As Musk Goes Nuts Publicly, Tesla Bondholders Get Antsy

In terms of Tesla’s survival, this poses a problem.

Tesla shares fell 2.8% to $280.74 on Wednesday. They’re now down about $100 from the closing price of August 7 ($379.57) and down $107 from the high that day ($387.46). This was the moment when CEO Elon Musk had pulled another rabbit out of the hat during trading hours in order to brazenly manipulate up the share price by announcing a blatant lie – that he’d take the company private at $420 a share, “funding secured.” Today, shares closed $140 below the buyout-lie number.

The ludicrousness of his lie that had instantly spread all over the world had an unintended consequence for eons to come: The term “funding secured” can never again be pronounced with a straight face.

As a consequence, Tesla is now steeped in legal issues. It’s not like it doesn’t have enough issues already, with its “manufacturing hell,” as Musk himself called it, that refuses to abate.

A CEO is supposed to right a listing ship. But Musk can’t even right himself. Just today it came out that he’d called the British cave diver who’d helped save the boys soccer team in Thailand a “child rapist” in an idiotic email to Buzzfeed. In August, he’d called the cave diver a “pedo guy” only to delete that tweet and apologize. In other words, this CEO, who’d always been a loose cannon, has gone completely over the edge – publicly, for all to see, even Tesla bondholders.

And those bondholders have taken note. The $1.8 billion in senior unsecured notes, due in 2025, that Tesla sold in August 2017 fell to a record low of 85.69 cents on the dollar today. Investors that acquired them at issuance are down over 14%. This chart via FINRA and Morningstar depicts the entire life of those bonds:

This comes as Tesla’s suppliers are also beginning to fret. For the smaller among them, exposure to Tesla is an existential experience.

The bonds are rated six notches into junk (B-) by Standard and Poor’s and seven notches into junk (Caa1) by Moody’s. This is deep junk (my cheat-sheet for bond ratings).

When Tesla issued them, investors were enticed by Musk’s hype and Tesla’s razzmatazz, and they thought that all this will work out somehow, and that the Model 3 was going to save the company instead of bleeding it to death, and that 5.3% yield looked soooo good.

Now they’re deeply in the hole. These bonds are unsecured, and in an event of default, recovery may not be anything to write home about. But don’t cry for the bondholders. No one forced them to believe Musk’s BS. They did this on their own volition.

In terms of the survival of Tesla, however, this poses a problem.

Tesla is a high-performance cash-burn machine. It must raise ever larger amounts of cash to fuel this machine. The ability to raise more cash has been predicated on the mutual guarantees of sorts offered by bondholders and shareholders to each other.

For bondholders, Tesla’s sky-high stock price, and therefore its ability to sell more shares and raise more money with ease was a guarantee that Tesla can always issue more shares and use the proceeds to service its debt.

And for shareholders, the eagerness of bondholders was a guarantee that Tesla could always raise money by issuing more debt, thus minimizing the dilution of existing shareholders.

At today’s closing price of those bonds, the implied yield is 8.03%. In other words, if Tesla had to raise money today by selling bonds, it would have to pay over 8% interest on this debt. If it has to raise $2 billion at 8%, it would add $160 million per year in interest to the consumption of its cash-burn machine.

Investors see this too, and as they get more skittish, Tesla may be looking at having to offer 9% or more in interest in order to entice them to take these ever more glaring risks – which now include an erratic, loose-cannon CEO that has gone completely nuts.

Tesla’s share price is still ludicrously high at $280. So at the moment, if it issues $2 billion in new shares, instead of selling debt, Tesla would save a lot of interest expense going forward. But now that the hype is no longer working as before, such an announcement could drive down the share price by a big chunk, making that undertaking a lot more expensive and dilutive for existing shareholders.

To avoid this fate, they might be tempted to unload the shares before this happens, which would drive down the share price even further, thus whittling down the guarantee as seen by bondholders, which makes them even more skittish – and in unison, potential bond buyers and share buyers become even more reluctant. But their cash is needed to fuel the cash-burn machine…. You get the idea. This is going to be a mess.

After Musk admitted the other Friday night that his “funding secured” deal had been a blatant lie all along, all kinds of things did not happen the next Monday. You’ve got to hand it to Musk. Read… 7 Things that Did Not Happen to Tesla & Musk after the Friday-Night Deal-Massacre  
 

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  139 comments for “As Musk Goes Nuts Publicly, Tesla Bondholders Get Antsy

  1. Auld Kodjer
    Sep 5, 2018 at 9:52 pm

    “7 Things That Did Not Happen …”

    The first 3 will inevitably be replaced by an angry mob with Hung, Drawn and Quartered.

    Delete remaining 4.

    • Joan of Arc
      Sep 6, 2018 at 2:39 am

      Deleting the remaining 4 things was wise since no one knows what happens before St. Peter at the pearly white gates.

    • nick kelly
      Sep 7, 2018 at 10:21 am

      And today (7 th) he’s smoking pot on TV.
      Not that there’s anything wrong with that but the stock doesn’t like it.

      • RangerOne
        Sep 8, 2018 at 1:04 pm

        When your are CEO of a company that has taken loads of federal funds there is a lot wrong with that. Musk is about to get bounced out on his as.

