Tesla Faces U.S. Criminal Probe Over Musk Statements • Hacker News Board

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#31

Post by SeanAppleby » Tue, Sep 18, 2018, 4:11 PM UTC

crankylinuxuser wrote: post #16

atonse wrote: post #7

Earlier quoted context omitted.

As sad as this makes me (because I want Tesla to be wildly successful), I have to agree. This is textbook and brazen stock manipulation, a flat out crime.

Isn't "Opening a civil and criminal investigation" without due process, also direct manipulation as well? Surely, prior to a fault/guilty verdict, running someone through the mud is furtherance of that, no? This reminds me of "perp watches" posed by police departments on Facebook and twitter. No charges, but arrested - and you get to live in the newspaper and social media regardless if you are exonerated. Cause, publ…

Sure, publicity around early investigations in general has inevitable externalities on people who might still be innocent, but how do you think you reach a verdict without going through an investigation?

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#32

Post by scotchio » Tue, Sep 18, 2018, 4:11 PM UTC

Another day, another excited slam piece headline against Tesla. Tesla's Nov 7 Earning Report must be good...

In all seriousness, no idea what Elon was thinking with that Tweet.

Gut says, long term Tesla will be fine and little will to come of this investigation.

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#33

Post by beaner » Tue, Sep 18, 2018, 4:11 PM UTC

TAForObvReasons wrote: post #11

chollida1 wrote: post #5

The sad piece of karma in all of this is that Musk tweeted in an effort to destroy the shorts. His tweet turned out to: - give the shorts a big dip in his stock, - an investigation by the SEC - an investigation by the DOJ - the backing off of a deep pocketed investor in the Saudis - Him potentially being personally liable, which would mean having to step away from SpaceX and Tesla if he was found guilty of fraud. Thi…

> All to screw with the shorts, who really have no power whatso ever to hinder Telsa. If Tesla wasn't burning through cash and didn't need an ever-inflating stock price in order to keep the house in order, the shorts would be powerless and in all honestly would back off. The only reason the shorts have power is that Tesla's future is currently heavily dependent on its stock price.

Can you explain how that works? I thought that once a company's stock was listed, third parties just trade it amongst themselves. How does that activity affect Tesla in terms of how they're able to execute?

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#34

Post by pathseeker » Tue, Sep 18, 2018, 4:11 PM UTC

jchw wrote: post #23

crankylinuxuser wrote: post #16

Earlier quoted context omitted.

Isn't "Opening a civil and criminal investigation" without due process, also direct manipulation as well? Surely, prior to a fault/guilty verdict, running someone through the mud is furtherance of that, no? This reminds me of "perp watches" posed by police departments on Facebook and twitter. No charges, but arrested - and you get to live in the newspaper and social media regardless if you are exonerated. Cause, publ…

A criminal investigation being opened is literally part of due process.

The big announcement is what OP is referring to.

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#35

Post by thedaemon » Tue, Sep 18, 2018, 4:12 PM UTC

chollida1 wrote: post #5

The sad piece of karma in all of this is that Musk tweeted in an effort to destroy the shorts. His tweet turned out to: - give the shorts a big dip in his stock, - an investigation by the SEC - an investigation by the DOJ - the backing off of a deep pocketed investor in the Saudis - Him potentially being personally liable, which would mean having to step away from SpaceX and Tesla if he was found guilty of fraud. Thi…

Please define shorts. Google was unable to figure it out.

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#36

Post by simias » Tue, Sep 18, 2018, 4:12 PM UTC

zwerdlds wrote: post #22

simias wrote: post #17

Earlier quoted context omitted.

I'm not super knowledgeable in the stock market, what would he have gained from destroying the shorts? I understand that shorts are effectively a bet that the stock will go down but do they actually damage the company in any way? At a glance it sounds like trying to break the thermometer because you think it's too cold out there, the stock wasn't at risk because of the shorts, instead there were shorts because some i…

Shorts drive the price down, making it more expensive for the company to borrow from the market by selling stock. They have to sell more shares to receive a similar amount.

