Tesla: The Great Short

[legion]

I don't think these people are wrong, but trying to time a financial market is a fool's errand. The problem with shorting is that you can be forced to close the position (at a loss) before you are ready. The bigger problem is that your gains are capped (at the price of the stock times the number of shares you have shorted) and the losses are unlimited.

Trying to do battle with a cult and its leader is even more problematic.

https://www.latimes.com/business/autos/la-fi-hy-tesla-short-sellers-musk-20190408-story.html

It’s a sunny day in March and “Machine Planet” is flying a single-engine Cessna over Northern California. He’s cruising at 1,500 feet toward a massive lot leased by electric-car maker Tesla. His mission: to burst the Tesla bubble. And make some money doing it.

What he sees today makes his eyes widen: more than 100 car-carrier trailers, the kind you see on highways hauling new cars to dealers. They’re lined up in neat rows. Empty. Idle.

“Ten days left in the quarter, and they’re just sitting there,” said Machine Planet, peering down at the remote landscape outside Lathrop. Tesla bought those trailers to aid what Chief Executive Elon Musk said will be an unprecedented wave of new car deliveries in March. But to Machine Planet — that’s the name he uses on Twitter — the scene just confirms his suspicions that there are lots all around the U.S. filled with unsold Tesla cars. (He and others claim to have counted 52.)
…
Most $TslaQ posters try to remain nameless, citing the repercussions faced by some Tesla critics, including death threats to some $TslaQ members and harassment by Musk himself.

On a Hawthorne sidewalk not far from another Musk company, SpaceX, a man raises his iPhone to get a good camera angle.

It’s after dark. Model 3s by the hundreds are parked inside a lighted-up three-level parking garage. The cars are covered in dust. According to the man, some have been in there for months.

“I wanted Tesla to make it,” he says as he taps the big red button. “I’m a car guy, man. The Model S was a great car, especially when they came out with the dual motor.”

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.

Such storage practices are “extremely unusual” in the auto industry, said Bill Hampton, a Detroit veteran who runs AutoBeat Daily, an online industry newsletter.

Tesla doesn’t have traditional dealers, whose lots are filled with Fords, Chevys and Hondas awaiting buyers. That could account for some of Tesla’s scattered inventory, he said.

“But cars shouldn’t be sitting in staging lots for that long under any circumstances,” he said, “unless you have too many cars.”

Tesla declined to discuss the cars in the Hawthorne lot.
…
$TslaQ has no leader, but it does have a hero. His name is Lawrence Fossi, a lawyer and New York money manager who contributed to the Twitter hashtag as well as investor site Seeking Alpha under the moniker Montana Skeptic — until he was exposed by Musk.

According to Fossi, after he was outed on Twitter last July, Musk personally called the small investment office he works for. Musk told his boss he wasn’t happy about the online activity and threatened to sue Fossi for defamation. (Tesla doesn’t dispute that Musk contacted the company.)

Meanwhile, Tesla’s public relations department sent emails to the media naming Fossi and encouraging reporters to call his boss — phone number included. The communications executive involved declined to discuss that matter.

“I had never before heard from Tesla or Elon Musk to correct anything I wrote,” Fossi said. “I would have been happy to correct anything that was wrong.”
…
The short thesis gained traction last week when Tesla announced a dramatic drop in deliveries in the year’s first quarter — Model 3 deliveries fell 19% from the previous quarter, and older Models S and X models tumbled 56%.
…
But he noticed car-buyer demand was a big topic on $TslaQ. Contributors posted Google satellite shots of lots in remote locations, far from the company’s Fremont factory, where cars were being stored.

One spot was in Lathrop, not far from Stockton, in an unirrigated section of the Central Valley known as the “dust bowl.” A couple of $TslaQ contributors had spotted an ad for Tesla jobs there. They found what seemed like hundreds or thousands of Model 3s being trucked into a lot through a gate and behind fences. But they couldn’t get a good look inside.

“So I flew to Lathrop,” Machine Planet said. “There was this amazing moment when I realized the entire facility was packed with cars.” More than 3,000, he said.
“That was entirely the moment where we went from kind of believing Elon about demand and not being able to build enough cars to [finding evidence that] the cars are either not sold or not salable.”
…
One man started sending a drone over automobile auction houses, posting videos of Teslas stored there.

