The legal issue, and it is one that will need to be resolved, is how the combination of a high profile spokesman and the modern wildfire communications methods are going to be regulated. There is no doubt, from a real world standpoint, about Musk having manipulated the stock value. Whether intentional because he is sharp, or accidental because he is a social media hothead, I'm not sure. And I'm even less sure that such a "method" is covered under existing law.

 

[FriendlyFire]

And all of that is, technically, not any sort of legal issue.

Well Investors are free to speculate on Musk money losing companies, provided Musk isn't distorting or falsifying information.
But I think that Musk is skirting quite close to the line where he is committing outright fraud with hes unrealistic promises and self promotion

 

[Zkribbler]

...fire hazards far worse that the fuel cars...

3 fires with 0 injuries means it's far too early to make such grandiose predictions of doom.

 

[Hrothbern]

And all of that is, technically, not any sort of legal issue.

The legal issue, and it is one that will need to be resolved, is how the combination of a high profile spokesman and the modern wildfire communications methods are going to be regulated. There is no doubt, from a real world standpoint, about Musk having manipulated the stock value. Whether intentional because he is sharp, or accidental because he is a social media hothead, I'm not sure. And I'm even less sure that such a "method" is covered under existing law.

He used "fake news" approach to his company.
Why would that not be acceptable in a country where politicians and news media do the same ?
Affecting our government, our democracy, our public goods.
Here some text of the SEC of that link in OP:
"We alleged that Musk's statements were false and misleading because they lacked any basis and fact"
How does that differ from the continuous stream of nonsense from US and UK leadership ?

Whether intentional because he is sharp, or accidental because he is a social media hothead, I'm not sure

That could apply to Trump as well, and so many others.

Is it suddenly more important when there is more volatility in share prices affecting the money of investors, than volatility in government behaviour affecting citizens ???

I think both types of misbehaviour need to be adressed fundamentally.

 

[Timsup2nothin]

Well Investors are free to speculate on Musk money losing companies, provided Musk isn't distorting or falsifying information.
But I think that Musk is skirting quite close to the line where he is committing outright fraud with hes unrealistic promises and self promotion

The issue is that his unrealistic promises and self promotion is really hard to identify as "providing false information to investors" in a legal sense.

Let's say that we are partners in a business. I run it, and you and @Zkribbler are the financial backers. So I'm in the bar one night, just shooting the breeze with somebody, and talking about retiring. Someone overhears me, and since they are your friend they ask you the next day "Hey man, Tim is retiring, what are you gonna do? Who's gonna run the business?" You know you don't want to do it, and you know Zkribbler doesn't want to do it, and you don't want to be stuck in this mess. You contact Zkribbler, don't share this distressing information, and make him a sweet deal on buying you out so he is the one stuck with the bag...but I was actually talking about retiring someday. You acted on hearsay, trying to get a jump, and you sold your part of the business for less than it was really worth. You, as a shareholder, did not receive any official information and you were not defrauded.

So where does wild boasting on Twitter fit in the spectrum from hearsay to official notification? Trump has created a situation where presidential tweets are supposed to be treated as official government policy...sometimes. Musk created a situation where some of the shareholders apparently took his tweets as some sort of substitute quarterly financial report. I gotta say, that was just silly of them.

But since we now can look at the results you have to consider that such silliness could have been predictable. If I knew your friend in the bar was listening, and I was intentionally misleading about that 'someday' part, and I had already briefed Zkribbler that if you took the bait I wanted in on your buyout if he could make a good enough deal...then that probably would be prosecutable fraud. Does making a tweet fall in the same category as intentionally being overheard distributing false information? Or is it "just nonsense on the internet that no one should take seriously, ever"?

@Hrothbern...cross post, but you can buy out FF if you want.

 

[Hrothbern]

cross post, but you can buy out FF if you want.

I sometimes feel hopelessly lost with understanding turbo urban whatever language...
buy out FF
What do you mean ?

 

[Timsup2nothin]

I sometimes feel hopelessly lost with understanding turbo urban whatever language...
buy out FF
What do you mean ?

In my strange example. I was maybe defrauding Friendly Fire and having Zkribbler buy him out, because I thought the three of us were the only ones paying attention to the thread...but when you came cross posting along I didn't want to leave you out.

The problem with Musks statements "having no basis in fact" is that said statements weren't in any way official statements on behalf of the company...they were tweets. If someone took action based on them that's their problem...maybe. Clearly the law is going to have to be adapted to these new information pathways.

 

[Cheetah]

Nah.

