The crowd-sourced, social media swarm that is betting Tesla will crash and burn(latimes.com)
latimes.com
The crowd-sourced, social media swarm that is betting Tesla will crash and burn
https://www.latimes.com/business/autos/la-fi-hy-tesla-short-sellers-musk-20190408-story.html
14 comments
I know short sellers claim they improve price discovery and market efficiency by seeking out negativity, but in the case of Tesla where Elon has pushed electric vehicles forward 5-10 years, having millionaires like Josh Wolfe sitting on Twitter day and night nitpicking seems really Petty and pointless.
If the worst of what short sellers believe about Elon Musk & Tesla turns out to be true, the resulting backlash may set electric vehicles back many years instead.
At any rate, large individual EVs with zippy 0-60 times are a piss-poor solution to the problem of climate change.
At any rate, large individual EVs with zippy 0-60 times are a piss-poor solution to the problem of climate change.
> The man says he works for a short seller who goes by the Twitter handle Latrilife. In return for scouting out and monitoring Tesla delivery centers and storage sites around L.A., he gets $20 an hour.
20 bucks an hour is not bad money for just a few photos
20 bucks an hour is not bad money for just a few photos
From the NYT article linked in this:
> In 2018, Tesla said, it delivered 245,000 cars, mostly in the United States. The research firm IHS Markit, which tracks state motor-vehicle data, counted registrations of 164,000 new Teslas nationwide.
That's a pretty interesting and potentially damning finding. I don't see why anyone would buy an expensive car from Tesla and then fail to register it. It's possible that IHS is just missing legitimately registered cars, but given the long list of exaggerated or just plain false claims made by Musk and Tesla it doesn't seem impossible that they are exaggerating their metric for number of cars delivered.
> In 2018, Tesla said, it delivered 245,000 cars, mostly in the United States. The research firm IHS Markit, which tracks state motor-vehicle data, counted registrations of 164,000 new Teslas nationwide.
That's a pretty interesting and potentially damning finding. I don't see why anyone would buy an expensive car from Tesla and then fail to register it. It's possible that IHS is just missing legitimately registered cars, but given the long list of exaggerated or just plain false claims made by Musk and Tesla it doesn't seem impossible that they are exaggerating their metric for number of cars delivered.
Hmmm... I don't see any reason why Tesla would lie about their delivery numbers though. Halon's Razor would argue that Tesla's grossly accelerated deliveries in Q4 (end-of-the-year) is leading to errors in IHS Markit's numbers.
Overall, Tesla clearly has a demand-problem demonstrated by Q1 numbers (30% drop in deliveries, even as the company cut prices worldwide and expanded to China + Europe deliveries). But I don't see any reason to distrust the numbers Tesla is giving out.
Overall, Tesla clearly has a demand-problem demonstrated by Q1 numbers (30% drop in deliveries, even as the company cut prices worldwide and expanded to China + Europe deliveries). But I don't see any reason to distrust the numbers Tesla is giving out.
Delivering to resellers or dealers lots may count. Their accounting is known to be... creative.
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> Of its 173 million shares, about 17% are held by short sellers.
Can someone explain to me what this means? that a share is held by a short seller?
Can someone explain to me what this means? that a share is held by a short seller?
A short seller borrows their shares from someone, and sells them to someone else. In effect, a short-seller inverts the process: they SELL... THEN they Buy at a later date.
In essence: a short-seller is betting that the price will drop in the future. The practice is controversial with TSLA shareholders because Elon Musk constantly hates on the practice, but its not really considered a bad thing by the greater investing community.
Short-sellers lose if the stock price goes up, or if dividends are distributed. In effect: short-sellers can ONLY make money if the company money in the long run.
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Long-holders (typical shareholders) win from short-sellers, because short-sellers provide more shares for the company without actually diluting the overall stock.
Lets say 1-million shares exist, but 17% of them are held by short sellers. That means the company has 1,170,000 shares in circulation (+17%), allowing more long-holders to benefit in case the share price goes up.
