
Tesla Plunges After a Conference Call - sxcurry
https://www.bloomberg.com/news/articles/2018-05-03/musk-says-don-t-buy-volatile-tesla-stock-investors-take-heed
======
mephitix
I was on this call. It was extremely cringey/embarrassing to hear Elon dismiss
valid questions.

At the same time, it was fantastic to see a young, smart, retail investor
(Gali from Hyperchange) get to ask so many questions directly to the
leadership team. I thought before the call that Gali would get to ask only one
question, like the other analysts. He was able to ask almost 10!

It was surreal. I was left feeling that the team overall did a great thing by
allowing Gali but wished that Elon didn’t insult the institutional investors
by (at least so harshly) dismissing valid questions.

~~~
nodesocket
Disagree about it being embarrassing and cringey. I appreciate his no-bs and
no-fluff candor.

Elon called out the press for writing misleading articles to generate clicks.
He went as far as calling it irresponsible and dangerous.

He also called out day-traders, saying of you can't handle volatility then
sell your stock. "I am not here to convince you to buy Tesla stock."

You can listen to the call at [https://edge.media-
server.com/m6/p/nwvzygvo](https://edge.media-server.com/m6/p/nwvzygvo)

~~~
3pt14159
Yeah I agree with you nodesocket. Musk comes off as focusing on the right
things, not getting bogged down by a x% difference on capital outlay here or
there.

~~~
matwood
> not getting bogged down by a x% difference on capital outlay here or there.

People would not be after him so much if he hadn't missed almost every
prediction he's made. The company is quickly approaching a cliff that the Musk
cheerleaders cannot simply cheer him across. Timelines really start to matter
when your runway is running out.

~~~
3pt14159
There is no fast approaching cliff or any such nonsense. Tesla's market cap is
$50B. They can release stock and dilute current shareholders if they need to.
Talking about whether it is a $4.4B capital outlay or $4.0B capital outlay
doesn't matter.

What matters for Tesla is making sure that their core offering doesn't get
overshadowed by an established automotive manufacturer before they can scale.
What matters for Tesla is that petrol prices don't plummet due to some new
unforeseen technology of economic downturn. What matters for Tesla is that
their cars wear reliably so they don't tarnish their reputation.

------
rawrmaan
Elon has always seemed to have the attitude of "not everyone should invest in
this stock". I find this refreshing. God forbid a CEO do anything except try
to drive the share price as high as humanly possible.

I don't know if this carries the same weight in a public company, but setting
expectations with investors is super important in a startup and prevents a ton
of wasted time wrangling investors who don't get the true cost/benefit ratio
of what you're doing.

~~~
zmk_
Actually as a CEO he has a fiduciary duty to maximise shareholder value.

~~~
garmaine
I’m not sure why you are down voted... that is his _legal_ obligation.

~~~
ceejayoz
That's a commonly held _myth_.

[https://www.nytimes.com/roomfordebate/2015/04/16/what-are-
co...](https://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-
obligations-to-shareholders/corporations-dont-have-to-maximize-profits)

[https://www.washingtonpost.com/news/wonk/wp/2013/09/09/how-t...](https://www.washingtonpost.com/news/wonk/wp/2013/09/09/how-
the-cult-of-shareholder-value-wrecked-american-business/)

[https://medium.com/bull-market/there-is-no-effective-
fiducia...](https://medium.com/bull-market/there-is-no-effective-fiduciary-
duty-to-maximize-profits-939ae50d0572)

[https://en.wikipedia.org/wiki/Fiduciary#Fiduciary_duties_und...](https://en.wikipedia.org/wiki/Fiduciary#Fiduciary_duties_under_Delaware_corporate_law)

------
Zhenya
What a weird call. Especially the callout of the diamler CEO.

Elon says that the diamler CEO does not understand physics "He doesn't know
much about physics. I know him. I'd be happy to engage in a physics discussion
with him. I actually studied physics in college."

Wiki says otherwise:

"... studied electrical engineering from 1971 to 1976 at the University of
Karlsruhe; he graduated as an engineer. He completed his doctorate in
engineering in 1982 at the University of Paderborn."

-[https://en.wikipedia.org/wiki/Dieter_Zetsche](https://en.wikipedia.org/wiki/Dieter_Zetsche)

~~~
nick_urban
Engineering students are usually required to study physics.

~~~
justwalt
I think he’s talking about the other CEO. Musk is 46, meaning he couldn’t have
graduated in 76.

------
ttul
Tesla is clearly flying close to the sun, and Musk is not incorrect to suggest
that investors who can't take that kind of risk should not be along for the
ride; however, it probably would have been more prudent to hold back on that
pronouncement, given that many investors seem to have taken the hint and
exited the stock...

Tesla is a giant confidence game - as are most high growth opportunities.