        I wonder if his replacement will be able to save tesla…. because Musk is on borrowed time and he has clearly unraveled under the pressure of undliverable promises.

  2. Gershon
    Sep 5, 2018 at 10:29 pm

    I can’t imagine owning stock in a company “led” by this petulant man-child. If he has reason to believe anyone is a pedophile, that information should be shared – privately – with the appropriate authorities. But slandering a man with such an allegation in such a public way is not just tacky in the extreme, it seems likely that he’s smearing an innocent person with one of the worst allegations there is, and in the court of public opinion. That is vile, and Musk should be held fully accountable for his actions.

    • Frederick
      Sep 6, 2018 at 1:17 am

      Musk was just making a stupid generalization and assumption that is making an ass of him Just the fact that he felt tjhe need to do it shows how unstable the guy is psyvhologically Scary Times Coming for sure not only for Tesla Bucket up folks

    • Joan of Arc
      Sep 6, 2018 at 2:35 am

      The question is has Musk been smart enough to have sold off at least $2 billion worth of his personal stock holdings and squirrel it away? $1 billion for himself and $1 billion to pay off all potential future liabilities? If he were real smart he sold off $5 billion. But after tweeting about the gent in Thailand for the third time, the chances are he has sold off 0% of his stock because he believes that his companies and himself are invincible. Like a captain, he may be destined to go down with the entire ship. His 3 tweets coming from a CEO are beyond comprehensible. It is a sad perspective on how thin the veil between sanity and insanity can sometimes be.

      • Petunia
        Sep 6, 2018 at 10:06 am

        Sadly, in terms of innovation he has no competitors in Silicon Valley. The social media guys rehashing old software are no competition for him.

        Also, selling shares is not the only way to cash out. You can borrow against the shares, using them as collateral, then walk away when the SHTF. It’s done on Wall St. everyday.

        And…the best way to really cash out of a failing company, is to get fired. Then you can be forced to sell your shares and can also take any vested benefits, no questions asked. If you go back and look at the financial crisis, you will see the the president of a “certain” Wall St. firm got himself fired over some BS. How convenient that he was fired at the top of the market.

        • Nick
          Sep 6, 2018 at 10:19 am

          Innovation? Gimme a break! As has been reported people are finding out just how overpriced, dangerous, and poor craftsmanship Teslas are. Look at the recent article regarding post warranty service and repairs. No dealerships to fix the cars, very few parts……….and people are on wait lists for these stupid cars? And to the idiots that think they are saving the planet think again……….cobalt and lithium used in electric cars are just as reliant on fossil fuels as gasoline in order to mine and refine them.

        • JZ
          Sep 6, 2018 at 11:34 am

          If you give me 1 billion to burn, I can innovate too. Using innovation to justify capital allocation is simple MALINVESTMENT if the business is NOT economical.
          When would malinvestment happen? Oh, when monetary policy artificially short circuit the market and artificially stimulate.

        • RagnarD
          Sep 6, 2018 at 5:35 pm

          @Nick
          Are There still wait lists? Because there is a dealership on the south eastern side of Charlotte that has lots of teslas on its lot. looks like a combination of model 3, S and that SUV like thing. Maybe 100 total.

        • Lou Mannheim
          Sep 6, 2018 at 7:15 pm

          Yeah, Spector really won the lottery there.

        • A Citizen
          Sep 7, 2018 at 9:53 am

          “Also, selling shares is not the only way to cash out. You can borrow against the shares, using them as collateral, then walk away when the SHTF. It’s done on Wall St. everyday.”

          Yeah? Go ahead. If you want to get buried under years of frozen accounts, litigation and a possibly extended at your local FBP incarceration facility.

        • intosh
          Sep 7, 2018 at 11:45 am

          It’s just innovation-to-be: “innovation” that can’t be sustained financially. Huge subsidies (both to the company and to the consumer) in an era of cheap money but still losing billion of dollars hand over fist and on the brink of collapse.

      • Dave
        Sep 7, 2018 at 7:18 am

        If he is really smart and corrupt he sold off 5 Billion and is shotting his iwn stock (kinda) via options ir some other derivative.

    • Ian
      Sep 6, 2018 at 6:11 am

      Yeah he is quite something. Probably the greatest snake oil BS merchant the world has ever seen. Clearly genius in the way he has ridden the government backed, taxpayer supported, jamboree into electric vehicles and put that idea into practice. But also a monumental egomaniac and increasingly deranged, starting to believe his own BS and messiah type status. His push into “affordable” mass production instead of the niche product for the uber wealthy and slightly thick market, and now having to compete with all the major players, will go down as the premier business school strategy case study on how to f*&# things up

      • RangerOne
        Sep 8, 2018 at 1:09 pm

        I think Theranos takes the cake on snake oil. Musk delivered a product. He is just failing to be profitable and lying about being able fix it.

    • RangerOne
      Sep 6, 2018 at 9:00 am

      Meh, if the board boots him over his big mouth he should run for president. You can say whatever you want in that job.