Furthermore, the long-holder that is loaning their shares to the short-seller benefits: because when you loan your shares out, the short-seller pays you an interest rate.
This is the classic "bulls vs bears" situation. If the stock price drops in the long term, short-sellers win. If the price increases in the long term, then long-holders win.
In essence: a short-seller is betting that the price will drop in the future. The practice is controversial with TSLA shareholders because Elon Musk constantly hates on the practice, but its not really considered a bad thing by the greater investing community.
Short-sellers lose if the stock price goes up, or if dividends are distributed. In effect: short-sellers can ONLY make money if the company money in the long run.
--------
Long-holders (typical shareholders) win from short-sellers, because short-sellers provide more shares for the company without actually diluting the overall stock.
Lets say 1-million shares exist, but 17% of them are held by short sellers. That means the company has 1,170,000 shares in circulation (+17%), allowing more long-holders to benefit in case the share price goes up.
Furthermore, the long-holder that is loaning their shares to the short-seller benefits: because when you loan your shares out, the short-seller pays you an interest rate.
This is the classic "bulls vs bears" situation. If the stock price drops in the long term, short-sellers win. If the price increases in the long term, then long-holders win.
I'm familiar with short-selling, but not the phrasing there. As you note, the point of short selling is that you borrow the stock ... then sell it. So short-sellers shouldn't ever be "holding" the shares to begin with, except very briefly.
What I think it means is that the value of the short positions is 17% of Tesla's market cap?
What I think it means is that the value of the short positions is 17% of Tesla's market cap?
Ah, I see.
The article's wording is definitely imprecise. I agree with you there. Here's my interpretation: The share is held by a lender, who has sold the share to a short-seller. In effect, 17% of the shares are "double-counted".
If there are 1,000,000 total shares, but 17% short-interest, then there would be 1,170,000 shares in circulation. It seems clear to me that the article is talking about short-interest (but is using somewhat imprecise words at that).
So its not so much that the share is being "held by a short-seller", but the share is "double-counted because of a short seller". It probably would have been better if the article more precisely said "17% short interest", which is probably the precise and technical wording for this situation.
The article's wording is definitely imprecise. I agree with you there. Here's my interpretation: The share is held by a lender, who has sold the share to a short-seller. In effect, 17% of the shares are "double-counted".
If there are 1,000,000 total shares, but 17% short-interest, then there would be 1,170,000 shares in circulation. It seems clear to me that the article is talking about short-interest (but is using somewhat imprecise words at that).
So its not so much that the share is being "held by a short-seller", but the share is "double-counted because of a short seller". It probably would have been better if the article more precisely said "17% short interest", which is probably the precise and technical wording for this situation.
Ah, okay. Or "17% of shares are out on loan to some short-seller".
Say an Insurance company owns 1,000,000 Tesla shares worth $273 million at the current price. It can lend them to a 'short seller' for a fee say 1% for 3 months.
The insurance company will get their 1 million shares in three months but it will get an income of $2.7 million. This means the portfolio is generating a positive return or it lowers the effective cost of the shares. But by helping short sellers it can wipe out your portfolio.
eg If the short seller(s) force the price down to $150 your shares have lost about $120 million.
The insurance company will get their 1 million shares in three months but it will get an income of $2.7 million. This means the portfolio is generating a positive return or it lowers the effective cost of the shares. But by helping short sellers it can wipe out your portfolio.
eg If the short seller(s) force the price down to $150 your shares have lost about $120 million.
That's not how the market works.
When a short-seller is done with their term, they have to BUY the shares back. When short-sellers buy (to cover), the price increases back.
In the long term, a short-seller sells the stock (which will drop the price), but then has to buy the stock later (which increases the price of the stock). The long-term trend of any short-seller is neutral at the worst-case.
When a short-seller is done with their term, they have to BUY the shares back. When short-sellers buy (to cover), the price increases back.
In the long term, a short-seller sells the stock (which will drop the price), but then has to buy the stock later (which increases the price of the stock). The long-term trend of any short-seller is neutral at the worst-case.