7 Things that Did Not Happen to Tesla after the Friday-Night Deal-Massacre

You’ve got to hand it to Tesla’s CEO Elon Musk.

After his August 8 claim during trading hours that he’d take the company private, “funding secured” – a blatant lie that caused market cap to surge by over $6 billion – and after Musk admitted late Friday night, rather than during trading hours, that this had been a blatant lie all along, all kinds of things didn’t happen on Monday.

1. Shares neither crashed nor soared. Over the weekend, expectations ran all over the place about whether shares would plunge on Monday or – given how Musk had been able to twist things in the past – soar on new hopes of some sort or other.

But they did neither. By end of the day, shares (TSLA) were down just 1.1%, after dip buyers rescued them. They’d been down as much as 3.4% in morning trading. But that too was just a minor squiggle, after what had just passed.

At $319.27, shares ended regular trading down just $3.55. That said, they’re $100 below the $420 buyout price Musk had proffered – a sign that Wall Street had exactly zero confidence in the deal even before the Friday-night deal massacre.

2. The bonds didn’t crash. The $1.8 billion in 5.3% bonds due August 2025 that the company had issued just a year ago were essentially flat on Monday. OK, so they closed at 87.32 cents on the dollar, down just a minuscule bit from Friday, but near their record low at the end of May, and down 12.7% from the issue price. Bondholders haven’t been enthusiastic for a while.

3. Musk didn’t get fired. In their statement Friday night, six members of the nine-member board said that they had met with Musk on Thursday, and that they agreed with Musk on everything, and that they prayed to him on a daily basis as their personal demi-god – well note quite, but just about – and they added this:

“The Board and the entire company remain focused on ensuring Tesla’s operational success, and we fully support Elon as he continues to lead the company moving forward.”

They could have changed their mind on Monday and fire him anyway, but no. The three members of the board that didn’t sign off on the statement were Elon Musk, his brother Kimbal Musk, and Steve Jurvetson.

4. Musk can’t get fired because shares would collapse. That’s now the fear. Automotive News cited Tesla booster Ross Gerber, CEO of wealth management firm Gerber Kawasaki, who explained the thinking that is widespread among Tesla fans:

“Why would you invest in Tesla without Elon Musk? It doesn’t make sense.”

If Musk is gone, those fan investors would dump the shares. They’re investing in a dream and in a demi-god, and not in a real company with sustainable business model. From that point of view, it makes sense to not ever fire Musk, no matter what. If reality were allowed to take over, Tesla’s shares would just unceremoniously collapse, and the company would go bankrupt because, after the collapse of its shares, it won’t be able to raise the funds needed to feed its cash-burn machine.

5. It doesn’t matter that Musk is a loose cannon. Last week, Bob Lutz, an ancient hand in the car business with top executive jobs at Ford, GM, and Chrysler, and having served on their boards, including as vice chairman at the latter two – and having to his credit, among other things, as head of Chrysler’s Global Product Development, the Dodge Viper – said this on CNBC:

“I think Elon is tired. He’s worn out. He’s obviously got some emotional problems. He’s self-medicating. He has shown some disturbing signs of being somewhat volatile and unstable. I think the right solution for Tesla at this point is to move him aside from day-to-day operations.”

But Lutz was too merciful, and at the same time, he was wrong: Musk cannot be shuffled aside; Tesla shares would collapse. Lutz just doesn’t get that.

6. The first shareholder lawsuit failed. On Monday, US District Judge Charles Breyer in San Francisco dismissed a securities fraud lawsuit filed by shareholders. They had alleged that Musk had misled them about the production progress of the Model 3. Yes, Musk had set fake targets, and had used those targets to push up the share price, but “federal securities laws do not punish companies for failing to achieve their targets,” Breyer said.

The aggrieved shareholders, who apparently had believed the fake targets were real promises, saw share prices crater in mid-September from $385 a share, as production problems were coming to light.

“Plaintiffs are correct that defendants’ qualifications would not have been meaningful if defendants had known that it was impossible for Tesla to meet its stated production goals, not merely highly unlikely,” Breyer wrote. “The facts plaintiffs have put forth do not tend to establish that this was the case.”

The shareholders have till September 28 to amend their complaint, the judge said. The lawsuit preceded the lawsuits filed after the “funding secured” fiasco, which are still going to hound Tesla for a while.

7. Musk hasn’t shown remorse, and it fires up the SEC, which already served Tesla with a subpoena and is looking into whether Musk violated securities laws. Former attorney in the Office of the General Counsel at the SEC Teresa Goody explained it on CNBC on Monday:

“What I think the SEC is going to find alarming – as I did when I read the New York Times article, his interview – is the fact that he says, ‘Well, I don’t regret any of my tweets. Why would I?’ Because a lot of people believed you and lost a lot of money.”

