An Open Letter to Tesla CEO Elon Musk
Dude, you’re blowing it.
You are sitting on one of the biggest transportation breakthroughs in the history of mankind — the Tesla! The car that will usher in a new wave of self-driving vehicles, changing the way we get around.
This autonomous breakthrough could rank up there with the steamship, the internal combustion engine and the railroad.
It’s a breakthrough that will liberate daily commuters and free soccer moms from endless afternoons of carpool drudgery.
While I don’t own a Tesla, I’ve test-driven all three models. I’ve also been an early-stage investor in electric cars — unfortunately investing in Tesla’s now-defunct competitor, Fisker.
So you can say I’ve followed the Tesla Inc. (Nasdaq: TSLA) story from the beginning. And even though I made an early-stage wager on your competitor, I’m still a big fan.
Tesla Is Making History
Teslas aren’t cars; they’re more like futuristic rocket ships with wheels, capable of going zero to 60 in under 3 seconds. The torque on these things will pin your head to the headrest. They can also drive themselves down the highway with the press of a button.
Moreover, this is the closest proximity to a real-world version of KITT, Michael Knight’s artificially intelligent, self-aware and nearly indestructible car from the popular ‘80s show Knight Rider.
The latest models can be summoned on command — who needs a valet? They can also parallel park themselves for less-skilled drivers — you know who you are.
If you can successfully launch the mass-market Model 3, the name Musk will be permanently inscribed in the annals of transportation history with the likes of Vanderbilt, Wright and Ford.
And we get it, you’re eccentric.
You’ve built rockets that can land themselves, and proposed digging new tunnels underneath cities to alleviate snarling traffic jams. At 32, you put your life savings into a plan to colonize Mars.
Devout Tesla fans have even bought into your sophomoric humor, eagerly scooping up your “Boring Company” flamethrowers and your $1,500 Telsa surfboards.
Yet with all these successes comes a great deal of skepticism, especially from the Wall Street community of analysts and hedge fund managers looking to bet against TSLA’s success.
You May Have Gone Too Far
Tesla, despite the recent surge in stock price, remains the most heavily shorted U.S. equity. ShortSqueeze.com reports 34,721,900 shares short, a total that represents 27.4% of the float, or tradeable stock.
For comparison, tech giants Amazon and Google have less than 1% of their float short. Even Facebook, after its recent earnings stumble and negative press, has a short float ratio of 1.02%.
No tech company or CEO is doubted more than you.
And I’m worried this is starting to really get to you.
Yes, you’ve been prickly with Wall Street analysts on earnings calls and have childishly taunted short-sellers on Twitter, promising “the short burn of the century” back in May.
But on Tuesday, you may have gone too far:
Firstly, I don’t think it will surprise anyone if you take Tesla private. Michael Dell, tired of dealing with corporate raider Carl Icahn, famously took his eponymous company private in 2013.
There’s also a strong argument here that long-term planning at a private company is easier when you don’t have to constantly worry about hitting quarterly numbers. This means you wouldn’t be forced to sit through quarterly earnings calls, like the recent one where you called the Sanford Bernstein’s analyst’s questions “boring” and “bonehead.”
That’s all fine and dandy, if you’ve got the “funding secured.”
But if you don’t, you just brought on a world of hurt, as that comment tripped off sirens over at the Securities Exchange Commission (SEC).
The Short Burn of the Century?
You see, securities law states that you can use social media to disclose material information. However, not if that information is intentionally false or misleading.
If you were just intending to send the shorts running for cover and create that promised “short burn of the century” — it worked! TSLA stock jumped over 10% on the news before halting.
However, if you weren’t serious about having the funding secured, you’re likely to hear from the SEC faster than the Model S goes from zero to 60. And you just created a job bonanza for the short-sellers’ plaintiff lawyers.
Yet, as wacky as that statement sounds … as improbable it may be that you have buyers willing to take your company private at $420 … I’m willing to believe you.
Only because you have a history of making proclamations. Even though most sound obscene (such as plans to colonize Mars or dig tunnels under Los Angeles), almost all of them are truthful.
Editor, Crypto Profit Trader