~~~
JumpCrisscross
> _Musk is not incorrect to suggest that investors who can 't take that kind
> of risk should not be along for the ride_

Risk is fine. Blind risk is not. Questions about cash position for a money-
losing company with less cash on hand than it burned in the trailing 12 months
are prudent.

~~~
pooya13
All the capex info was in their letter and they talked about it in the call as
well. Why should all the investors have to listen to them repeat themselves? I
for one appreciated that he skipped the question and did not waste my time.
Also the reservation holder conversion rate is a highly strategic information
and I don't think they should release that to the public. And to be honest it
is irrelevant while they have such a giant backlog of orders. my guess is that
the intent was to gather material for negative press. Let's not kid ourselves.
Tesla has been the target of a massive propoganda/trolling campaign recently.
(HN included)

~~~
shanghaiaway
Who do you imagine being behind your imagined propaganda campaign?

~~~
marvin
Context notwithstanding; as a long-term Tesla shareholder I am a bit skeptical
towards the Musk’s behavior on this call. (Haven’t heard it myself yet).

That said, Tesla currently has 38 out of 170 million total shares sold short.
So there is a strong economic interest in the company failing.

------
kc10
I have been investing a portion of my paycheck every month for the last three
years and never sold TSLA. It's bothering me to see so many high profile
departures particularly in finance/accounting groups. And yesterday's
conference call was a disaster, I see it as dodging valid questions related to
current state of the company and answering open ended interesting questions
like "When will Tesla launch its own network of driverless cars?".

I just dumped all the $TSLA stock I have bought for the last few years.

~~~
komali2
Nice, helping make it cheaper for us :)

I for one have been loving the dump, makes it real easy to buy.

~~~
refurb
I have a feeling that posts like this are going to be very entertaining to
read in a year or so.

Just like the "Dropbox is a stupid idea because..." everyone loves to quote.

~~~
komali2
Given how much content people post, we can just wait for _any_ company to
fail, then google their ticker on sites with comments, find some "idiots"
talking about buying their stocks, and laugh at them.

~~~
refurb
True, but I think Tesla is unique in the quantity and enthusiasm deptartment.

------
jsw97
This is apparently a common practice, although rarely this blatant. Paper:

[https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2479542](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2479542)

Paper finds that "firms that 'cast' their conference calls by
disproportionately calling on bullish analysts tend to underperform in the
future."

~~~
uryga
Haven't read the paper, but isn't the causality the other way around? As in,
troubled companies call on bullish analysts to try to keep up good
appearances, but then underperform anyway because of their problems?

~~~
jsw97
Yes, that's actually the causality they suggest in the paper.

~~~
uryga
Ah, thanks for the clarification!

------
Animats
The strange thing is, Tesla finally seems to be getting decent production
rates on their Model 3 line.[1] They got 2500 cars out the door in a week at
peak, which is respectable. Until recently, output was so low that it was
clear the line wasn't working right. They then shut down to retune their
production line, which makes sense. They should soon be cranking about
2500-3000 cars a week without much fuss. Once first shift is running smoothly,
they can add a second shift.

Tesla may be over the hump on getting the business working. But profitability
is still a ways off. Tesla may need more capital to get there.

What Tesla doesn't need now are distractions. The truck, the new roadster, the
next model, self-driving. They need to focus on shipping product before the
money runs out.

[1] [https://www.bloomberg.com/graphics/2018-tesla-
tracker/](https://www.bloomberg.com/graphics/2018-tesla-tracker/)

------
olivermarks
Musk sounded exhausted.