  3. michael
    Sep 5, 2018 at 10:30 pm

    After the first “pedo” comment investors should have cashed their chips in and run. What sane CEO would get away with that? The board has no control over Musk. Meanwhile, the SEC continues to watch their online porn as Musk continues his verbal manipulation of the market.

    Even the you tube fan boys, who make a living pumping Tesla, are now hiding.

    • Joan of Arc
      Sep 6, 2018 at 3:04 am

      Who in their right mind could ever buy or short such an abstract monstrosity as Tesla…especially after it crossed over $100, $200, or $300 per share?

    • MC01
      Sep 6, 2018 at 7:33 am

      Wait a minute… are you telling me there are people out there whose sole means of support are the cheques Alphabet sends them for monetizing their YouTube videos which are basically free (?) advertisements for Tesla?

  4. Javert Chip
    Sep 5, 2018 at 10:49 pm

    Even though Tesla isn’t a unicorn, playing with them can be dangerous to your health (I read today that Theranos is being liquidated).

    At the very least, somebody better start rolling beautiful model 3s out the front doors that successfully compete with BMW. Rolling Elon out the back door wouldn’t hurt either.

    Somewhere in here is a tipping point – $40 stock drop, $100 drop? What ever it is it’ll probably be quick & brutal (as in “no buyers” for corporate Tesla).

    • DM
      Sep 6, 2018 at 9:55 pm

      Model 3 already outsells all of BMW in the US.

      • Javert Chip
        Sep 6, 2018 at 10:05 pm

        DM

        I have to admit I’m stunned – didn’t know that. 17,000 in a month is impressive.

      • Javert Chip
        Sep 6, 2018 at 10:17 pm

        17,000/month @ $30,000 ea = $510M/month

        Uncertain how long demand/delivery holds up at this level, but back-of-the-envelope, over 12 months = 12* $510M = $6.1B; @ PE = 14, market cap = $73B.

        I guess the questions are:

        1) Is Tesla profitable at 17,000/month?
        2) Can Tesla continue to deliver at least 17,000/mo?
        3) Is there on-going market demand for 17,000/month Teslas?

        Crap! I sound optimistic about Tesla,,,didn’t mean to do THAT

      • Sep 7, 2018 at 12:46 am

        DM,

        Quit posting those effing lies on my site. In Q2, BMW delivered 80,000 vehicles in the US, 4X the units that Tesla delivered.

      • Frederick
        Sep 7, 2018 at 4:19 am

        DM I’ll take the beemer anyway I bought a 525i new in 1992 and just sold it in 2016 so I think I got my money’s worth Best car I ever owned in 50 years of car ownership

  5. Rates
    Sep 5, 2018 at 11:03 pm

    Musk has lawyered up with a well known lawyer. That only happens presumably because the SEC is going to take a tough line …….

    What would make this a true comedy is if someone were to come up with Musk doing “unsavory” stuff.

  6. raxadian
    Sep 5, 2018 at 11:12 pm

    So Tesla is crashing due to Musk being an idiot, not because is a money sink hole?

    Is not the math, is the stupid people! Should be Wolf Street new motto.

    • SlimJimWins
      Sep 6, 2018 at 6:11 am

      Tesla has been a cash incinerating machine for its entire existence- the fact that they are losing lots of money is nothing new. Confidence in Musk is largely what keeps this bubble inflated. As confidence in Musk evaporates, the stock price plummets.

    • Frederick
      Sep 6, 2018 at 7:42 am

      Rax probably both

  7. Sep 5, 2018 at 11:33 pm

    Wasn’t it “funding secured”?

    • Sep 5, 2018 at 11:35 pm

      It sure was :-]

      • Sep 5, 2018 at 11:38 pm

        I’m nit-picking, but just thought it was “secured” rather than “assured”.

        • Sep 6, 2018 at 12:34 am

          I forgot to add the “thanks!” that I normally add when someone points out a booboo I made :-]

        • Itsobvious
          Sep 6, 2018 at 8:38 am

          Driving the shares down with tweets. And then suddenly Acquire enough to go private. Is not that his proclaimed goal?

        • Sep 6, 2018 at 9:46 am

          Going private would send Tesla into bankruptcy court in short order. As a private entity, it cannot raise the money it needs to raise to keep burning cash. It would go bankrupt in less than a year as a private company. And in bankruptcy court, shareholders (including Musk) would lose their shares and ownership, and creditors would get the company. That’s how bankruptcy works.

  8. Realist
    Sep 6, 2018 at 12:12 am

    Anyone remembering DMC ?

    • Javert Chip
      Sep 6, 2018 at 12:55 am

      Yup. Boy, did he blow it…

    • Delikon Threetree
      Sep 6, 2018 at 7:30 am

      This will be the third time I put this statement on Wolf Street and nobody believed me. Tesla WILL BE the next DeLorian/DMC!!!

      • Frederick
        Sep 6, 2018 at 10:47 am

        Deli Tree We Are alittle slow here on Wolfstreet Flourinated water you know

      • raxadian
        Sep 6, 2018 at 12:10 pm

        So they will use a Model 3 as a time machine in a movie?

        • RagnarD
          Sep 6, 2018 at 5:43 pm

          Nice.