“I think it is good that we have clarity, and now this whole going private is kind of now blown out of the water. So there is clarity. And the confusion to the market has now ended. But questions from the SEC are going to continue.”

Institutional investors, which hold a large part of Tesla’s shares, have their own problems. Some of them have been holding Tesla since the beginning and have huge gains and lots of money tied up in it, and they want to hang on to those gains, and ironically, the only way they can hang on to those gains is by not selling because trying to get out of their large positions quickly would ruin the party for them, and everyone else. But perhaps jointly buying the dip a little during times of need, like on Monday after the morning-selling had abated, would make everyone happy.

But suppliers are fretting: 18 of 22 suppliers believe Tesla is now a financial risk to their companies. Read… The Hype is No Longer with Tesla: Suppliers & Creditors Start to Fret  
 

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  71 comments for “7 Things that Did Not Happen to Tesla after the Friday-Night Deal-Massacre

  1. Gershon
    Aug 27, 2018 at 11:33 pm

    7. Musk hasn’t shown remorse, and it fires up the SEC, which already served Tesla with a subpoena and is looking into whether Musk violated securities laws.

    Even though what Musk did was blatant stock manipulation and should’ve been illegal, the result of the SEC “investigation” is a foregone conclusion: a slap-on-the-wrist fine (if that) and a pro forma “mistakes were made” mea culpa by Tesla officials, but nothing in the way of punishment, much less accountability, for his actions.

    Laws are for the little people. Our captured regulators, enforcers, and judiciary will see to it that the oligarchs have complete impunity for their frauds and felonies.

    • Aug 28, 2018 at 3:22 am

      The SEC can’t do what they should because Elon holds all the cards – any action would cause a catastrophic collapse of the shares and bankruptcy.

      • Gershon
        Aug 28, 2018 at 8:01 am

        The worthless SEC has turned a blind eye to massive, systemic fraud on Wall Street at the behest of its oligarch puppetmasters. One can only hope that after the coming financial collapse, our captured, complicit regulators and enforcers will face tribunals and finally get the hard prison time they deserve for being witting accomplices and enablers of fraudsters like Musk.

      • Aug 28, 2018 at 12:26 pm

        I have to agree with you there Peter. The SEC would get blamed for tanking a popular cult stock if they did much.

        I imagine that trying to police markets at the top of a huge bubble is hard … if the SEC does want to punish Musk it would be much easier if they wait for the shares to crash first, and it’s probably wiser not to pick that battle if they don’t.

        • Bobber
          Aug 28, 2018 at 5:30 pm

          “Tanking the stock” shouldn’t even be a consideration. Decisions like this make the difference between moral and corrupt leadership. Anybody with an iota of intelligence would realize it was Musk’s actions that caused the stock to tank, if it does indeed tank, which is doubtful.

          We’ll see what the courts say. The plaintiffs have a case. The real question is proving damages. The stock went then down in a matter of days, and very few shorts likely covered their positions during that timeframe.

  2. Frederick
    Aug 28, 2018 at 12:01 am

    The only thing that I hand to Musk is the druggie of the year award for his prolific cocaine use

    • Petunia
      Aug 28, 2018 at 8:58 am

      I worked in both tech and finance where drug use is wide spread, but hands down Wall Street wins.

  3. Pete from Toronto
    Aug 28, 2018 at 12:58 am

    Wolf, all the coverage I have seen about Musk’s tweets refer to stock manipulation.

    Can releasing material company information through Twitter also be considered selective disclosure?

    • Aug 28, 2018 at 8:00 am

      If this material information is knowingly wrong, it could be ruled securities fraud. If the material is correct, it would just be disclosure via Twitter. That has been ruled ok.

      • Pete from Toronto
        Sep 1, 2018 at 10:37 pm

        I didn’t know that authorities had already approved of disclosure by Twitter. Thanks, Wolf!

  4. L Lavery
    Aug 28, 2018 at 1:02 am

    How much of the stock market’s (over?) valuation is down to $ burning entities like Tesla[? On Radio 4 (business section) this morning it was said without the high fliers, such as Tesla, the market is flat!

  5. Old dog
    Aug 28, 2018 at 1:06 am

    Elon Musk’s sense of entitlement is off the charts. His narcissism is beyond evaluation.

