
SEC settlement sends Tesla stock soaring - okket
https://arstechnica.com/cars/2018/10/tesla-stock-soars-as-musk-taunts-the-sec-with-a-tweet/
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sabertoothed
Weird title. The title seems to suggest that the stock soars because of Musk's
"naughty by nature" tweet. It soared because of the SEC agreement (as stated
correctly in the article) and the impressive production numbers.

~~~
gamblor956
Somewhat ironically, the "impressive" production numbers are actually below
what they were expecting for Q1. Being generous and assuming only a 12-week
quarter, 51,000 cars is only 4250 cars/week, far below the 5000 they were
expecting to hit back in January. The news is that they are finally able to
maintain this sort of scale.

The unfortunate news is that despite the months of lead-in time to getting up
to this scale, they never bothered to get a handle on the logistics of
shipping out the completed product, and are now stuck with massive lots of
undelivered Model 3s. Musk's "genius" plan to deal with this is to spend a few
million dollars and few months to build a new fleet of trailers, rather than
simply work with existing companies to ship existing products to existing
customers within the next month.

~~~
nickik
They are between 50k and 55k, exactly according to the guidance from the last
call. Yes, 1-2 years ago they were to optimistic about mass production of
cars.

> Musk's "genius" plan to deal with this is to spend a few million dollars and
> few months to build a new fleet of trailers, rather than simply work with
> existing companies to ship existing products to existing customers within
> the next month.

Tesla is using a new type of sale and delivery system compared to pretty much
all existing companies. That has advantages and disadvantages.

I'm not sure what you are referring to with 'existing companies', you don't
just have to deliver. You have to deliver, do paperwork, show cars feature and
give the costumer the opportunity to point out quality problems. What existing
companies could possibly do that?

We will see in the longrun if location based are vehice based delivery is
better.

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haaen
Former SEC enforcement attorney John Reed Stark wrote about the complaint
against Musk:

(...)

But here’s the rub. The SEC does not typically file SEC enforcement actions
like the one against Musk. Indeed, a close reading of the SEC’s complaint
against the celebrated billionaire finds a litany of glaring absences within
the SEC’s allegations, including:

No alleged profits or other ill-gotten gain earned by Musk; No alleged scheme
conducted by Musk; No alleged market manipulation orchestrated by Musk; No
alleged pump and dump ploy executed by Musk; No alleged conspiracy between
Musk and anyone else; No alleged evidence of scienter or intent by Musk; No
alleged false filing or other false or inaccurate Tesla report to the SEC by
Musk; No alleged violation of any sort of required SEC “quiet period” by Musk;
and No concrete evidence of an alleged motive attested to Musk (though not
required in SEC enforcement actions, motive is typically pled or implied in
some way, shape or form).

(...)

[https://www.linkedin.com/pulse/secmusktesla-settlement-
dawni...](https://www.linkedin.com/pulse/secmusktesla-settlement-dawning-new-
era-sec-internet-john-reed-stark/?published=t)

~~~
true_religion
The SEC will file against you if it looks like you disrespect them. They do
not have the budget to investigate much less enforce their purview across the
entire market so the only stability we gain from them is based on their
reputation.

Musk threatened that so they came down on him hard.

------
slededit
A lot of people don't realize that Microsoft actually had two antitrust
agreements. The first in the early 90s was a slap on the wrist (so much so
that most people don't even remember it). Gates even mocked it. That
culminated in the late 90s antitrust that almost saw the company split apart.

------
sbov
I used to be a pretty big Musk supporter, but he's becoming increasingly
juvenile. His tweets like this make me feel like I'm back in high school.

~~~
toomuchtodo
I feel the opposite: I love his attitude. Delivering results allows for
leeway.

Disclaimer: TSLA investor

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kakaorka
I think what he’s doing is reckless and his behaviour is really immature. A
CEO is supposed to be doing the opposite of everything he has been doing for
the last few weeks.

~~~
jlarocco
I don't particularly like Musk, and I understand why people are mad, but Musk
doesn't owe them anything. Anybody who doesn't like it can sell their Tesla
stock and walk away. Same goes with Tesla employees.

It's not like he just started doing stupid stuff like this a couple weeks ago.

Edit: It's also amusing to see so many people on HN pushing the, "think of the
shareholders" line.

