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Tesla Plunges After a Conference Call (bloomberg.com)
286 points by sxcurry 11 months ago | hide | past | web | favorite | 397 comments

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.

A little more context from the WSJ article (https://www.wsj.com/articles/teslas-elon-musk-turns-conferen...)

>“We’re going to go to YouTube, sorry. These questions are so dry. They’re killing me.” He directed the operator to take questions from Tesla investor Galileo Russell, whose HyperChange TV YouTube channel features a video titled, “Why I Bought Tesla Today at $255/Share.”

>Mr. Russell, who had campaigned to get on the call usually reserved for analysts, got more than 20 minutes from Mr. Musk. The first of his dozen or so questions: When will Tesla launch its own network of driverless cars?

>“Thank you for an interesting question,” Mr. Musk replied.

It's especially cringey because if Musk was honest about that interesting question he would say he has no idea and should really be focusing on ramping up production. Instead it's a softball question that lets Musk proselytize on the radical world changing work that Tesla is doing...

In the grand scheme of things figuring out how to make model3's faster than they can sell them is a boring problem for Musk and I could imagine how frustrating it must be to have all the banks freaking out as if they're going to miss a fleeting opportunity to sell a bunch of cars. It's like when Nikola Tesla was trying to build worldwide wireless telegraphy but J.P. Morgan just wanted him to make fluorescent lights. Hopefully things go better for Elon than they did for Nikola.

> In the grand scheme of things figuring out how to make model3's faster than they can sell them is a boring problem for Musk

It's the gateway problem to any of the ones he might find more interesting, and if he isn't willing to engage with that problem enough to satisfy investors, he should be “Chief Ivory Tower Visionary” and let someone else be CEO. Or, at least, get a COO and gracefully hand off boring operational questions to them.

The CEO role is Chief Ivory Tower Visionary. As CEO, your #1 job is to set the vision and strategy for the company, and your #2 is to get the right people on the bus and the wrong people off, which is dramatically easier with a strong vision.

He does desperately need a good COO though to make sure Tesla can actually deliver on its promises.

> The CEO role is Chief Ivory Tower Visionary.

No, the CEO role is turning abstract vision into concrete strategy and communicating that strategy especially to investoes, because money people always want to hear things from the horse's mouth. It's a good thing for the CEO to be the visionary rather than channel someone else's vision, if they can do the rest of the job, but they can't be stuck in an ivory tower and think that addressing the path from present reality to distant vision is beneath their dignity.

Lol, my old startup had a great Ivory tower CEO. We ran out of runway after he continually chased any shiny ball that the wind brought him. No monetary plans, no concept of what a usable product could be, just lots and lots of vision, and vague descriptions of implementations to the team.

That doesn't disqualify your statement, but it does highlight that - if that is correct, a COO is needed to put some sanity on the Ivory goals.

Then again, I was working for a startup. I guess that was a success (~25M funding before fizzling), as far as startups are concerned.. lol.

Is it really ideal doing things this way ? Or is it just part of an ego trip, and deciding on such complex things as vision an strategy for a company are better done in a collaborative fashion, maybe with the CEO as the final arbitrer ?

And how much of that image of a all knowing visionary CEO is just a manufactured image ?

It's pretty difficult to generate a coherent vision by committee - you usually end up with something that nobody finds compelling, not even the people who collaborated on it.

And of course the image of an all-knowing visionary CEO is a manufactured image! It's not like people can actually predict the future. Rather, it's selection bias at work. Those CEOs whose vision doesn't resonate end up getting replaced, or their company goes bankrupt, and then they get written out of the history books. The thing is, you need to have a vision to get people excited and actually rowing in the same direction (nevermind the right direction), so without that you're dead in the water anyway.

Sure visions aren't usually created by committee. But aren't visions usually starting very raw, and not really that valuable or unique("let's build a computer for every pocket") - and to get to a coherent and unique vision, you need some research and exploration, which is usually a team effort ?

No argument there (and I think that the success of Musk's companies is largely because of the faceless engineers he hires that toil away to make it a reality).

My point is that left to their own devices, most of those engineers would rather toil away on their own startups or hobby projects, and that convincing them to all work on a tiny piece of a big project requires someone who's both charismatic and has a finger on the pulse of what problems can excite people. Musk has been uniquely successful in aligning people to work on big, hairy, audacious goals.

For all that Musk is credited with versus what he actually invented he is not Tesla, he's Edison with worse business sense.

He’s building things other places won’t touch because of the economics

Everyone wants to sit and cross t’s and dot i’s because they are trained those matter more than net new

If those are the only conversations you have, only doing things you’re sure will be comfortable the economy and society stagnate

Economics are not the law of the land or reality. They’re a control mechanism for our output as a thinking, feeling, creative species

Let’s just make more banal phone apps I guess. The ones where the economics are well known to keep us safe

See stories about kids not playing outside or being allowed a quasi dangerous chemistry set

No one wants to be wrong so we take the safe route, which protects the status quo we all bitch about

Literally every industry he's involved in has competitors several of which pre-date his entrance in each.