If Smith & Wesson launched a consumer flamethrower there would be
outrage...Musk has been able to distract with lots of shiny objects but the
clock is ticking, even amongst his niche fan base...I hope all the people who
are working so hard in Musk's various companies come out of this ok...

~~~
tensor
For the sake of society, I hope Musk succeeds. We've spent too much time as a
culture celebrating fairly useless achievements and being unwilling to dare to
do the things that will truly take us forward.

~~~
maxsilver
The important part of Musk's plan has already succeeded. He made electric cars
cool and competitive. If Tesla folds tomorrow, there will still be a large
market for electric cars, and multiple other companies serving that.

Depending on your needs, that has arguably already happened. While Tesla is
still the "coolest" brand of car, there are better/cheaper electric cars from
many non-Tesla companies already widely available today. That will not go
away, even if Tesla implodes.

~~~
djrogers
> While Tesla is still the "coolest" brand of car, there are better/cheaper
> electric cars from many non-Tesla companies already widely available today.

No, there are a very small handful of cheaper electric cars that may be
subjectively better for some uses but worse for many others. Bolt, i3, Leaf -
that's about it for mass-produced cars being bought in any volume, and the
manufactureres are taking a bath on them.

GM is reportedly losing ~$7,500 for each Bolt they sell, how long do you think
that would go on if Tesla were to disappear overnight?

~~~
yread
there is also Prius Prime, Clarity, Volt, Fusion, Ioniq, Outlander and more

[https://insideevs.com/april-2018-plug-in-electric-vehicle-
sa...](https://insideevs.com/april-2018-plug-in-electric-vehicle-sales-report-
card/)

~~~
djrogers
You’re conflating plug-in hybrids with pure EVs here, and even then most of
the ones you lost won’t ship 1000 cars per month, let alone 5k. Those are
peanuts.

My point is, the needle is just barely starting to move toward EVs - it’s not
pegged yet by any means.

------
bjl
Felt very reminiscent to Skilling's infamous earnings call. I'd have to
imagine any TSLA investors are very concerned after that performance.

~~~
mephitix
I’m not too worried. The earnings themselves were better than expected. Elon
said this in a tweet but its reiterated in the earnings - projecting positive
cash flow in Q3 and Q4.

And such dismissive behavior (as much as I am not a fan of it) is not uncommon
among stressed-out CEOs - Jobs, Gates..

~~~
xkjkls
Why does Elon Musk have any credibility regarding the cash position of his
company? He's repeatedly made similar statements that didn't turn true too.

~~~
mephitix
I take what he says, especially in tweets, with a grain of salt. That's why I
ignored the tweet - but I looked at the earnings, which re-iterated this (as I
said in the comment above)

~~~
xkjkls
The earnings, though better than expected, still show a company in a
precarious position that is going to have to raise more capital if it doesn't
reach cash flow positive by Q3 or Q4 of this year.

And if it does raise more capital, how do you justify the $50 billion market
cap if your earnings are crippled with so much debt financing?

------
danso
Is Musk still working long hours and sleeping at the car factory? Maybe he's a
little under the effects of sleep deprivation.

~~~
namlem
Or he's just in a manic episode of his BPD.

~~~
Diederich
BPD is 'Borderline Personality Disorder', not 'BiPolar Disorder'. Very
different things.

------
natch
Anyone know of a call-in number to hear a playback of the call? Or is it
online anywhere?

~~~
askl56
Here:
[https://www.youtube.com/watch?v=h-dyiASgGkk](https://www.youtube.com/watch?v=h-dyiASgGkk)

~~~
vkou
There's also a transcript on Yahoo Finance. [1]

[1] [https://finance.yahoo.com/news/edited-transcript-tsla-
earnin...](https://finance.yahoo.com/news/edited-transcript-tsla-earnings-
conference-095541387.html)

~~~
pdonis
This is of the November 2017 earnings call. That's not the one being discussed
here.

------
aresant
Not that it's going to happen.

But Apple is sitting on ~$270b of cash (1).

And is run by a guy in Tim Cook that is a world class operator and fulfillment
guy.

And who has been criticized for lacking vision :)

We can dream right?