    Elon “funding secured” Musk’s move is similar to that of a woman who wanted to have a dream wedding. She needed $60,000 so she asked guests to contribute $1,500 as an attendance fee. The guests refused. She was so disappointed/frustrated/enraged she canceled her wedding.

    I have trouble understanding the investors who have put Musk in a pedestal. After they lose their shirt they will still revere him.

    Like like Jim Jones and the People’s Temple, Tesla’s cult can’t end well.

    Here’s the link about the entitled bride.

    https://www.msn.com/en-us/lifestyle/lifestyle-buzz/this-bride-canceled-her-wedding-after-guests-refused-to-pay-her-dollar1500-attendance-fee/ar-BBMvYKk

    • Old dog
      Aug 28, 2018 at 1:38 am

      “Institutional investors …. … the only way they can hang on to those gains is by not selling because trying to get out of their large positions quickly would ruin the party for them, and everyone else.”

      This is understandable. What it’s harder to understand is why they, or anybody, bought into the Tesla hype. Elon Musk’s antics and his unbridled narcissism were known quantities before Tesla.

      With the only exception of Steve Jobs, I cannot think of any enterprise in the last 100 years that was led by an uber-narcissistic type that ended well. All cults have an initial hype phase but it’s precisely that hype that telegraphs the incoming collapse.

      I bet institutional investors are pricking voodoo dolls at night and praying that Musk dies like Jobs. If that were to happen, he too would acquire mythical status and Tesla’s investors would breathe a sigh of relief :)

      • Aug 28, 2018 at 3:25 am

        Elon hold the vision, that’s all you need to know.

      • Pete Stubbben
        Aug 28, 2018 at 5:40 am

        You forgot over last 100 years, u know, titans with outsized & as u say ‘destructive’ egos — Ford & Edison… PJS

        • Rates
          Aug 28, 2018 at 1:02 pm

          They didn’t have Twitter. And those people invented things that actually produced … profits.

          The funny thing is that Tesla’s namesake i.e. Nikola Telsa also had an ego, but so what. Everyone knows smart people have egos, but in the end, you need to produce profits.

      • Nicko
        Aug 28, 2018 at 6:09 am

        Apple recently surpassed $1 trillion market valuation. Tesla’s innovation and growth is equally boundless. Leaders are often assholes, even if they are brilliant assholes.

        • Aug 28, 2018 at 8:18 am

          Nicko,

          Tesla just makes cars and installs solar panels. There is nothing “boundless” about it. It’s like PCs — a very mature industry with tons of competition. In the US, car sales peaked in 2016. Apple invented a whole new consumer device and operating system: the swipe smartphone with third-party apps that took the world by storm. There is no comparison between Tesla and Apple. Look at the profit margins of both, negative for Tesla despite taxpayer subsidies, hugely positive for Apple. The iPhone has been hugely profitable from day one.

          Tesla doesn’t even make the battery cells. That’s where most of the science is. Panasonic makes them.

        • Prairies
          Aug 28, 2018 at 9:51 am

          ” Tesla’s innovation and growth is equally boundless” with endless flamethrowers and surf boards? His innovation is as impressive as sliced bread, he’s late to the show and not even a little bit original.

          He didn’t innovate the automotive sector, he just shown that automation leads to delays. I even noticed one of his buildings on fire in the news, is that boundless growth in flamethrowers backfiring?

        • Kaz Augustin
          Aug 28, 2018 at 7:43 pm

          Why do people think Musk is brilliant? He never designed ANYTHING at Tesla; all he did was pump some money in and claim the top role. Look it up. It’s the same for SpaceX and Boring. He has little-to-no engineering intelligence…you just have to listen to any of his interviews. All he has is a big mouth and the ability to summon cash from “investors”. Whether that’s “brilliance” or a scammer-in-the-making is up to you to decide.
          This lionising of him is inexplicable, esp. from people who should already know how to look beyond the BS.
          As I say, read up on the history of Tesla et al. and you’ll see Musk had bugger all to do with the tech.

      • robt
        Aug 28, 2018 at 10:04 am

        Apple didn’t end well on the first go. As Apple approached bankruptcy, Microsoft had to bail them out in 1997 by buying 150 million dollars worth of stock, essentially to buy competition to avoid monopoly status.

        https://www.wired.com/2009/08/dayintech-0806/

        It seems that TSLA needs a savior soon, unless miracles do happen.
        Ironically, the touts are suggesting the kings of the oil world, or maybe Apple could be possible saviors, or possibly anyone with deep pockets. Anyone …

        • Kraig
          Aug 29, 2018 at 7:32 am

          @wolf The LG KE850 was a full fledged smartphone (wirh capacitive screen) and while new os before Apple was out.