        • Kenny Logins
          Sep 7, 2018 at 11:16 am

          Wrong doors, it’s need to be the gullwing one!

          Musk capacitor!

  9. Sep 6, 2018 at 12:17 am

    I believe we’re only down $120 from the high, not $220. Then again, I’m short Tesla, so I could be wrong too — I’ve been wrong so long I’m beginning to question my short even though deep down I know I’m right to be short.

    • Sep 6, 2018 at 12:33 am

      Where do you get the $220?

      • Bauz
        Sep 6, 2018 at 2:02 am

        “Today, shares closed $240 below the buyout-lie number.”

        Should be $140 :)

      • Jan Folkert Kunst
        Sep 6, 2018 at 4:58 am

        Hi Wolf,

        Alfonso meant the 240. It is 140 “below the buyout-lie number”.

        Thanks,

        JF

      • Sep 6, 2018 at 8:51 am

        $420-$240 = $180.

        Current stock price is $280. We’re only $140 off from the proposed buyout price. Though it feels more like the $240 you suggest here.

        “Today, shares closed $240 below the buyout-lie number.”

        $280+ $240 = $520 … buyout was “secured” at $420.

        • Sep 6, 2018 at 9:08 am

          OK, $140 instead of $240. Typo. Thanks.

          In your original comment you said, “I believe we’re only down $120 from the high, not $220.” It’s the $220 I couldn’t figure out. I guess you meant to say: “I believe we’re only down $140 from the high, not $240.”

          It seems you make the same kinds of typos I’m making :-]

        • GDetroit
          Sep 6, 2018 at 4:05 pm

          Isn’t this a bit like arguing whether the Titanic’s deck chairs were light or dark wood?

  10. BobT
    Sep 6, 2018 at 12:35 am

    In a ‘normal’ economic environment, (pre 2008), Tesla would never have existed at all.

    Tons of press coverage here in Thailand of the accused pedo’s 40yo long term girlfriend. They love to cover crazy ‘falang’ stories here and reckon they have a medal winner in Musk.

    • Jim Graham
      Sep 7, 2018 at 11:00 am

      “”In a ‘normal’ economic environment, (pre 2008), Tesla would never have existed at all.””

      Are you referring to the glorious dot com era?

  11. Kasadour
    Sep 6, 2018 at 1:53 am

    In my opinion, Musk went sideways when he promised investors he could take Tesla mainstream.

    You’re right, Mr. Richter, at ~0.26% market share, investors should have or could have known Tesla was never going mainstream. It also bears mentioning that these “factory gated” Model 3s that Musk cheered about are really just lemons.

    Elon Musk will be remembered as one of the biggest frauds in U.S. history.

    • DM
      Sep 6, 2018 at 12:35 pm

      Where do you get 0.26% market share? Tesla outsold ALL Mercedes and Audi cars this past August in the US. It is the #5 best selling car in the US and growing.

      http://www.goodcarbadcar.net/2018/09/august-2018-ytd-u-s-passenger-car-sales-rankings-best-selling-cars-in-america/

      • Sep 6, 2018 at 3:20 pm

        DM,

        Tesla does NOT report monthly delivery figures. So any August numbers you see are just guesses or hype by others. Tesla reports only quarterly figures. So here we go:

        According to Tesla’s own quarterly reports, in Q1 and Q2 combined, Tesla delivered 70,765 vehicles globally. US deliveries are about half that.

        According to Autodata, the auto industry overall, in Q1 and Q2 combined, delivered 8,610,770 vehicles in the US.

        This gives Tesla a market share in the US of less than 1% (closer to 0.5%)

        There is a lot more to those Tesla numbers:
        https://wolfstreet.com/2018/08/01/tesla-discloses-worst-quarterly-loss-ever-but-where-are-the-17000-model-3-cars-it-produced-but-didnt-deliver/

        • Dm
          Sep 6, 2018 at 9:58 pm

          I’m not talking about Q2 financials which were terrible. I’m talking about August 2018 Model 3 sales which are reported by both insideevs.com and goodcarbadcar.com. They have been reporting monthly sales accurately for years.

          Tesla may never make money and the stock might be overvalued but they are selling a bunch of cars.

        • Sep 7, 2018 at 12:54 am

          Tesla DOES NOT report monthly numbers. Don’t you get that? Any publication that reports Tesla’s deliveries on a monthly basis is just guessing.

  12. polistra
    Sep 6, 2018 at 2:07 am

    “For bondholders, Tesla’s sky-high stock price, and therefore its ability to sell more shares …”

    This is the basic problem, isn’t it? In a normal SANE market, high prices would STOP sales. In the current CRAZY situation, high prices encourage people to buy more.

  13. m
    Sep 6, 2018 at 2:24 am

    > Today, shares closed $240 below the buyout-lie number.

    140?

    • Joan of Arc
      Sep 6, 2018 at 2:55 am

      The buyout number was $420.00 per share. The stock closed yesterday at $280.00 per share…$140.00 below the buyout number.

      • Kasadour
        Sep 6, 2018 at 6:28 am

        *Scratching head*

        Yeah you’re right. I had to get out the calculator, and I don’t know why cause I am good at maff.

