"Shorts" didn't cause the CEO to invent a $420/share offer for the company out of whole cloth, nor did they force him to smoke a blunt on video. The mental gymnastics you have to do not see the red flags here, completely the result of the CEO's actions and mismanagement, is something.
Neither of those things bother me. Being a conformist is not a virtue in a business culture marked by top-heavy bureaucracy, mediocrity, me-too hype chasing, and slow decline. Economists, board members, bankers, c-level execs - the shot callers of the world are much less clever and equipped to lead than they collectively think they are. If you think hitting a joint is a red flag, I wonder what kind. It's just showmanship - he's building up his normal-guy folk-hero persona. It means nothing else, is completely harmless.
> Economists, board members, bankers, c-level execs - the shot callers of the world are much less clever and equipped to lead than they collectively think they are.
I completely agree with this, but disagree that Musk is constructively channeling his creativity and nonconformity here. He's trying to pivot from a niche product for tech enthusiasts to a mass market car, with a client base whose first questions will be about the car's reliability, not how quickly it can go 0 - 60. A guy who flies off to Thailand, accuses people of being pedophiles, curses out journalists, and yes, smokes a huge blunt during an interview, does not inspire confidence to most people at a time when his company is hemorrhaging cash, straining to meet production goals, slashing investments in the future, and losing senior execs left and right.
If Tesla was humming along it'd be one thing to have more of this edge, but to me this looks like a slow motion breakdown prompted by deep problems at his company.
To me, the senior execs leaving is what's probative. Reading between the lines, the CFO left because he feels Musk is unstable and doesn't know what to expect. I take that as much more significant than my own perception of Musk or some random person on the internet. Also, I tend to discount FUD about cash and production goals, but again, I weight the insiders' actions much more highly.
It's probably only "not smart" because you're assuming some hypothetical people are going to be hypothetically upset about the weed use when they have no real reason to be. In effect, you'd be that reactionary person you're worried about.
"Wall Street" is not betting on them to go bankrupt. Collectively, investors value this company that produces, at best, 7K cars a week at $45 billion. The idea that one quarter of profitability achieved through slashing capex to the bone fundamentally would fundamentally change their valuation doesn't carry much water in my view.
That's a solid point, and I guess the stock market is a bad figure to talk about bankruptcy.
Instead, we can look at the Bond market for that. Moody's rates Tesla 2025 bonds at Caa1, and today the interest rate on Tesla has risen above 8.8%
The bond market certainly is pricing in the risk of default and/or bankruptcy at this point. 9%ish bonds are really bad on a 7-year bond, especially in today's market that's got relatively low-interest rate.
I work at a hedge fund specializing in corporate credit. No serious market participants think that Tesla is going actually bankrupt but does run the risk of debt restructuring. Bankruptcy vs debt restructuring would happen under very different terms. As a better metric clogged by less noise, Tesla 1yr CDS is pricing in a 12% chance of default while 2yr is 20%. The bonds you mentioned should actually be a lot lower but they had a large retail allocation and are hard to borrow to short.
BTW, you mention the "interest rate" on those bonds when I think you meant yield. Very big difference.
> BTW, you mention the "interest rate" on those bonds when I think you meant yield. Very big difference.
I'm not very knowledgeable here, but is the key difference that yield is more a result of the market (i.e. bonds fluxuate in value but the return on the bond itself is fixed, so the yield reflects the relationship between cost and payout)?
He's right. I misused the terms. "Interest rate" isn't precise at all, and since we're talking finances, the details are actually important and I should have been more careful about which terms I used.
There is a "coupon", which is the amount a bond pays each year. Which is one kind of interest rate.
There is the "yield to maturity", and since Tesla's 2025 bond seems like a normal bond, so Yield implies yield-to-maturity. This is another "interest rate" but just saying "interest rate" is meaningless.
Since coupon vs yield is ambiguous, I should have used more precise language earlier.
> bonds fluxuate in value but the return on the bond itself is fixed, so the yield reflects the relationship between cost and payout
If I were to hear interest rate mentioned in relation to a bond, I would assume they were talking about the coupon which in this case is fixed. I think you have the right understanding, various yield methods basically are just the IRR of the security under different assumptions. If you bought at par and held to maturity, the yield would be equal to the coupon which in this case is 5.3%. Without knowing where the bond is actually trading, given that it has a yield higher than its coupon, you know that it is trading below par; the difference is how much it is trading below par under the assumption you get 100% of the principal at maturity.
I wouldn't normally refer to the return as "fixed" as that is primarily only used in reference to the coupon and because of the fact that you mentioned earlier in that sentence; bonds fluctuate in price so the yield is regularly changing given a change in price.
Most large investors are just holding. The small amount of shares that are exchanged every day are bought/sold by speculators and they are backed by institutions that get paid for this intraday activity. Also, with all the short positions on TSLA, the bank are risking an almost infinite sum of money (in case of a short squeeze).
Since Tesla doesn't intend to raise capital for the foreseeable future, banks can only gain from volatility or from a major event that would force Tesla to raise funds.