          Their OS is basically a tweak of freebsd and not whole and new anyway.

          So it’s marketing and product for Apple rather than a whole new category. Same with ipod(just another mp3 player) and pcs

          Although one or two competitors (depending on how you count blackberry) is a lot different than a car manufacter’ s existing competitor.

  6. William Smith
    Aug 28, 2018 at 1:29 am

    Isn’t this all about the great American “fake it till you make it” strategy that everyone worships? There are lots of examples where this strategy worked very well. In this time of crumbling capitalism : https://motherboard.vice.com/en_us/article/43pek3/scientists-warn-the-un-of-capitalisms-imminent-demise the economics truths of the past are no more. Money is only valuable because people believe it is (“in god we trust”). So belief is now emerging as the real currency. He (Musk) is actually making and delivering a believable and real product, not like Theranos et al. Belief that something is valuable is what is keeping the likes of crapbook solvent. MySpace was once “the place to be” until people decided it wasn’t: their showman was not as good a spruiker as suckerberg. When everything is comoditized away to nothingness, it is only the showmanship that maintains the value: something Madison Avenue knows very well. So I am not surprised when Musk (or Trump etc) transgresses the old mores (that nobody observes anyway) and nothing happens. Welcome to the brave new world.

  7. Joe
    Aug 28, 2018 at 5:10 am

    It is easy to lose sight of amidst all the drama, but Tesla has moved electric vehicle technology ahead by leaps and bounds. Call it a cult, call it hype, but the cars that Tesla has produced are light years ahead of where the tech was even 10 years ago. I daresay that without Tesla, we would still be lamenting the GM EV1, and waiting for traditional automakers to finally making a real electric vehicle.

    • Joe Banks
      Aug 28, 2018 at 2:04 pm

      It’s an electric car with a battery! First done in 1898. There is nothing new here. The first one also had had 4 wheels and a steering wheel. It sucked then and it sucks now. Long live the ICE

      • Kraig
        Aug 29, 2018 at 7:22 am

        The induction motors are pretty new.

        Who makes them? I can easily see them having 100% market share in EU/Asia/India by 2040.

  8. breamrod
    Aug 28, 2018 at 5:29 am

    Yep and he’s “connected”. That’s all one needs to know.

  9. Pete Stubben
    Aug 28, 2018 at 5:45 am

    My shocking revelation out of this Tesla thing was from some institutional investor…”Please, Elon, don’t take T private at 420, as I think your company is worth $4,000/share, and me & my public clients want to participate”.

    Now that’s freakin amazing… PJS

    • Aug 28, 2018 at 8:12 am

      Pete Stubben,

      Institutional investors fear that Tesla, once it is privately held, will not be able to raise enough money to keep burning cash at its current rate. Once the money flow stops, the company is finished. So going private for those institutional investors would mean that THEY would have to supply the money to keep Tesla going — and keep putting more money into it all the time to keep up the charade. That’s a scary prospect.

  10. Aussie andy
    Aug 28, 2018 at 6:51 am

    Demigod – Filling the void of Steve Jobs. I’ll worship Elon when you get that power wall down in price.

  11. Frederick W Bauer
    Aug 28, 2018 at 7:12 am

    I’m lost. All I see are huge red flags and the stock price is holding tight. What’s keeping it up? True believers? Options exercising? Is it like Wiley Coyote hanging in the air before he looks down?

    • JZ
      Aug 28, 2018 at 6:31 pm

      What props up Elon is NOT value (TSLA makes money), nor Elon invented good science.
      What does prop up Elon is that Tesla cars are good products (forget about money making and science barrier) and Elon visions the future.
      For Elon to fall, you have to make people believe 1. Others make better electrical cars 2. Elon is a manipulating fraud. His visions will cease to matter once he is in jail.

      People like wolf have been crying out loud that Tesla lose money and there is NO science/engineering barrier to block competitor to do the same. This is where Elon is smart. Competitors are NOT building cars like Elon because competitors need to make money but Elon can sell stories. Competitors can NOT afford to build 100K cars and sell 80K and yet Elon has set the public perception of electrical cars like Tesla cars. Until people see others can easily do what Elon can do, people will continue to believe Elon IS the future.

  12. Mike R.
    Aug 28, 2018 at 7:17 am

    Great article Wolf.
    The US and other stock markets are propped up by respective governments. This is the new normal.

    All thing “tech” and “innovation” are particularly supported by these powers in the US because “tech” is our only hope for increase productivity.
    If what has just occurred with Tesla and Musk doesn’t convince you of this theory/reality, I don’t know what would.