A loosely formed Shorty Ground Force began posting pictures of Teslas stored for weeks on lots across the country. Crow Point Partners, an investment firm with a short position in Tesla, periodically posted pictures of Model 3s parked in Norwood, Mass., covered in deep snow. The snow recently melted, but most of the cars are still there, the firm contends.

Just last Tuesday, a $TslaQ contributor posted a video that appeared to show dozens of Teslas parked on the fifth floor of a shopping mall parking garage in Buena Park.
…
A reporter roamed a public parking lot outside the Crunch Gym in Burbank, where more than 100 Teslas sat. The vehicle identification numbers showed that many were manufactured in 2018.

Machine Planet has created a website called Crowdsourced Tesla Research at tslaq.org, in part to escape the snark and hot takes that infect Twitter. He said readers could draw their own conclusions, but “we think there are at least 10,000 unsold Model 3s out there.”

He backs up his assertion with data from IHS Markit, a market research firm, as reported recently in the New York Times: Tesla said it delivered 245,000 cars in 2018. Most were in the United States. But IHS said only 164,000 were registered nationwide.

An IHS spokeswoman said the timing of reported sales could account for some of the difference, but for the full story, “your questions are best to be addressed to Tesla.”

The shorts say distorted sales claims fit with a long list of hyperbolic and misleading Musk statements...

[Zeke]

I read that article and was amused by the referred to Bill Ackman who attempted to short Herbalife and got his ass kicked.

[legion]

Originally Posted by Zeke

I read that article and was amused by the referred to Bill Ackman who attempted to short Herbalife and got his ass kicked.

That is the dark side of shorting, IMO. You find yourself in a position that you KNOW won't pan out (and like I said, shorting has unlimited losses)--so you pull some dirty tricks like trying to get some investigations going so that you can get out of your position.

[sammyg2]

Ackman was right.

[Zeke]

Originally Posted by sammyg2

Ackman was right.

Not according to the SEC and the 51% increase in the stock's value while he held short.

Telsa may have the last laugh. If they bring out a decent PU with their technology they might punch small hole in the biggest market in the US. The fact that they have ignored this segment other than talk surprises me. A mid size Ranger/Colorado unit would be killer. Ford just resurrected the Ranger.

[ZAMIRZ]

^Full-size truck is extremely brand loyal on the retail side and extremely cost sensitive on the fleet side. Not a good recipe for Tesla up to now, but I think the pickup is after the Y and new roadster, so it's coming.

Mid-size is not a good bet, as it's mainly a lifestyle choice and right now it happens to be hot.

[sammyg2]

Originally Posted by Zeke

Not according to the SEC and the 51% increase in the stock's value while he held short.

The FTC fined them $200 million.

Herbalife is a multi-level marketing company. IOW con, scam (IMO).

The company has been criticized by, among others, hedge fund manager Bill Ackman of Pershing Square Capital, who claimed that Herbalife operates a "sophisticated pyramid scheme"[5][6] after taking a $1 billion short position in Herbalife stock.[7] Herbalife agreed to "fundamentally restructure" its business and pay a $200 million fine as part of a 2016 settlement with the U.S. Federal Trade Commission (FTC) following accusations of it being a pyramid scheme. The FTC said in a press release about the settlement "it's virtually impossible to make money selling Herbalife products."[8] In November 2017, Ackman's hedge fund closed out its short position in Herbalife.[9]

Now most of the time I would say "buyer beware" but the slick con men trick people into buying their BS garbage products in hopes of selling them to make money.
Most do not.
But they often do make money by recruiting other suckers who buy products, who don't make money. so they recruit suckers, and so on. .

Mark Reynolds Hughes (January 1, 1956 – May 21, 2000) was an American businessman who was the founder, chairman, and CEO of Herbalife International Ltd, a multi-level marketing company.

Multi-level marketing (MLM), also called pyramid selling,[1][2] network marketing,[2][3] and referral marketing,[4] is a marketing strategy for the sale of products or services where the revenue of the MLM company is derived from a non-salaried workforce selling the company's products/services, while the earnings of the participants are derived from a pyramid-shaped or binary compensation commission system.