        • roddy6667
          Sep 6, 2018 at 7:41 am

          Maffs be hard.

        • Mean Chicken
          Sep 6, 2018 at 10:56 am

          1st World maff’s be hardest! :)

    • Sep 6, 2018 at 9:11 am

      Yes. There’s a whole big discussion about that just above :-]

  14. Anthony
    Sep 6, 2018 at 2:24 am

    This surely is a lesson in how things can change. Just a couple of years ago, Musk was being celebrated by Wall Street and the MSM as a wonderkid. Nothing lasts, even when it is presented to us, as usual, as some kind of new and eternal fact of life.

  15. DV
    Sep 6, 2018 at 5:24 am

    Musk is desperate. Why would Model 3 be a best seller, if much lower gasoline family sedans have been struggling?
    On the high-end more competition is coming from the likes of Mercedes, BMW and Jaguar. There is no way Tesla can survive.

    • DM
      Sep 6, 2018 at 9:57 am

      Here are the sales of the Model 3 for August 2018. It is the 5th best selling car in the US and sold more than all of Audi, BMW, or Mercedes.

      https://insideevs.com/monthly-plug-in-sales-scorecard/

      The CEO may be unhinged and the stock overvalued, but he’s selling a lot of cars. We’ll find out in November if he’s selling them profitably. Last number I saw was an ASP of $59K for the Model 3.

      • Wisdom Seeker
        Sep 6, 2018 at 12:09 pm

        I don’t think the Tesla data represent sales in the conventional sense of the word. Pretty certain that the other dealers are not “selling” cars they have not yet produced.

        The numbers that ought to be reported are actual deliveries of completed, road-ready vehicles to either dealers or end-use customers.

        • DM
          Sep 6, 2018 at 12:31 pm

          Tesla data is actually sales to end customers. They have been reporting this for years now and insideevs.com has been very accurate with their methods for years as well.

          The Tesla Model 3 will be in the Top 10 best selling cars in the US for all of 2018.

        • Sep 6, 2018 at 3:27 pm

          DM,

          Tesla does NOT report deliveries or sales on a monthly basis. It reports them only on a quarterly basis. Any numbers for July and August are just guesses by others.

          Please see my comment above with market share figures based on Tesla’s own reporting. To summarize, its market share in the US is less than 1% (closer to 0.5%).

      • Max Power
        Sep 6, 2018 at 12:14 pm

        Can you provide a reference that shows the Model 3 being fifth best selling car in the US?

        To achieve that target they would need to be selling at least 25,000 of them per month.

        • DM
          Sep 6, 2018 at 12:28 pm

          This is the report that shows the Tesla Model 3 was the 5th best selling car in the US in August 2018. Goodcar estimates 20K but insideevs.com estimates 17,800. Even at 17,800, it is #5.

          http://www.goodcarbadcar.net/2018/09/august-2018-ytd-u-s-passenger-car-sales-rankings-best-selling-cars-in-america/

          Sort by Month.

          Ahead of Hyundai Elantra, Nissan Altima and Sentra. Behind Toyota Camry, Corolla and Honda Civic and Accord.

        • RagnarD
          Sep 6, 2018 at 5:53 pm

          Well
          I thin I’ve see a total of three model 3s on the road around Charlotte. I’ve seen a lot more model S, though. So, sounds like BS.

        • Dm
          Sep 6, 2018 at 10:11 pm

          Wolf, when I am proven right in October, will you correct the record?

          Insideevs.com has not been wrong yet.

        • Sep 7, 2018 at 12:56 am

          DM, you’re lying between your teeth about Tesla outselling BMW. As I said, BMW sold 80K in Q2 and Tesla about a quarter of that.

        • Frederick
          Sep 7, 2018 at 4:22 am

          I think DM is possibly a Musk troll or just a person who mistakenly bought a Tesla

  16. Sadie
    Sep 6, 2018 at 5:32 am

    If I remember correctly, Toyota sold their position in Tesla around a year ago. Looks like a really wise decision now. I don’t think that was by chance or luck…

  17. HomerSimpsonRocks
    Sep 6, 2018 at 6:28 am

    I’m not short or long Tesla, but I am watching this maniac and what happens to his company with popcorn ready. Picturing him up in his office pacing, listening to Prince “Let’s Go Crazy!”

    • Hg
      Sep 7, 2018 at 3:03 pm

      Pass me the popcorn! I’ll pee my pants if Elon Musk lighting up a dube on TV turns out to be the spark that burns down the global economy.

  18. nick kelly
    Sep 6, 2018 at 7:29 am

    OK we’re all skeptics but we know that this is a big cult apparently immune to screw ups by the Leader ( can you think of another?)

    So one question: is Tesla systemically important, even more important than its considerable valuation (45 billion?) Is it psychologically important enough to the point that its sudden crash or bankruptcy would create a panic in the most expensive stock market since 1929 ?

    Re: the broader market, J.P Morgans lead quant (Ph.d in physics) is predicting the worst crash in 50 years.

    Main culprit apart from overvaluation, automated trading bots that will sell into a pull back, which will produce more selling ….

    He thinks we might be ok until the second half of 2019,

    It will take a catalyst, which itself need not be large. Tesla?