~~~
thrill
Wrong. Musk as an officer of TSLA, a publicly traded company, most explicitly
has fiduciary responsibilities to those who hold the company's stock.

~~~
jlarocco
Right, but there's leeway in fiduciary responsibility.

Musk has a reputation for doing this type of thing (specifically the immature
"naughty by nature" tweet), and running companies that way seems to work for
him.

People looking to invest with a by-the-book CEO should go somewhere else
because that's not Elon Musk.

------
RcouF1uZ4gsC
From the book In Search of Stupidity: Over 20 Years of High-Tech Marketing
Disasters by Merrill Chapman

In 1994, the U.S. government arrived at a fairly toothless settlement whose
provisions wouldn't take effect until 1995. Microsoft agreed not to require
hardware manufacturers to buy an OS license for every machine they made,
regardless of whether the machine used Windows or DOS. This was a rather
pointless restriction, as by the time the decree went into effect there wasn't
much else left to buy. Microsoft also agreed not to integrate new features and
capabilities into its products if they were intended to "crush" the
competition. Presumably, a gentle mauling would have to be sufficient.

Gates, however, in an action that signaled he had finally started to grow too
big for his britches, made a mistake at this point. Having maneuvered a dream
deal out of the DOJ's lawyers, Gates proceeded to hurt their feelings by
swaggering about telling everyone that nothing had changed and that Microsoft
would continue with business as usual. It was stupid behavior. Microsoft is
big and has a lot of money, but the U.S. government is bigger and has all the
money. Soft words and a humble attitude would have been the smart move. The
political appointees at the DOJ didn't pay much heed to Gates's mouthing off,
but in the eyes of the department's career attorneys, Bill Gates was a marked
man.

\----------------------------

The lesson is that when you get a favorable settlement from a government
enforcement agency, be humble about it.

------
BitterSweets
I'm glad. Big middle finger to the shorts and the mass media who seems to love
to post negative news on Tesla. Why didn't they include that the model 3 was
the most popular sedan this quarter?

I personally put more money in Tesla on Friday and woke up to a nice surprise
this morning.

~~~
gamblor956
_Why didn 't they include that the model 3 was the most popular sedan this
quarter?_

Because it wasn't. For example, In July alone, Toyota sold 26,311 Camrys and
26,754 Corollas. In August , Toyota sold: 30,141 Camrys and 26,155 Corollas.
This means, even if they sold no cars in September, both Toyota models sold
more in Q3 than the Model 3.

The Model 3 was the best-selling EV sedan in Q3, but it should have been,
given that it doesn't yet have any real competition.

~~~
xanderjanz
Depends on how you calculate it. Toyota sold more car, but in terms of $$
spent, Model 3 is the most popular sedan in US.

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jiveturkey
Interesting spin. The market actually thinks it's a great outcome that Musk is
removed as COB, and Musk spins it into some kind of personal endorsement.

BTW, soar = return to pre-crash levels.

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ourmandave
Was this tweet directed at the SEC? Or is that the assumption?

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Invictus0
Crazy to see how this guy has changed over the last year. From the whole "pedo
guy" scandal to the insane earnings call and now this barely-concealed stock
price manipulation stuff. He must think he's Tony Stark.

~~~
briandear
Except Tony Stark actually shipped products on time.

~~~
stcredzero
It's only in comics where massive feature creep has only positive effects.

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UpshotKnothole
What an asshole, and what a stupid thing to do. He has a responsibility to the
company and not just his immense ego, and that responsibility is long term.
Taunting the SEC while still under DOJ investigation and facing a number of
lawsuits is reckless, obnoxious, counterproductive, and borderline
sociopathic.

~~~
autokad
well, after a tweet that costed that much money, i would probably never tweet
again if I were him. however, it was a naughty by nature youtube link, so I
guess that is rather harmless

~~~
toomuchtodo
The fine was roughly 0.1% of his net worth. Seems negligible, from a relative
perspective.

~~~
tuesdayrain
He probably sees his net worth fluctuate more than that every day purely due
to investments.

~~~
UpshotKnothole
Yeah, being booted off the board, required to install two independent board
members, and facing a criminal investigation are probably the bigger deals
than the cash.

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binalpatel
"Musk and Tesla must each pay $20 million in fines, which will be distributed
to traders who were harmed by the tweets."

At face-value this sounds like "distribute the proceeds back to the hedge
funds that lost money".

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andrewtbham
Most other outlets have described the tweet as cryptic or enigmatic....

My guess is he is somehow taunting the shorts. He has posted songs for them in
the past... namely that song "who wears short shorts?"

Perhaps he is saying... the SEC is cheating on the shorts with him. Cuz...
it's widely suspected the SEC was influenced by short sellers.

[https://medium.com/@andrewt3000/suspicious-timing-in-sec-
law...](https://medium.com/@andrewt3000/suspicious-timing-in-sec-lawsuit-
against-elon-musk-8597876badb)