    SEC will play around with short squeeze. People in the ranks will push to prosecute and higher ups will stall and squash. It will drag on and be forgotten, largely.

    • Wisdom Seeker
      Aug 28, 2018 at 3:16 pm

      Re: stocks propped up by governments

      That’s the consequence of a fiat monetary system. Elites (using their bought-and-paid-for governments, media outlets and banks) no longer need to have (or tax) the “money” to support a desired organization, they can just print-and-spend it as they wish. They quietly devalue everyone else’s money, without anyone noticing anything much other than median standards of living stagnating.

  13. Begbie
    Aug 28, 2018 at 8:51 am

    Is there a difference between Tesla and Theranos?

    • robt
      Aug 28, 2018 at 10:27 am

      TSLA does have a tangible product that seems to work.

    • MC01
      Aug 28, 2018 at 1:23 pm

      Apparently Elizabeth Holmes took both her investors and board members for a ride. How she has avoided being utterly crushed by regulators so far is a mystery, as lying to big institutional investors is what ultimately undid Martin Shrekeli: the guy is being slowly boiled alive to make an example of him, and nobody will (rightly) shed a tear.
      From what I’ve heard she’s a pretty ruthless type, ready to do pretty much everything to keep her investors from learning the fact Theranos was actually running Fujirebio, Philips and Siemens blood analyzers instead of her own inexistent kit. Apparently employees were made to sign incredibly punitive non-disclosure agreements and were openly threatened with crippling lawsuits to keep them from going to the press (which would have done nothing) or the authorities (which moved with the same speed as an asthmatic ant with some heavy shopping). Not a pretty show.
      Ellon Musk is, from I understand, either a consumate showman or underwear-on-head crazy. Maybe both.
      He’s using a completely different approach from Holmes. They only thing they have in common is how easy it has been for them to keep the media on a leash, albeit for completely difficult reasons: in Holmes’ case because she touted a technology still at least a decade in the future even in experimental form, in Musk’s case because he doesn’t seem able to make even the most minuscule profit despite the ability to charge as much as he wants for his products.

      Differently from Holmes, Musk is not doing anything illegal. The SEC has let people off the hook for far more than Musk’s tweet and will have to let him off as well. He’s not trying to hide how much cash his business burns through and the SEC filings clearly state the business is viable only as long as investors are willing to pump money into it at record-low rates. He’s not touting his products as using some unique technology: if his cult of personality does that, it’s their problem, not his. The SEC does not deal with cultists.

      In short until the now infamous “funding secured” tweet Musk had not lied to anybody: people read (or did not read) the fine print and gave him money fully knowing what they were buying.
      But from now on he’ll have to walk a very fine line: the tweet will be blamed on anything from overwork to one glass of cognac too many and that excuse will be more or less accepted. But he cannot afford more such blatant stock manipulation, especially when involving extremely powerful financial groups such PIF.

  14. IronForge
    Aug 28, 2018 at 8:55 am

    IMHO, it’s the beginning of the Descent for the Company and their Share PX.

    Several Articles and Whistleblowers coming out about the Production Rate Scam – one reports that 80% of the Units Produced on that 5K/Week Goal-Deadline needed rework (certain there are plenty more in that queue).

    Reminds me of the Final Scenes of “Gung Ho” – at the Production Deadline; but without Happy Ending.

    Whistleblower Engineer released a list of VINs corresponding to Units w/defective Battery Packs. Those Units should be recalled before they cause more fires.

    Company are too much in Debt and Burns too much Cash. Going Private as a means of distributing Passive Loss Generating Liabilities, or becoming a “B” Corp or an NPO could have worked; but Production, Safety, SEC, and Employee Exodus Problems looming as Other AutoMakers roll out more Alternative Energy Model Vehicles don’t inspire much confidence.

  15. Petunia
    Aug 28, 2018 at 9:15 am

    I’m a Musk believer, he is the only person out there in tech land really innovating. The software guys are only rehashing old technology. When tech resets, only guys like Musk will be left standing. It doesn’t even matter if he’s making money now, eventually he will.

    • Rates
      Aug 28, 2018 at 12:53 pm

      LOL. You have a very strange definition of “innovating”. Elon Musk is useful though in showing everyone the TRUE face of America. Him and Elizabeth Holmes.

      Tesla should take over Theranos. #fundingsecured.