Although each MLM company dictates its own specific financial compensation plan for the payout of any earnings to their respective participants, the common feature that is found across all MLMs is that the compensation plans theoretically pay out to participants only from two potential revenue streams. The first is paid out from commissions of sales made by the participants directly to their own retail customers. The second is paid out from commissions based upon the wholesale purchases made by other distributors below the participant who have recruited those other participants into the MLM; in the organizational hierarchy of MLMs, these participants are referred to as one's down line distributors.[5]

MLM salespeople are, therefore, expected to sell products directly to end-user retail consumers by means of relationship referrals and word of mouth marketing, but most importantly they are incentivized to recruit others to join the company's distribution chain as fellow salespeople so that these can become down line distributors.[3][6][7] According to a report that studied the business models of 350 MLMs, published on the Federal Trade Commission's website, at least 99% of people who join MLM companies lose money.[8][9] Nonetheless, MLMs function because downline participants are encouraged to hold onto the belief that they can achieve large returns, while the statistical improbability of this is de-emphasised. MLMs have been made illegal or otherwise strictly regulated in some jurisdictions as a mere variation of the traditional pyramid scheme, including in mainland China.[10][11]

[legion]

Trucks are a horrible idea for an electric vehicle. I have a full-sized Silverado. I get about 18 mpg on the highway. If I have 500 lbs. in the bed and I tow a 6000 lb. trailer while running the air conditioning, I get 12 mpg. I drove it loaded like that from Atlanta in my normal time of 11 hours.

Now do that in an electric pickup truck. Your 800 mile range (optimistic claim from Rivian on their yet-to-be-released electric full-size pickup) will drop to something like 200 miles. You will have to stop 3 times to fully charge your battery. Let's assume it take 8 hours each time--which I imagine is a load of fun to do with a trailer in two. The 700 mile trip from Atlanta would take 35 hours instead of 11.

[RANDY P]

Imagine how easy it would be to rob one of those electric trucks.

Stop in front of it and rob it blind.

[red-beard]

I was never a hydrogen guy, until recently. A 50kg tank of H2 will take a Tesla S about 800 miles, maybe more since there is a significant weight reduction.

[trader220]

I have wanted to short Tesla for nearly a year now but I know better. I look at the puts almost every day but they trade so rich I can't justify buying any. The calls are not worth selling because you can get rolled so quickly.

I don't believe their accounting, the Federal Tax credit's going away, they are closing all their dealerships, they smell like a company who is dying. You cannot expense your way into a profit, so make all the cuts you like, the bottom line needs sales of goods that actually make money.

[widebody911]

Question: if he found a 100+ car carriers full of Teslas, why didn't they post pix thereof, instead of just stylized drawings?

I see a lot of these "tesla in trouble" stories and I think it's just the short-sell crowd trying to create a self-fulfilling prophecy.

[onewhippedpuppy]

Originally Posted by legion

Trucks are a horrible idea for an electric vehicle. I have a full-sized Silverado. I get about 18 mpg on the highway. If I have 500 lbs. in the bed and I tow a 6000 lb. trailer while running the air conditioning, I get 12 mpg. I drove it loaded like that from Atlanta in my normal time of 11 hours.

Now do that in an electric pickup truck. Your 800 mile range (optimistic claim from Rivian on their yet-to-be-released electric full-size pickup) will drop to something like 200 miles. You will have to stop 3 times to fully charge your battery. Let's assume it take 8 hours each time--which I imagine is a load of fun to do with a trailer in two. The 700 mile trip from Atlanta would take 35 hours instead of 11.

Yup. You might steal a few buyers from the Ridgeline. For people who actually use their trucks, no way. Particularly considering the typical pickup demographic, I doubt there is much overlap with the typical Tesla buyer.

[widebody911]

Originally Posted by sammyg2

Herbalife is a multi-level marketing company. IOW con, scam (IMO).

[red-beard]

Originally Posted by widebody911

Question: if he found a 100+ car carriers full of Teslas, why didn't they post pix thereof, instead of just stylized drawings?

I see a lot of these "tesla in trouble" stories and I think it's just the short-sell crowd trying to create a self-fulfilling prophecy.