(1) [https://www.cnbc.com/2018/05/01/apple-q2-2018-earnings-
heres...](https://www.cnbc.com/2018/05/01/apple-q2-2018-earnings-heres-how-
much-money-apple-has.html)

~~~
Analemma_
Apple buying Tesla would be a gigantic waste of money. Ben Thompson has
explained why in a couple good Stratechery posts, but the tl;dr is, a large
percentage of Tesla's valuation is goodwill (its reputation and "coolness
factor"), and Apple already has plenty of that, so all the money Apple spent
for that piece of Tesla's value would be pure waste. And that's before you get
into the fact that huge acquisitions, where the acquired company is in a
totally different sector than the buyer, almost never work.

~~~
fooker
Both Apple and Tesla sell luxury electronics. The difference is in just in the
size and the number of moving parts.

~~~
Analemma_
That's like saying that both Ford and SpaceX sell freight vehicles.

~~~
fooker
Apple and Tesla both sell to consumers of a rather similar demographic. You
can not say the same for Ford and Spacex.

------
Clubber
Perhaps a buying opportunity. Sounds like investors are being spiteful.

~~~
vkou
Asking how he is going to reign in capital expenses, when their burn rate will
drain them of cash in 8 months is not being spiteful.

It's called being an investor.

Refusing to answer that question, is either being spiteful, or disingenuous.
It's a bit of a red flag.

~~~
derefr
That wasn’t the question he refused to answer; he refused to (I think in his
opinion) sit there and do a bunch of simple—yet almost entirely
spitballing—maths that any financial analyst could do, to tell them how much
his proposed steps would save the company.

~~~
danso
_" And so where specifically will you be in terms of capital requirements?"_

This is a question that can be answered by "any financial analyst"?

------
mmsimanga
Having watched clip in the article and given I don't have any Tesla stock.
Additionally having been an operations manager I have some sympathy for Musk.
Every Tom, Dick, and Sally has an opinion but very few have the know-how to
help. But in today's world who needs to be an expert to comment or pass
judgment. On the one hand we have CEOs who chase the quarterly earnings at the
cost of long-term sustainability. Musk says he isn't interested in short-term
(in not so many words). Either way, you going to piss someone off. Like I said
I don't have stock in the game.

~~~
Nokinside
Firstly, this was not some PR event. Musk had large number of people knew what
they were talking about wanting to ask tough questions. What Musk is
interested in is not relevant.

Secondly, Musk can't avoid short term investor questions because unless he
answers them, there may be no longer term. This kind of clear avoidance of
difficult questions can easily add one percentage point to Tesla's future
loans and reduce the amount he can collect.

Tesla is down almost 12% from the beginning of the year.

~~~
supernovae
Investing is what we make of it. The reality is for everyone but the top 1%,
investing is long term. It's tied into 401ks, it tied into RSU, its tied into
Options unless you're the top 1% in which case the only benefit of short-term
markets is the ability to manipulate them for your own benefit. Many CEO's
know this and Tesla isn't the only company that faces this problem. Amazon has
to think long-term, many tech companies have to think long term. Trying to get
an entire industry/society to move forward or make systematic changes is a
LONG TERM proposition.

sure, we can day trade or buy stocks and sell whenever we want, but we're not
the ones causing market swings, we're positions in computational modeling
where the market makers aren't even offering our positions to the market but
using your sell to do another buy and make money off us reacting/acting on the
market.

The end result is still that Tesla seeks a profit - but its business goal is
to change the market. If you don't like that, don't buy the stock.

~~~
Nokinside
Even long term investing is fundamentally risk management. Tesla has so much
debt and burning trough so much money that Tesla has problems with the future.

You want to quantify the risks you are taking. Answering questions would help.

------
unclebucknasty
I was reading all of the thoughtful critiques of Elon's behavior when
something occurred to me: there is an awful lot of brain power here that is
spending an awful lot of time analyzing the decisions and words of one man.

It's actually odd when you think about it: we do a lot of observing and
commenting these days (myself included) and I wonder how much more productive
we would be individually and as a society if more of our energy was invested
in creation and building.

~~~
mathinpens
I was reading a fun essay by Thoreau about this the other day. I tend to agree
that a lot of people pay too much attention to ephemera with minimal value.

[http://xroads.virginia.edu/~hyper/walden/essays/life.html](http://xroads.virginia.edu/~hyper/walden/essays/life.html)

------
mathinpens
I don't know all that much about finance but I do know when someone is dodging
challenging questions because they don't have good answers...

------
howaboutnmc
Musk literally said to an investor "Please sell our stock and don't buy it.".

Transcript : [https://seekingalpha.com/article/4169027-tesla-
tsla-q1-2018-...](https://seekingalpha.com/article/4169027-tesla-
tsla-q1-2018-results-earnings-call-transcript?page=15)

~~~
mephitix
Context is important :) He was talking specifically to and about day-traders:

"We have no interest in satisfying the desires of day traders. I couldn't care
less. Please sell our stock and don't buy it."