I obviously lack a piece of the puzzle here, let me see if I get this right: a short means borrowing stock, selling it then rebuying it later (betting that the price would have fallen in order to turn a profit) before giving it back to its original owner.

I suppose if everybody shorts at the same time the huge amount of stock being sold could drive the price momentarily down, but then again the opposite happens when the stock is re-bought. So in the end it should be effectively zero-sum? Or is it just that a huge amount of people started shorting the stock at the same time which made it a sort of self-fulfilling prophecy?

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#37

Post by NickM » Tue, Sep 18, 2018, 4:12 PM UTC

simias wrote: post #17

chollida1 wrote: post #5

The sad piece of karma in all of this is that Musk tweeted in an effort to destroy the shorts. His tweet turned out to: - give the shorts a big dip in his stock, - an investigation by the SEC - an investigation by the DOJ - the backing off of a deep pocketed investor in the Saudis - Him potentially being personally liable, which would mean having to step away from SpaceX and Tesla if he was found guilty of fraud. Thi…

I'm not super knowledgeable in the stock market, what would he have gained from destroying the shorts? I understand that shorts are effectively a bet that the stock will go down but do they actually damage the company in any way? At a glance it sounds like trying to break the thermometer because you think it's too cold out there, the stock wasn't at risk because of the shorts, instead there were shorts because some i…

If you short a stock, you profit when that company does poorly; since Tesla is one of the most shorted stocks out there, we have many people trying to spread FUD via blog posts/tweets/etc in hopes that they can drive the stock price down. (Or in some cases even going to extremes like fraudulently submitting reports to the NHTSA claiming design flaws and problems with Tesla cars.) This has the side effect of damaging public perception of Tesla.

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#38

Post by Asparagirl » Tue, Sep 18, 2018, 4:12 PM UTC

chollida1 wrote: post #5

The sad piece of karma in all of this is that Musk tweeted in an effort to destroy the shorts. His tweet turned out to: - give the shorts a big dip in his stock, - an investigation by the SEC - an investigation by the DOJ - the backing off of a deep pocketed investor in the Saudis - Him potentially being personally liable, which would mean having to step away from SpaceX and Tesla if he was found guilty of fraud. Thi…

It’s important to note that Elon screwed over the “longs” (people holding TSLA stock) too, not just the shorts. Many people and funds bought more TSLA stock in the $350’s range on the assumption that of course the company could/would go private at $420/share. After all, hadn’t the CEO just said so?

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#39

Post by zerotolerance » Tue, Sep 18, 2018, 4:13 PM UTC

The headline is almost as long as the article. Useless article.

Re: Tesla Faces U.S. Criminal Probe Over Musk Statements

#40

Post by propter_hoc » Tue, Sep 18, 2018, 4:13 PM UTC

simias wrote: post #17

chollida1 wrote: post #5

The sad piece of karma in all of this is that Musk tweeted in an effort to destroy the shorts. His tweet turned out to: - give the shorts a big dip in his stock, - an investigation by the SEC - an investigation by the DOJ - the backing off of a deep pocketed investor in the Saudis - Him potentially being personally liable, which would mean having to step away from SpaceX and Tesla if he was found guilty of fraud. Thi…

I'm not super knowledgeable in the stock market, what would he have gained from destroying the shorts? I understand that shorts are effectively a bet that the stock will go down but do they actually damage the company in any way? At a glance it sounds like trying to break the thermometer because you think it's too cold out there, the stock wasn't at risk because of the shorts, instead there were shorts because some i…

Tesla's stock price is very high right now, largely on the basis that many investors expect it to do well in the future. This high valuation makes it easier for Tesla to raise more money to fund its future ambitions. The short sellers are promoting a story that Tesla will not do well in the future, and is overvalued today. If they manage to convince other investors of this story, the stock price may decline and hinder both Musk's personal wealth and prestige, and Tesla's ability to fund its future operations.

So it's somewhat understandable that Musk doesn't look kindly on the short sellers - he would prefer that skeptics stay quiet and stop trying to ruin his company's valuation. You are correct, however, that acting in a deceiving manner to make the shorts lose money is not an acceptable retaliation.