    • Juanfo
      Sep 6, 2018 at 4:49 pm

      1) A crash has been predicted for as long as I can remember. Sooner or later it can happen. Oh joy.
      2) Anyone stopped to consider the most remote possibility that maybe this man could have a winning product? Please continue.
      3) Solid contribution to culture and knowledge WOLF and participants. I spend way too much time here. More than any other virtual location. Thank you for the education and entertainment.

    • alex in san jose AKA digital Detroit
      Sep 6, 2018 at 6:22 pm

      Cult? Cult? What cult? You’re the cult!

      He’s just trying to MACA (Make Cars Great Again)

  19. Cmoore
    Sep 6, 2018 at 7:41 am

    I was thinking Musk too out a huge bank loan to buy more shares personally and prob also bought on margin. It’s a possibility he will be completely wiped out before it’s over with.

    • Frederick
      Sep 6, 2018 at 7:45 am

      Elon had. Better stock up on his drug of choice now in that case He’s going to need it

      • MB732
        Sep 6, 2018 at 3:25 pm

        Jigs up Frederick…Your keyboard does have a working ‘period’ key. Use it!! ;-]

    • Eastwind
      Sep 6, 2018 at 12:23 pm

      I also read that he said that he’d bought shares. But given various recent credibility peccadillos, I’m wondering if there is any independent confirmation of that, such as an SEC disclosure form, for example.

      They say talk is cheap, but I have a suspicion some of Musk’s talk may turn out to be of the expensive variety.

      • Sep 6, 2018 at 3:33 pm

        Cmoore and Eastwind,

        When Musk or any smart CEO buys shares of their company, they fund the purchase with money borrowed from their company, and put those shares they bought up as collateral.

        When the share price collapses, the CEO will simply default on the loan to the company and let the company collect the collateral (the collapsed shares).

        A friend of mine who was the CEO of a publicly traded company did that during the financial crisis, no problem. Perfectly legal. Perfectly normal. The Board knew all about it.

  20. EEngineer
    Sep 6, 2018 at 8:24 am

    This is passive aggressive behavior. He wants to be removed as CEO so he’s not around for the end because his ego couldn’t take it, but his ego also won’t let him quit. Ergo, he needs to find a way to get fired. Suicide hotline time…

    • fajensen
      Sep 7, 2018 at 2:10 am

      Instead of cannabis (the 420) he should try 2CB or some psilocybin (“truffle”) while twitting / v-logging? That should do it.

      Maybe the poor guy had just one joint and discovered that this is not granddads pot anymore, but skunk? That is bioengineered and hits like a rubber-clad brick in the face, leaving the victim drooling for hour. No fun at all.

  21. Mike Earussi
    Sep 6, 2018 at 8:50 am

    How do you determine the actual value of a company that constantly loses money?

    • DM
      Sep 6, 2018 at 9:59 am

      Silicon Valley likes to use Price to Sales for startups that aren’t profitable yet. Tesla will do more than $20B in sales for 2018 and $30B for 2019. So P/S is about 2 to 2.5.

      • nick kelly
        Sep 7, 2018 at 10:25 am

        How many startups are valued over 40 billion?
        The Company is over 5 years old.

  22. Mean Chicken
    Sep 6, 2018 at 8:54 am

    One aspect of TSLA one should appreciate is the short interest it draws. Although, it appears the mentally addled are buying this morning.

  23. RangerOne
    Sep 6, 2018 at 9:02 am

    So if Tesla goes up in smoke how do all those owners get their cars repaired? :)

    • Joan of Arc
      Sep 6, 2018 at 9:32 am

      After a tesla goes up in smoke you need not worry about repairs…there is nothing left to repair. The battery fires are huge and intense. Even if it doesn’t go up in smoke just the regular maintenance costs can run you $14,000.

    • Michael Fiorillo
      Sep 6, 2018 at 9:35 am

      I’ve been wondering for quite a while how cars from an auto company without dealerships, and which treats everything in the vehicle as proprietary IP, can be repaired in a timely way.

      Am I missing something? While it seems far more likely that something else will doom the company, this alone seems like enough to make it unviable.

      • Bobber
        Sep 6, 2018 at 10:12 am

        I just saw an article saying Tesla owners are having trouble getting simple repairs done. This is how problems first surface with a troubled company. To conserve cash, they cut costs in ways that don’t harm immediate profits (cutting service, extending payables, cutting R&D and admin to bone, etc.)

        • Joan of Arc
          Sep 6, 2018 at 12:43 pm

          The cars were slapped together without attention to the little details. On youtube a guy has a new Tesla where he films a spider crawling around the inside of his tail light as he says it is not the first one. After a rain, there is water in the tail lights and water leaks into the trunk. You can bet the major auto makers get all of these kinds of details worked out right off the bat and have been for decades. The door latches notoriously quit working and cost around $1000.00 each to fix. They have a monopoly on parts and repairs and don’t hesitate to sock it to you. When you buy one you are taking on one big migraine headache. 50 years from now they may be highly sought after curiosity items like the Edsel is today.

        • David
          Sep 6, 2018 at 2:37 pm

          Reply to Joan of Arc ….