------
avoutthere
It sounds to me like Musk has a card up his sleeve. If he were truly in fear
for the continued existence of Tesla, he would have been very patient and
accommodating toward those whom he might need to approach later for more
capital. I suspect that he has already secured the capital (or assurances that
he will).

~~~
dragonwriter
> It sounds to me like Musk has a card up his sleeve.

It sounds to me like Musk has been projecting near term (<1 year, sometimes
even “next quarter”) transition to being cash flow positive and not needing
new capital regularly for six years now and is used to just getting away with
it even though it's been wrong every time.

------
mwfunk
It’s alarming to see the volume of kneejerk defensiveness here. You can
idolize Elon Musk but still have a fact-based, rational perspective. You can
be rooting for Tesla in the most tribal and idealistic way imaginable and
still see their financial challenges clearly and analytically.

------
samstave
One of the things I was really was going to happen with Tesla would have been
a revival of the boutique auto industry - whereby, one could buy all the
subcomponents of the Tesla - a full drive-train-chassis setup with all
controls and then build custom bodies on top of them

Like trucks and vans etc.

Pipe-dream sure, but I was really hoping that this would happen.

How hard would it be to extend the length of the chassis only to allow for a
long van/bus/truck be built on top of it (and by how hard, I mean "how hard"
\- not "it couldn't be that hard, could it" type of question)

~~~
stale2002
Tesla is literally the opposite of that dream.

Tesla is effectively the Apple of the car world. The whole thing is locked
down, and if you make modifications to the car, they will brick it with
software.

You don't really "own" that Tesla.

~~~
samstave
Sadly, I know - thats why I said it was a pipe dream.

------
21
Tesla earnings call was the best I've heard in a long time, says Jim Cramer (a
CNBC popular analyst):

[https://www.cnbc.com/video/2018/05/03/tesla-earnings-call-
wa...](https://www.cnbc.com/video/2018/05/03/tesla-earnings-call-was-the-best-
ive-heard-in-a-long-time-says-jim-cramer.html)

~~~
xkjkls
In the entertainment sense, sure. But Musk is running a $50 billion company,
not performing stand up.

~~~
mcguire
Jim Cramer, though, is.

~~~
xkjkls
_presses button to make recorded bull sound_

------
boznz
Musk is Willy Wonka for the 21st century, for all his flaws you still gotta
love him and lets face it Wonka Chocolates just wouldn't be the same without
him.

------
agumonkey
I always have an issue about the statistical viewpoint about safety. Musk
finds it outrageous that AP like products are nailed by the press but I find
it quite normal. It's a new thing, and it's related to injury, it will be
pinned. I wouldn't expect any otherwise. Musk should just swallow the pill and
just work around that. Press won't write about your car that doesn't kill
people. That's absurd.

~~~
karthikb
Unless that’s your brand - see Volvo.

------
_bxg1
It's so hard to see them starting to falter. They were on the cusp of
mainstream success.

~~~
mikeash
They don’t seem to be faltering to me. They’re doing better than they ever
have been. They sold almost as many cars last quarter as they did in all of
2014 (which happens to be when I ordered mine). Model 3 production is ramping
up much faster than Model S or X production did, and is only a few months
behind Elon’s notoriously optimistic predictions.

------
kgwgk
I’m curious: was the word “bizarre” always missing in the title or has it been
dropped later?

~~~
K2L8M11N2
It was dropped.

------
IkmoIkmo
Any place to get the audio, given the entire transcript is available?

------
holografix
I for one completely defend him. It must be excruciating getting the self
serving type of questions that all boil down to:

“how well can I infer you’re doing so I make sure I make more money or lose
less money in the next 6 months?” Over and over and over...

