Wednesday, June 20, 2018

Elon Musk May Soon Get His Comeuppance

Elon Musk may soon get his comeuppance for the total arrogance and disregard for what many people think are the rules of the road or common social norms. We don't hear this term often but it means a punishment or fate that someone deserves. Each day the divergence seems to grow larger between the Elon Musk we see and Elon Musk the visionary which the media claimed would revolutionize the way we live. The stock valuation of Tesla is over the moon for a company that has time after time failed to meet the benchmarks it has set for itself. Not only is the company burning through cash but it is having difficulty producing cars in the numbers and quality they promised. This has resulted in Tesla becoming one of the world’s most-shorted stocks.

Musk Has A History Of  Broken Promises
The day Musk is handed his just dessert could not come fast enough for the growing number of investors and Musk watchers that have become disenchanted by his erratic and sometimes capricious ways. This is highlighted by a recent effort to have him replaced as CEO of the company he founded by one of its largest shareholders. In reaction to this growing pressure, it seems Musk has redoubled his efforts to both talk up the stock price and returned to something that has helped in the past and that is to make predictions of pain for those who doubt Tesla's future. Shorts faced, in the words Musk used in his Twitter feed, the “short burn of the century". It should be noted this was in conjunction with him making a substantial buy of Tesla shares that kicked off a rally.

Regardless of Tesla's problems, many in the media continue to spin out positive stories such as a Market Watch piece titled; "Black Swan Author Defends Tesla After Actress Post Video Of Car Fire" This article may have exaggerated what Taleb actually said. It states that while Tesla skeptics, of which there are many, piled on, Nassim Taleb, New York University professor, “Black Swan” author and Tesla owner, stepped up to defend the company with some tweets of his own. Taleb pointed out that when it comes to cars catching fire numbers from the National Fire Protection Association states that two-thirds of the 152,300 car fires per year, on average, are caused by mechanical or electrical failures.

Tesla Numbers Are A Growing Concern
Part of the recent short squeeze rally concocted by Musk centers around his showing off Tesla’s newest production line in a weekend tweet as the electric-car company plunges forward towards its goal of making 5,000 Model 3 cars a week by the end of June. This new production line is the third at Tesla’s California facility. He claims the line was built in just three weeks in a tent-like structure next to the factory. This new line is rolling out dual-motor, high-performance $78,000 Model 3s that was introduced to the line only a few weeks ago. Musk was so happy that he sent an email to staff congratulating them on their efforts but said “radical improvements” still need to be made to reach their production goal.

Interestingly Business Insider has come out questioning if much is really is being produced by the tent production line dubbed GA4 which stands for, General Assembly #4. It is possible it is merely a prop to confuse or take our eyes off his failings. It seems fewer than 100 vehicles have come off this line since it began operation in the first part of June. Business Insider also reported that Tesla has only built made around 6,000 Model 3s this month, well short of the 5,000/week quota set by Musk who recently told employees that he would be at the Fremont factory “almost 24/7 for the next several days” to make sure the teams that are behind get “as many resources as they can handle.”

My point is that a CEO's job is not to hype up a companies stock but to run and guide a company forward taking Musk's actions over the line and into the area of blatant stock manipulation. Where there is smoke there is generally fire and this is not a pun referring to the recent number of Teslas that have burst into flames but has to do with the reality of so many investors being negative on Tesla stock. Unfortunately, for the shorts, shares are up almost 30% in the past month mainly as a result of Musk's antics and toying with those of little faith. Between his constant warnings such as, "They have about three weeks before their short position explodes." Such statements do not add to true price discovery but can extend a Ponzi scheme that is harmful to investors.


  1. Siting on the side waiting for the right time.

  2. He has allot of competition coming up the pipe. Look how heavy these things are.