    • JZ
      Aug 28, 2018 at 8:42 pm

      Is Elon as innovative as what US did sending people to moon back in 1970s?
      Do you think department of defense has innovative projects that you have never seen or even heard of?
      If NASA and DOD come to capital market and sell stocks, are you going to buy it?
      If you are willing to BUY NASA stocks, they do NOT need TAX people to fund NASA.
      Capital market is about returns, NOT about innovation. If innovation makes money, fine. But Elon? He will be THE HERO and investors will have 0 return and lose their principle. Yes, Elon is innovative, but Tesla motor should NOT worth as much as BMW,
      more close to 0 to me.

  16. Paulo
    Aug 28, 2018 at 9:16 am

    If the car was affordable, and worked as per hype, and if quality control was as good as other products, this story wouldn’t be an issue. Musk would get a pass.

    “Tesla is building Model 3s in a tent. … Inside the tent in Fremont, Calif., is an assembly line Musk hastily pulled together for the Model 3. That’s the electric car that is supposed to vault Tesla from niche player for the wealthy to high-volume automaker, bringing a more affordable electric vehicle to the masses.”

    http://www.latimes.com/business/autos/la-fi-hy-tesla-tent-20180625-story.html

    That says it all. I buy lumber from a gypo mill. The owner works 5 days a week falling trees, then runs his mills during his spare time. He has three small mills and a excavator to move the logs around. Every one of his mills are covered. His lumber is stacked under cover.

    Now look at Tesla. Musk wants deposits up front. He doesn’t pay suppliers. He assembles ‘high tech’ cutting edge EVs in a tent, and then parks them outside. They sell for $55,000 to $100,000 and may or may not be ready on time.

    Whatever. As far as EVs go I’ll wait for a Japanese truck version that I know will work as advertised. And, they’ll probably produce their own batteries and electronics with spare parts and repair centres if required.

  17. Gorbachev
    Aug 28, 2018 at 10:03 am

    He did what what NASA failed to do.Make a reusable

    rocket. He may only deal in old commodities but

    changing the energy infrastructure so we can individually control

    it is a threat to the serious money in this country. I hope he wins.

    • Petunia
      Aug 28, 2018 at 10:56 am

      The power wall is an awesome idea. Some day it may power most of the third world. It already saved lives during the Puerto Rican disaster.

      The reusable rocket is a technology that could never have been achieved by a govt agency which has no tolerance for failure. Only someone outside the system was capable of absorbing all the risk involved.

      Part of the reason Musk might want to go private is to protect his patents. My impression from afar, and I have thought this for a long time, is that they want to drive him into bankruptcy to buy out his patents for pennies on the dollar. Once a predator, always a predator.

      • Ambrose Bierce
        Aug 28, 2018 at 11:17 am

        Yeah but is the reusable rocket kinda like recycling paper towels?

        • Petunia
          Aug 28, 2018 at 12:44 pm

          The reusable rocket is a big money saver, big space saver, big time saver.

    • Aug 28, 2018 at 3:21 pm

      Gorbachev,

      Well, you know — or you might have forgotten: NASA built reusable Space Shuttles decades ago. They’re now retired, after decades of use.

      Two of them burned up (1986 when Musk was a baby and in 2003). Reusable rockets have failed too, and many more will fail.

      The difference between the Space Shuttle and the reusable rocket is that the Space Shuttle had people on it and all the equipment and everything. The reusable rocked is essentially just fuel tanks, parachutes, and some rocket engines.

      • Ambrose Bierce
        Aug 29, 2018 at 9:52 am

        The amount of energy required to make the rocket is far less than the rocket uses. The more efficient the product is at using energy the more disposable it becomes, like the paper towel. We recycle because it is more energy efficient.

  18. WSKJ
    Aug 28, 2018 at 12:28 pm

    sometimes a figurehead is worth a lot.

    i have not felt that the SEC should go after Musk because i don’t see his “funding assured” remark as anything anyone in the market should have taken seriously. i took it to be the remark of a guy with demi-god status (thx, Wolf) who parties with big-money people and equates their adulation with willingness to fund him if he were to decide to try to take Tesla private.

    a smart slap on the wrist from the SEC should suffice. If he’s self-medicating, and/or of questionable mental health, his Board carries a great deal of responsibility for looking after both Elon, and the company.

    Current discourse in public life is rife with exaggerations, absurdities, nonsense, hyperbole, etc.,etc.. If this were a time in which we counted on accuracy and discretion in public statements by public figures, i would feel differently re Musk’s hyperbole.

    presumably the TSLA Board will exert a moderating effect henceforth, and TSLA should contend with the challenge of actual production, they’ve got plenty on their plate, there.

    • Petunia
      Aug 28, 2018 at 12:47 pm

      I think you are forgetting Milken’s “highly confident letter” in the 1980’s.