And yet none of them are landing autonomous reusable rocket modules

Of all the 100% electric cars on road, he has two in the top 5

Who else has been pushing battery storage and solar systems that aren’t ugly af and simply made of old parts glued together in parallel?

All these other experts with experience can’t seem to hang with Johnny come lately.

Humans don’t have a history of being petty over others not being the same as them, or worse, outperforming them. We’d never cherry pick facts, and ignore the whole story. Why that would make us no better than animals

>>And yet none of them are landing autonomous reusable rocket modules

I watched Armadillo do that in 2005

>Of all the 100% electric cars on road, he has two in the top 5

And neither invented the category nor managed to turn a profit on it

>Who else has been pushing battery storage and solar systems that aren’t ugly af and simply made of old parts glued together in parallel?

For batteries: Panasonic, LG but also literally every battery company and chemistry department in the world.

For solar panels: also every chemistry department and dozens of companies, "China" as a vague term.

And these other experts: they're making money instead of losing it.

But even then this whole post buys into the idea that I some how have to disprove that Elon Musk does these things. He doesn't. Companies that Elon Musk is CEO of do those things.

When people are talking about SpaceX’s accomplishments, you can assume an implied “* from orbit”

I guarantee you John Carmack would not say he did anything close to what Musk did.

Yeah but they 'didn't do anything close' to what SpaceX (not Musk) did, 12.5 years ago. That nobody bothered to do it in the (presumably) 20 years that it was viable is probably an indication that while aesthetically cool it's probably not all that economically practical.

i suspect the space industrial complex had built up a great deal of inefficiency, creating an economically practical exploitable opportunity for anyone with the gumption to face down the status quo. Heck, the heat shield on the dragon capsule is in the NASA database, practically free tech invented and tested in the 70's and dismissed by possibly dozens of programs except for a tiny few. SpaceX did a little appropriate tweaking and made it commercially viable and probably more suitable than everything else, despite industry groupthink...

Whether a problem is interesting is orthogonal to whether its important. This is an earnings call and scaling up production is actually an important issue to address for the company's long-term viability.

The question wasn’t about scaling up production. It was a very specific question about trees when Tesla doesn’t really know what the forest looks like yet.

If you're in the lumber business and giving estimates on how much wood you're going to deliver per month, then not knowing what the forest looks like might be considered something of an existential problem.

I get that Musk really enjoys thinking big and changing the world, and to such a person questions about capital expenditures might be dry and boring, but they're still important and need to be answered. If he doesn't want to do it then he should delegate.

It may be a "boring" problem, but people aren't just paying for a reservation for nothing, ultimately they are expecting a car. And if there's no indication that they can meet the promises, that's a problem and he shouldn't be promising or giving wild production estimates in the first place.

Unless you believe that Musk is selling the ability for people to say they have a reservation. In which case there's no point to even bother building the cars in the first place.

but thousands of model3's are being produced and delivered every week. at this point it's just a matter of time for reservations to be filled and velocity will ramp up naturally as they improve their process. the investors panicking because velocity isn't doubled yesterday doesn't seem like long term thinking.

You can't focus on the long term at the expense of the short term if in between you're bankrupt.

This is a lot like the fallicious thinking surrounding poor people and why they so often remain in such shitty circumstances.

If they could afford long term planning and investment, by definition they wouldnt be poor.

...that’s not what investors are panicking over? You know that right?

The investors are panicking because Elon didn’t answer two pointless questions.

Perhaps they need to ask better questions next time?

"Sacconaghi pressed ahead with another query about Tesla lowering its 2018 capital expenditure projection to $3 billion, from $3.4 billion. Ahuja said the carmaker would spend less by simplifying its approach to automation and curtailing infrastructure outlays.

'And so where specifically will you be in terms of capital requirements?' Sacconaghi said.

'Excuse me. Next. Next,' Musk said to the call operator. 'Boring, bonehead questions are not cool. Next?'"


I'm not defending Elon's behavior here, but speaking more generally: if you're in a place where you need to maintain maximum productivity for a while, because a deadline has slipped for example, meetings can turn into a massive time sink if you don't act like a total nazi during them.

In so many meetings, people just want to hear themselves talk, whether to offer some opinion, reiterate some point, or ask some useless question. If your goal is, "end this meeting as quickly as possible so I can start fixing the things that need fixing", often the other people in the meeting become your careless adversaries.

edit: I regret trying to raise this point in a thread about Elon Musk. :-(

You know Elon doesn't actually like turn wrenches and connect wiring harnesses right? Talking on the phone with investors and making sure the company maintains creditworthiness is his actual core job.


It is obvious to anybody looking at the balance sheets of the company that TSLA will need to raise capital soon. Either late 2018 or maybe early 2019. A company with $3 Billion cash that's losing $1-billion per quarter will need more money. That's just the facts.