>The small amount of shares that are exchanged every day are bought/sold by speculators and they are backed by institutions that get paid for this intraday activity.
The largest shareholders were dumping shares last disclosure. Do you have data that says otherwise?
Tesla is more than just a car manufacture. I doubt self driving + solar + battery + charging network etc is worth the kind premium they have over just being a car company.
But, analysis based strictly on car sales a mistake, especially as established car companies outsource so much parts production.
Agree with Jacques M on solar, and would also add that much of the battery tech is Panasonic's and self-driving is a long ways away from being road-ready.
But, if you had a company that just did self driving and had as many cars on the road as Tesla does people would value it. Likewise for a giant battery factory, or a company putting out those solar shingles even with just a handful of installs.
Now suppose they sell those lines of business off to some other company to free up some capital. It's a path through the cash crunch that may catch people off guard.
PS: I am not saying buy the stock, but I don't think it's dropping enough to become a 45 billion dollar company any time soon.
There are amateurs successfully manufacturing ancient Kodak photographic processes; given that, "insert apples into bag" sounds pretty easy in comparison. The problem is my real juicer juices better than I can likely make this machine juice with homemade bags, and to keep my carb load low, I generally eat pieces of fruit not juices so I'd not use it personally, although its an interesting challenge.
I guess the components. I think the sold the machine at a loss and maybe you could make some profit reselling some components, yet I am not quite sure.
Protectionism would benefit some U.S. farmers, but certainly not all. The U.S. is a net exporter of corn, soybeans, dairy, etc. to Mexico and they are our third largest agricultural export market.
I'm not sure they vision you're describing is the direction private equity would take it, but with the major tech buyers shying away it does seem like a private exit is the most likely way this ends.
It turns out Pew found the opposite in their 2016 poll of global opinion of the United States. Favorability of the U.S. increased from 50% favorable to 57% in Germany from 2015 - 2016, while unfavorable views declined from 42% to 38%.
Great, then everything must be fine! Continue arming Jihadists and keep creating a mess in the Middle East so we receive more of these fine people! It will only fasten the process I described before.
Maybe you should inform yourself better. Germany refused to help their so called "ally" 2003 in the Iraq war, Germany refused to help their "ally" in the Libyan war, Germany refused to support any side during the Syrian civil war. Germany is the main reason that sanctions against Russia during the Ukraine conflict were weakened to the point of irrelevance (the US actually wanted a full blockade - LOL) as the government understands that it's really the US that caused this conflict.
The only US war that Germany viewed as legitimate and thus supported was the Afghanistan war of 2001.
It was more a reference to the whole "History of the Middle East, 1870-1960" thing, wherein Europe got its empire building thing on, redrew national boundaries, set up new governments, and generally made a hash of things before deciding it wasn't fun anymore and abruptly exiting the region, leading to the power vacuum the US stepped into in the 1950s.
Which doesn't change the fact that the US had no business invading Iraq in 2003 and probably should have stayed out of Afghanistan as well, but pretending Europe -- Germany near the top of the list -- had no role in creating the situation there is silly.
I really don't care about stuff that happened so long ago as it most people that are fighting in todays conflicts weren't even born back then and refugees coming to Europe don't do this because of something that happened prior to 1960.
That's like some Arabs retarded claim that every evil and barbaric thing they do today is justified because of the Crusades! (even though in reality the Crusades were a defensive move against the Arab invasions and thus absolutely justified but that's a different topic)
There is a difference between quality, informative journalism which allows people to make up there own mind and endless character assassinating, speculative
tabloid smut; However, I trust you know that.
The reason I used Trump as an example is because from what I've read and seen of Clinton she doesn't seem much better but is largely ignored in some media outlets in Australia.
What have you read and seen about Clinton? Because the bad things she actually has done are not remotely in the same league as those of Trump. She gets accused a lot by conservatives who clearly have a chip on their shoulder about her, but none of those accusations turned up anything serious. There have been 7 congressional hearing on Benghazi to try to bring her down, but nobody could find anything she's actually done wrong. The email server was certainly sloppy, but hardly worse than anything other government officials have gotten away with.
The things Trump has done wrong, like the Trump University scam, not paying his contractors, opportunistic bankruptcies to get out of paying his debts, while he still gets to keep his own profits, and the rape case with a 13 year old victim against him, get barely any attention at all. Most of the attention he gets, is about things that he personally has actually said. And that's already bad enough for most people.
With those candidates, there is no "lesser of two evils" in my opinion, though the media has us believe so. That is my point. My point is about media bias and, it's rampant.
If there's no "lesser of two evils", it's because Clinton is not really evil. She gets lots of bad press, but all things considered, she's actually pretty good. Certainly by the unfortunately low political standards of US.
I'd certainly like the US to elect more progressive politicians, but that seems unlikely to happen. In any case, Trump is sub-par even for US standards. He should be completely unacceptable, and fortunately even people of his own party are finally starting to see that.
Well, yea. One of them is an actual good candidate and the other is Trump. The media is just trying to make them look competitive so people keep reading stories on the election.