  19. Mean Chicken
    Aug 28, 2018 at 12:55 pm

    Once enough naysayers are finally censored from the internets, the stock will go back up to lofty levels where it belongs.

    • Kaz Augustin
      Aug 28, 2018 at 7:48 pm

      Brrrrrrr. I wish you were wrong…

  20. Joe
    Aug 28, 2018 at 1:59 pm

    Musk certainly has his issues, but you can’t argue with the success of SpaceX. It might make sense for him to bring in a very capable CEO for Tesla and step back into more of a figurehead role like what is going on at SpaceX.

    • JoeZ
      Aug 28, 2018 at 3:14 pm

      Agreed, and that would not be unprecented. Tesla would not be where they are without the visionary Musk at the helm, but many companies have needed a transition of leadership to get from vision to execution.

    • Rates
      Aug 28, 2018 at 6:25 pm

      Please define this “success” of SpaceX. Just sending up a rocket is not a barometer of success. Other people have done it.

      Elon Musk is basically the poster child of everything wrong in this country.
      Let’s do:
      1. Hyperloop.
      2. Space rockets.
      3. Cooler than cool cars.

      BUT, no one can even make the existing public transportation options work. I live in the Silicon Valley area, supposedly the tech capital of the world, but it does not feel like it.
      1. San Francisco has a human waste problem.
      2. BART and MUNI are both crap. The trains are dirty and they are often late. There’s no WIFI on either BART or MUNI whereas places like Taipei has WIFI on public buses!! The Japanese metro is obviously unparalleled in terms of efficiency and timeliness.

      Heck for working cars, people opt for foreign cars. How can you make this country great again if you’d rather believe in lies and hype?

  21. Fozzie
    Aug 28, 2018 at 2:14 pm

    I sense Tesla’s stock price will go through a controlled demolition. But I wouldn’t put it past the majority institution holders to instigate a sudden sneak drop of 100 points.

    • Rates
      Aug 28, 2018 at 2:29 pm

      The moment Apple comes out with “we are and have never been interested in Tesla”, this thing will drop fast. Why would Apple come in here if they (and other companies) can fight over the carcass at say, 50 bucks.

      Or a capital raise.

  22. Kenny Logouts
    Aug 28, 2018 at 2:16 pm

    Why can’t an institutional investor whose held for years and is many times up just dump their lot?

    Even if they’re selling their last shares at 50% of what they were ‘worth’ they’ll still be up on the deal?

    Those unwilling to blink will lose it all any way.

    • Rates
      Aug 28, 2018 at 8:59 pm

      FOMO. Fear of Missing Out. If they sell early and the stock price goes to 4K, they will always be known as “The Guys Who Sold The Unicorn.” On the other hand if Tesla crashes, you have plenty of company.

      Most problems in life originate from the fact that most people never really grow up after high school i.e. they are always comparing themselves to others.

  23. Laughing Eagle
    Aug 28, 2018 at 3:47 pm

    The two friends I know who have the Model S P100D which is Tesla’s top of the line costing $135,000, love it. The 0 to 60 time of 2.5 seconds is ultra fast. My one friend said it is simply a rocket from the starting line and no street car can stay with it. Even beats the Dodge Charger Hellcat with almost 800 HP.
    It is a great luxury car and the software can be updated as soon as Tesla changes it as it sent via the internet directly to the car. They also said they would buy it again.
    But Musk cannot make enough cashflow just with luxury cars and the Model 3 is simply average compared to the competition.
    There is an 8 year warranty on the battery and drive train.
    I think when Tesla fails or maybe before that, someone will buy his Model S and Model X because they maybe luxury cars of the future for that special niche of customer. The buyer will probably wait until they can buy for pennies on the dollar.
    Musk is an innovator but with the car business the average car will have too much competition for him to suceed IMHO.

    • Bobber
      Aug 29, 2018 at 11:12 am

      If you are thrilled with the 0-60 acceleration and speed, you are better off with an old Suzuki Hayabusa (available used for $3000) which would beat the Tesla quite handily, plus put a little wind in your hair at 200 mph.

      I doubt the average Tesla owner will ever use the acceleration though. I see so many people driving performance autos in Seattle, and I know none of them ever use those capabilities. It’s a complete waste of engineering time, money, and resources.

  24. xear
    Aug 28, 2018 at 4:21 pm

    I loved how Musk’s “taking tsla private tweet” got excused because he was zonked out of his mind on LSD when he made it.

    • robt
      Aug 28, 2018 at 8:24 pm

      The correct term when referring to trendy demi-gods using assisted-mood enhancement formulations is ‘self-medication’.