Musk posting on Twitter isn't hearsay. It's publishing his statements. I suppose you can argue that this is all unchartered legal territory, but courts in multitudes of countries have already legislated on when a Facebook group is big enough to go from private sphere to public space, and that, as long as social media companies do their duties, posters bear the legal responsibility for what they publish.

It would be hard to claim that Musk's Twitter feed is not public, or that Musk has not, in fact, published information he knew to be false.

The only defence I can see here is to possibly play it off as a joke, but I don't think that'll work.

 

[Silurian]

Later, in July, he picks it up a notch and attacks a British cave diver in Thailand, who was participating in an effort to save kids stuck in a flooded cave and apparently called Musk's submarine effort "PR stunt". Elon brands him "pedo guy" via twitter.. Mr Unsworth, the diver, files a lawsuit after some deliberation.

Mr Unsworth initially walked away from the unfounded abuse even though musk was goading him too sue.
Then Musk made further attacks on him.

 

[Moriarte]

The problem with Musks statements "having no basis in fact" is that said statements weren't in any way official statements on behalf of the company...they were tweets. If someone took action based on them that's their problem...maybe. Clearly the law is going to have to be adapted to these new information pathways.

Another little twist: Twitter or not, Musk was required to notify nasdaq se that he is going to post material information 10 minutes prior to releasing it to the general public. (which he of course failed to do). Nasdaq then proceeded to halt tesla stock trading for 90 minutes.

From here

https://www.wsj.com/articles/sec-overkill-on-elon-musk-1538176272

 

[Moriarte]

Mr Unsworth initially walked away from the unfounded abuse even though musk was goading him too sue.
Then Musk made further attacks on him.

There seems to be a pattern of inflicting self-harm with Musk.

 

[HoloDoc]

Musk has always been a narcissistic little twerp with a penchant for megalomania. He's basically a more erudite Martin Shkreli, with better public relations. Apparently his recent tweeting is just his private persona finally meeting the public eye. Essentially he's Steve Jobs; Jobs was a well-known lunatic, but Twitter didn't exist when he was screwing Steve Wozniak out of Apple.

This is definitely an interesting legal dilemma. Is a CEO having a very public mid-life crisis the same thing as a deliberate attempt to commit fraud? He's definitely attempting to influence the market, but is he even capable of recognising what is legal or not these days?

It's also an open question as to how his company will fare without him at the head; administratively, probably far better, but he's essentially established himself as "brand Tesla." Tesla without Musk would almost be like Trump's various tax scamsbusinesses without Trump behind them.

 

[hobbsyoyo]

So now he claims two additional things -

1. His girlfriend Grimes taught him about weed so he thought it would make her laugh to make the proposed stock price $420 a share
2. He claims he did have funding because he had a verbal agreement with the Saudis for funding and he was going to use his SpaceX shares to back his Tesla privatization scheme.


I really hope he doesn't ever gamble SpaceX to save Tesla


I also think Tesla would have been in a much stronger position if he wasn't running the company. I think he's only able to push his workers so hard and a lot of his more hair-brained schemes have blown up on him and hurt the company.

 

[HoloDoc]

So now he claims two additional things -

1. His girlfriend Grimes taught him about weed so he thought it would make her laugh to make the proposed stock price $420 a share
2. He claims he did have funding because he had a verbal agreement with the Saudis for funding and he was going to use his SpaceX shares to back his Tesla privatization scheme.


I really hope he doesn't ever gamble SpaceX to save Tesla


I also think Tesla would have been in a much stronger position if he wasn't running the company. I think he's only able to push his workers so hard and a lot of his more hair-brained schemes have blown up on him and hurt the company.

Why would the Saudis, who are oil kingpins, underwrite Tesla? Maybe that was another one of his pot-driven delusions? I had assumed the 420 reference was pot-related from the beginning.

 

[hobbsyoyo]

They are legitimately trying to diversify their asset portfolios out of oil. They were apparently actually in discussions with Musk about investing in Tesla and potentially taking Tesla private. But as far as has been shown they didn't make a serious, concerted effort to help him take it private, they just floated the idea.

 

[innonimatu]

3 fires with 0 injuries means it's far too early to make such grandiose predictions of doom.

The actual number of fires per car with electrics is well over one order of magnitude greater than with ICE cars. Do research it, I did last year and was taken aback at the numbers. Sorry, did not kept any references at the some.
And the mess these lithium battery fires cause is harder to deal with.

I really hope he doesn't ever gamble SpaceX to save Tesla

His SpaceX shares being taken by someone else was probably the best thing that could happen to that company.