          My parents bought an Edsel back in the day.

          They really liked it, actually. And my father was very mechanical and handy. If he thought something was crap he was good at expressing it.

    • Frederick
      Sep 6, 2018 at 10:50 am

      There’s a video on YouTube of a Tesla owner from Alaska I believe who does the work himself including building the parts from components An electrical engineering degree is probably helpful

    • Prairies
      Sep 6, 2018 at 10:53 am

      Same way people get Deloreans repaired. I will never see them where I live, but there will be havens in California where used parts will be well supplied. The cars won’t be driven every day, just on car show weekends as the niche that they are.

  24. panamabob
    Sep 6, 2018 at 9:20 am

    June 2020 puts are coming on the market. Since I avoid casinos, lottery tickets and the like, there’s money in the budget to roll the dice against Musk and all his groupies.

  25. Bobber
    Sep 6, 2018 at 10:02 am

    I don’t think you can short Tesla stock until the big announcement comes out. It seems clear they will find a solid #2 to take over Musk’s operating duties. They’ll put Musk in a pure visionary position that will excite his followers even more. When Musk isn’t the guy talking about operations, results, and Model 3 production, the market will not pay much mind to his diversions. Of course, it will be very costly to get that #2 in there. Anybody with any smarts realizes it would be a dicey position that requires enormous stock compensation and parachutes.

    I think the stock could rise 30% on such an announcement over a period of days. It might be worth shorting the stock after that.

    • fozzie
      Sep 6, 2018 at 11:41 am

      “I think the stock could rise 30% on such an announcement over a period of days. It might be worth shorting the stock after that.”

      Many have said the stock’s outrageous price is because of the Musk mystique. If he’s removed and the stock recovers then that will discredit that hypothesis.

      Musk’s mogul lifestyle is from the hundreds of millions he’s borrowed on his stock. He personally needs that stock price elevated and there’s motivation to do everything up to a forced liquidation. If a CEO comes in with automotive(or at least manufacturing) experience there’s risk he’ll realize the best course of action is to try to navigate a Chapter 11 reorg.

  26. Ted Freeman
    Sep 6, 2018 at 10:18 am

    Elon Musk still has South African and Canadian citizenship. If things go sour and the feds try to bring charges, he could easily skip out on a private jet back to SA. And you can bet that he has foreign bank accounts and shell companies protecting large parts of his net worth.

    • David
      Sep 6, 2018 at 2:39 pm

      Ah geez, he’s one of us? Canuck?

      Sorry. Gotta say it.

    • Auld Kodjer
      Sep 6, 2018 at 5:22 pm

      My apologies to Justin Bieber. I will no longer refer to you as Canada’s worst export

  27. Scott
    Sep 6, 2018 at 11:42 am

    The real question is what is going on with SpaceX and what impact do the problems at Tesla have on it long term. If Musk is charge with crimes, there could be problems with government contracts that it holds as in my experience, charges against CEOs and other senior managers often prevent companies from being considered for certain government contracts.

    • Tom T
      Sep 6, 2018 at 3:01 pm

      It is long past time for you all to take an honest look at Space X. If you think Tesla automotive is a fraudulence, Space X is a complete fiction. Mark my words.

      • aqualech
        Sep 6, 2018 at 4:15 pm

        Actually, SpaceX is operational and successful. They have a good product and are performing commercial launches. Here is a list of their launches. I am not a Musk fanboy, and don’t credit Elon with much or any of the engineering, just the drive. Rumor has it that SpaceX is a really crappy place to work in that it is super high pressure. https://en.wikipedia.org/wiki/List_of_Falcon_9_and_Falcon_Heavy_launches#2018

        • nick kelly
          Sep 7, 2018 at 10:40 am

          That’s what I thought when I read comment dissing SX.
          But not being up on SX I just wondered.

          If Musk was just SX or just Model S etc. (high end) or just the Power Packs he’d be ok. It’s the 3 that threatens everything.

          Has anyone worked out the negative impact on the niche exclusivity of the brand by introducing a budget car?

          Porsche COULD make a 35 K car but then they wouldn’t be the most profitable car co in the world per car.
          Sure people pay extra for quality but also for the fact that not everyone has one.
          The extreme example is the five thousand dollar purse, which
          is of no higher functional quality than a hundred dollar purse.

  28. Tom
    Sep 6, 2018 at 11:52 am

    Next financing for Tesla corp will be the new TeslaCoin ;Limited production.

    • Rates
      Sep 6, 2018 at 2:41 pm

      Perfect!!! Tesla Coin can only be mined through a Tesla car. You are a genius!!

      • Duke DeGuise
        Sep 6, 2018 at 5:14 pm

        Yeah, baby, I’m all in!

  29. Ambrose Bierce
    Sep 6, 2018 at 12:18 pm

    So Germany has new government mandates on EVs, along with China, I sorta think that even if this guy never does another thing that the market for these gadgets will catch up to him. If nothing else he is a great marketing tool. Other than a general stock market disaster and adjustment to overall credit markets this guy will come out smelling like a rose.

  30. Kenny Logouts
    Sep 6, 2018 at 12:42 pm

    Yeah it needs correcting to $140 from the incorrect $240 value.