What if it was in the Wall Street Journal?

https://www.wsj.com/articles/tesla-shares-tumble-after-delivery-miss-11554387456?mod=searchresults&page=1&pos=13

[speeder]

Shorting stocks is not for amateurs or anyone w a weak stomach. If you want to see an excellent documentary on the subject, watch the third installment of “Dirty Money” on Netflix. The people succeeding at it are literally some of the smartest people on earth. Rocket scientists and nuclear physicists. It’s all about the detective work.

[legion]

Originally Posted by speeder

Shorting stocks is not for amateurs or anyone w a weak stomach. If you want to see an excellent documentary on the subject, watch the third installment of “Dirty Money” on Netflix. The people succeeding at it are literally some of the smartest people on earth. Rocket scientists and nuclear physicists. It’s all about the detective work.

This. If you short a stock, your gains are capped and your losses are unlimited. You must know what you are doing and have the resources (and money to lose) to back up your position. Even if a company is failing, you can still lose everything on a short position if the stock experiences a sustained price increase based on false hope (or it gets swept up in a larger bubble).

[sammyg2]

Originally Posted by widebody911

Question: if he found a 100+ car carriers full of Teslas, why didn't they post pix thereof, instead of just stylized drawings?

I see a lot of these "tesla in trouble" stories and I think it's just the short-sell crowd trying to create a self-fulfilling prophecy.

The article said the car carriers were "empty. idle".

[Zeke]

Originally Posted by legion

Trucks are a horrible idea for an electric vehicle. I have a full-sized Silverado. I get about 18 mpg on the highway. If I have 500 lbs. in the bed and I tow a 6000 lb. trailer while running the air conditioning, I get 12 mpg. I drove it loaded like that from Atlanta in my normal time of 11 hours.

Now do that in an electric pickup truck. Your 800 mile range (optimistic claim from Rivian on their yet-to-be-released electric full-size pickup) will drop to something like 200 miles. You will have to stop 3 times to fully charge your battery. Let's assume it take 8 hours each time--which I imagine is a load of fun to do with a trailer in two. The 700 mile trip from Atlanta would take 35 hours instead of 11.

Yeah but I'd say 80% of the trucks sold in big cities are no more than grocery getters. How many PU's have you seen with 4 doors and a 4 foot bed? That's the market I'm talking about. You want a work truck, buy a work truck. Meanwhile I know a sihtload of contractors and service people that carry a small amount of tools for their work and don't travel far.

One more thing: Telsa makes a very fast car. The properties of electric power provide, as we know, for instant full torque and yet the damn things will do 100 MPH. Not for long mind you, but take some of that energy a use it wisely and the range will increase. A truck would have to be set up power-wise somewhat differently so it could handle a small payload and have some distance.

Now, take a casual survey of your family and neighbors. How many people drive even a 100 miles a day habitually. IDGAF about 300 mile range unless I plan on driving to Vegas across the desert. If that's a problem, use another car.

[Zeke]

@sammyg2, look I get your point and no one is kidding anyone about MLM sales structures. And yet, there they and many others are, still in business and still selling product. I've never participated selling or buying. I have a cousin who sells some nutrient product and he makes a living whereas beforehand he couldn't keep a steady job because of some mental issues like undue stress and not being able to focus. Let's not diagnose him, just approve of the fact that he can do MLM and no one has taken a shot at him after 10 years. Go figure.

I'm known here as sometimes a devil's advocate. The truth of the matter is that I do not regard anyone's opinion about anything as useful unless this person is my doctor and I will question him. I take every piece of information at face value and don't follow trends. Avoid them if I can just so I'm not ever recognized as a part of a trend.

Bill Ackman lost his ass and Herbalife is still there in the big building on the 405. That's fact. Fines? Common as flies in the business world. How many fines has your oil industry paid out?

The wooden stake may now have been taken out towards MLM operatives because of the new tax laws. Being in a MLM offered a nice tax write off if the money wasn't great. I mean how easy is it to keep a driving log and happen to have an appointment at the far end of any day's errands. All you need is a PO box in a shopping center nearby and after you pick up your mail, you've left the office and mileage is (was) deductible. As is your phone, etc.

Look at the real world and turn Fox news off along with a comedian who mocks news stories. BTW, I hated Jon Stewart. Nothing funny about that guy. Stephen Colbert, just a clone idiot.