~~~
xkjkls
If he actually answered it with any new information or to any real degree of
satisfaction it wouldn't have been asked so often.

~~~
akmiller
Didn't he provide all of the actual numbers? What else is he supposed to
provide?

------
Giorgi
Good. Dumbass "Analysts" can go eat you know what. Tesla is not there to earn
some granny their pension, it's there to be life changing company

------
chaostheory
It may be a strange call but it's not the first. Overstock's former CEO,
Patrick Byrne, had worse calls where he discussed his personal issues.

------
singularity2001
Please un-editorialize title.

------
sidcool
The news I dread to hear: "Tesla files for chapter 11".... It almost makes
wail.

I wish I had enough money to give Tesla a runway, free of Wall Street scrutiny
for a year. But that's not in the spirit of capitalism I guess.

------
bartozone
Elon did come across very Trumpian on the call, which, in the longer term may
serve his interests well. He's pretty upfront about not caring about what the
public markets think of him (or Tesla), and acts accordingly. Maybe if he can
devalue analysts, and their questions, in the long run these calls will have
less impact on value of the company.

I mean ... if I were an institutional investor in Tesla, I'd really wish he
would have answered those questions. He must have known what the outcome would
be.

------
nonbel
>'the CEO said an analyst was asking “boring bonehead questions” that were
“not cool.”'

The thing is that he isn't wrong. I listened to one of these earnings calls
the other day and literally fell asleep.

~~~
bllguo
It's literally his job to talk to investors. He explicitly invited those
questions, too.

Obviously it would be boring to you as a layman with no money on the line. I'm
sure I'd be bored too. That's not relevant though.

~~~
nonbel
>"It's literally his job to talk to investors. He explicitly invited those
questions, too."

I totally agree, still in my experience they are quite boring. I'm not even
advocating for any kind of change or anything, they are probably supposed to
be boring.

>"Obviously it would be boring to you as a layman with no money on the line."

Why would you I assume I was listening to an earnings call without money on
the line? But actually, now that you mention it, recordings of those calls
could be a good insomnia cure.

~~~
danso
Why do you have an expectation that a Q&A about financials should be
emotionally exciting?

~~~
nonbel
I don't. I even say this in the post you are replying to.

~~~
danso
My comment is directed more toward your opening rationalization: _" The thing
is that he isn't wrong."_

I don't believe Musk's critics are specifically disagreeing with how boring
earnings calls may or may not be. I guess if I expected these calls to be not
boring, I would think Musk had made an interesting observation.

------
ihsw2
Oh good, TSLA is on sale at 10% off.

Setting aside the abject glibness of this comment, the likelihood of it
recovering at this time tomorrow is pretty much guaranteed, and by his logic
(not everyone should own this stock) it will be owned by the right people
(those that believe in Tesla's ability to deliver a compelling product rather
than healthy stock returns).

------
bitwize
I get the feeling Elon thinks of Tesla as an OLPC for EVs: he doesn't care if
the business fails so much as it gets the concept of consumer EVs out there
and in people's minds.

Which probably doesn't make investors happy and understandably so, but the
Musk moves in mysterious ways.

------
staunch
Wall Street and their car industry friends want to kill Tesla. They use every
opportunity. They probably pay "PR" firms to do anti-Tesla propaganda, judging
from the shill YouTube comments I've seen.

None of it matters if Tesla produces products that people love. So far they're
doing a great job of that. If they keep up the "pace of innovation" they will
succeed, and if they don't, they will fail.

None of this drama will matter in the end. As a Musk fan since before he was
cool, this just makes me like him that much more.

~~~
bllguo
You've clearly wrapped up way too much of your identity in Musk. If you
actually care about his enterprises you should care about their financial
sustainability.

Want to kill Tesla? Do you understand who he was talking to? These people are
Tesla _investors_. Well, maybe that should be "were" now.

~~~
staunch
Your ad hominem attack is against the guidelines of Hacker News.

I simply believe that founders, products, and teams determine success and that
investor happiness is a lagging indicator. This is clearly what Elon Musk
believes too.

Wall Street investors are like sheep. You can curse at them all you want. They
can bleat all they want. They'll still come running when the food is ready.

Believing investors could be loyal to Elon Musk based on his personal behavior
is a good way to kill Tesla. They only value the profits that he can generate
for them, and he knows it.