  25. Bet
    Aug 28, 2018 at 5:42 pm

    Tesla stock float is 171 million shares and supposedly Musk owns 25% of that. That lends to a stock huge volatility. Very few traders I know trade the stock short or long and when they do its through options.
    Tesla can be an brokerage account vaporizer .Stocks with short (small) floats are easy to manipulate. They tend to go up hard and fast and drop hard as well and are hugely moved on any tweet or news
    I think Tesla is undergoing distribution. But they have to ease out on lift , they need the retail muppets to be bagholders
    As for buying a Tesla now, is there not risk
    If it folds Who will offer technical support or guarantee the product?
    I just went in Seattle craigslist to see how many used Teslas are for sale ,quite a few late models. Doesn’t that mean they have been traded in as dealers do not sell new Teslas?

  26. Chris fron Dallas
    Aug 28, 2018 at 8:10 pm

    Like Petunia, I LOVE the idea of Tesla, SolarCity and SpaceX products.

    I have lusted after a top-of-the-line Model S for several years. Fell hard for the beauty of the SolarCity new roof tiles. And as an avid Sci-Fi buff for 40+ years, and believing in the power of free enterprise (/greed) to accomplish great things, I have been counting the days until I can blast off for THE NEW FRONTIER.

    Even worse, being frugal and working 60-80 hours per week for 42 years I have more than enough to scratch these itches.

    But I cannot do it.

    I am too frugal for the Model S, and have learned to avoid things that seem too good. And just today, as I was thinking of upgrading my rental car to a Model S (at Enterprise here in Dallas) I was told I couldn’t! They only had 1 and it had been in the shop FOR TWO AND A HALF MONTHS waiting on parts for bodywork repairs.

    Now, because of Texas laws, you cannot test drive a Tesla here. You can SEE it at NorthPark Mall (one of the best malls in the country), but you CANNOT DRIVE IT.

    And unfortunately, although I have wanted to go all solar since the 70s, this still is not a viable economic alternative unless your cost per kilowatt is double the national average or you do not have access to reliable service. And the SolarCity roof is four times the cost of regular ugly solar panels.

    But, I am still holding out hope that my non Tesla Investments will go up enough that I can convince my wife to let me buy a rocket from Elon.

  27. Aug 28, 2018 at 9:01 pm

    Wolf, great list, one of the best things you’ve written. Couple of further bets here:

    1) Tesla’s BOD has little choice but to make a $4-5B stock issue. It’s doable and would placate stiffed parts suppliers and salve the burn long enough until late 2019. Larger funds would buy the equity simply to protect their portfolio values.

    2) Some clever people at Goldman and JPM are constructing “Telsa Insurance” derivatives right now. These will only be offered to a handful of select funds so they can lock in their gains. Once insured, they will sell in concert and reach for toilet plungers. They make a killing on the way up and the way down, everybody else gets torched.

    3) Elon will be scapegoated.

    • Aug 29, 2018 at 12:27 am

      Why didn’t I think of those?

      :-]

    • fozzie
      Aug 29, 2018 at 1:07 pm

      “1) Tesla’s BOD has little choice but to make a $4-5B stock issue. It’s doable and would placate stiffed parts suppliers and salve the burn long enough until late 2019. Larger funds would buy the equity simply to protect their portfolio values.”

      This is the big question – why hasn’t Tesla done this? They should have done it back in August/Sept of last year when the stock price was ~$380 yet instead issued bonds, while at a great rate of 5.3% given the quality of the company’s finances, saddled them with more debt.

      Now, customers in Norway are fed up with parts shortages. Cars have been building up around Service Centers waiting for parts over 6 months now. A similar shortage in the US has occurred. Mechanic liens are being filed by suppliers(now large ones). And Model 3 purchasers, focused in Texas but now spreading to other states, have given Tesla the entire amount for the car, many about to make payments on the loan, yet have yet to get their car from Tesla. The whole brand is taking a dump.

  28. Gershon
    Aug 29, 2018 at 10:02 am

    Elon Musk has performed one valuable public service: he has affirmed anew that the SEC’s sole reason for existence is to provide the .1% complete impunity for manipulating these rigged, broken “markets” and defrauding retail investors. It could not be any more blatant how captured “our” enforcers and regulators have become.

  29. Gershon
    Aug 29, 2018 at 10:43 am

    I can’t for the life of me understand who in their right mind would “invest” in a money-losing company run by a petulant child with a penchant for ill-advised public comments that wipe millions of Tesla’s share price and leave Musk vulnerable to lawsuits.

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