    Time to buy the dip?

  31. Gershon
    Sep 6, 2018 at 12:59 pm
    • Frederick
      Sep 7, 2018 at 4:28 am

      It was the “Ambien “ combined with the crack that made him do it Gershon No doubt a nasty cocktail right there He May need to add alittle Xanax to level things out

  32. van_down_by_river
    Sep 6, 2018 at 2:35 pm

    “But don’t cry for the bondholders. No one forced them to believe Musk’s BS. They did this on their own volition.”

    No need to cry for the bondholders because they are playing this game with other peoples money – Heads they win – Tails the pension funds lose. What a wonderful game, and the dollar debasement policy, implemented by Ben Bernanke, guarantees the fun will continue long into the future. There is still plenty of purchasing power to be profitably be wrung out of the dollar and that means there is still a lot of wealth yet to be transferred.

  33. Begbie
    Sep 6, 2018 at 2:49 pm

    He should get together with Elizabeth Holmes to compare notes

  34. Bobber
    Sep 6, 2018 at 3:58 pm

    The Model 3 at $60k is way overpriced. It should be priced just a little higher than the Saturn sedan it resembles.

  35. aqualech
    Sep 6, 2018 at 4:18 pm

    I don’t think that Elon really cares about the safety of investing in Tesla as long as he gets lots of accolades and time in the spotlight.

    BTW, while he gets credit for being involved in “renewable energy” and clean technology, etc., it is said that the manufacture of his EVs is horrifically damaging to the environment….all of the relatively rare metals and what-not.

  36. RagnarD
    Sep 6, 2018 at 6:08 pm

    Tesla model three outsells entire BMW car lineup. Does not include SUVs.

    https://www.autoblog.com/amp/2018/09/06/tesla-model-3-outsells-entire-bmw-car-lineup/

    But, like I commented above,I think I’ve only seen three of these on the road

    • Joan of Arc
      Sep 6, 2018 at 6:54 pm

      He won’t escape to South Africa or Canada when the whole thing comes crashing down. He will stock up a deluxe boring machine with food and water, point it downward into the earth, and bore like hell.

  37. ZeroBrain
    Sep 7, 2018 at 3:17 am

    I just watched a bizarre interview of Musk by Joe Rogan (Thursday 9/7/2018). He appeared on the verge of tears when talking about the dangers of climate change, almost like a sociopath trying to mimic emotion. And then when Joe Rogan gave over-the-top compliments about his intelligence/genius, he just lapped it up and didn’t dismiss it like any normal person would. Elon also said his mind was exploding with ideas at all times and that he can’t turn it off. I’m hardly even scratching the surface – if Tesla goes bankrupt, people are going to look back at this interview as an obvious tell.

    • Prairies
      Sep 7, 2018 at 9:35 am

      Joe is a fan boy for Musk. If you want to know who is pumping up Tesla stock, it is wealthy Californians like Joe.

      • intosh
        Sep 7, 2018 at 11:57 am

        People like Joe are the key figures of the fringe (social) media movement rallying fanatics of anti established conventions/beliefs/knowledge/norms.

    • SnotFroth
      Sep 7, 2018 at 8:08 pm

      I immediately thought of Wolf’s article when I saw Musk on Rogan’s talk show. What a timely development.

      I have nothing against the smoking of weed but when Joe handed him the blunt I was thinking “oh no Elon, now’s not the time, not on camera.” If this interview happened three years ago it probably wouldn’t be a issue. But Musk is already on thin ice after “pedo guy” and “funding secured.” With the narrative turning against him, why compound the problem with more behavior unbecoming of a big-shot CEO.

      He seemed distracted and uneasy. Maybe he was thinking the same thing….

  38. RagnarD
    Sep 7, 2018 at 8:33 am

    i just called the dealer in Charlotte and talked about buying one and I asked about the inventory on the lot. He says that most of the cars on the lot are Model 3s that are tied to a customer/waiting for delivery.

    (For some reason this process takes “weeks”)

    The Charlotte dealership is NOT licensed for sales. To actually buy, I’d have to deal with the Raliegh dealership. Considering what I’ve read on Wolf Street, it seems like these might also be simply storage of cars that are not yet opertaional.

    • Mean Chicken
      Sep 7, 2018 at 2:09 pm

      How does that work? Customers aren’t allowed, perhaps instead they’re waiting for their team of delivery agents?

      Sounds like someone’s too busy smoking weed.

  39. Begbie
    Sep 7, 2018 at 8:54 am

    Musk smoking weed on the Joe Rogan podcast has apparently not gone over well………..

    • Mean Chicken
      Sep 7, 2018 at 2:04 pm

      Coulda’ been the whisky? Look at the mess he’s in! ;)

  40. Rates
    Sep 7, 2018 at 8:55 am

    Darn why didn’t I buy more puts????

  41. Paid Minion
    Sep 7, 2018 at 12:03 pm

    Substitute electric cars for mini-Jets, and Elon is running the Vern Rayburn/Eclipse Aviation to the letter.

  42. Rates
    Sep 7, 2018 at 8:59 pm

    #WeedSecured. And there’s even proof!!

Comments are closed.