Musk is going to be either relying upon institutional investors / the stock market in general for another round of equity offerings, or relying upon banks for a loan. In either case, it seems like Musk just bit the hand that feeds his company money.

Another 300,000 reservations at $1000 per is probably not going to happen. There are fewer and fewer ways for TSLA to raise tons of money.

Linear approximations aren't really the best way to do time series predictions.

Better than Elon's exponential approximations: https://twitter.com/elonmusk/status/881757617416056832

I'm not necessarily saying "TSLA Will definitely run out of money in 3-quarters". I'm saying "TSLA is currently, on a linear-approximation track to run out of money in 3-quarters".

Obviously, the Model 3 rampup will improve profitability. But the Model 3 Ramp-up also requires more resources (more humans in the assembly line. More robots in the assembly line. etc. etc.). So that still requires money.

A linear approximation is basically a quick-but-shitty-approximation. Its really easy to calculate and full of flaws, but full of flaws in a way that almost everyone can immediately understand.

Exponential approximations (ie: Musk's approach) might be more realistic... since production lines can exponentially grow to some degree. But if you are off by even a little bit, then you end up being ... oh I dunno... 8-months to 10 months late with your 5000-cars per-week estimate.

Tesla plans on spending a lot less CapEx in the future compared to last quarter, so they won't burn through as much money.

Given that he was so cavalier here that has these noses bent out of shape, and that he was tweeting April fools jokes about being bankrupt, could it be that he is actually pretty confident in Tesla's credit worthiness and that capital raising will not be required? Seems like a pretty dumb bluff otherwise - particularly on April fools.

Yeah, but a conference call with investors is not the kind of meeting you cut short. Maybe a weekly status meeting sure, but your quarterly call with people who if things go south, you'll have to rely on their largess to borrow money from? That's something you treat with care.

Borrow money isn't the right word. They're not creditors, they hold equity. They're the owners Musk is dismissing. The point of these calls is to make sure the executive officers are being held accountable to the owners of the company with thier money Elon is managing on their behalf. It was a PTA meeting and Elon Musk was being a petulant child who doesn't think he should have to do what his parents tell him.

There are plenty of people holding Tesla bonds that are also listening to this conference call intently too.

>meetings can turn into a massive time sink if you don't act like a total nazi during them.

Which would explain Elon ending the conference call. Instead he spent 15-20 minutes taking open-ended questions from a youtuber with a TSLA position of 56 shares.

>If your goal is, "end this meeting as quickly as possible so I can start fixing the things that need fixing"

For Elon the 'things that need fixing' are exactly what the investors he cut off were asking about. If he is so focused on fixing those things he should have been able to give easy answers. The dodge is illustrative of how well he's handling those problems.

As well it seems ridiculous that the CEO of a ~$50B company can't spare an hour or two every quarter to explain his own company. Even Elon Musk isn't that busy.

If those are actually the things he is working on then perhaps there is no answer to give?

How long is your piece of string?

Well this morning it was three metres but then we doubled it and it looks like that was too much so come back tomorrow and we will let you know.

Then perhaps Musk could be honest and state explicitly that there is no answer. Instead, he chose to respond in a fashion that has multiple interpretations:

- There is no answer

- Musk does not know the answer

- Musk does not want to admit he does not know the answer

- Musk does not want the answer to be known

It's the second time in a short while that he shows he does not want to run the company like it is a public company. But he does want access to that capital. Those two don't mesh.

> It's the second time in a short while that he shows he does not want to run the company like it is a public company. But he does want access to that capital.

I think that Matt Levine (bloomberg) might suggest there's more & easier money to be had in the private market, anyway (see Uber, pre-IPO Spotify, etc...).

The problem for Musk, if he also shares that view, is that taking the company private seems (to me) like an impossibility at this point.

> Matt Levine (bloomberg) might suggest there's more & easier money to be had in the private market

That hypothesis is, at least so far, not sustained by the evidence of private-market darlings continuing to rise in the public markets.

I have no idea why anyone would ever downvote this, it’s a very non controversial statement. Being a public company is a double edged sword, it most definitely has downsides to go with the upsides. Depending on the company/industry/timeline/economy/etc., for some companies the downsides of being public can become a lodestone dragging them down (see Dell).

I think its too early to say Dell has been a posterboy for why going private makes sense, the company was saddled with massive amounts of debt due to the trasition, and are currently struggling to keep above water.

The situation has a lot in common with why leveraged buyouts almost always end in disaster, dispite the hype surrounding them when they are first annouced.

If Musk has a way to keep investors happy without spending time on these calls, he doesn't appear to have deployed it yet. If he doesn't think keeping investors happy is necessary or part of his job, well I guess we'll find out.

This is not a very frequent meeting. He is explaining to the public & investors why they should keep backing Tesla, and it happens only once a quarter. It's worth being thoughtful, given the tens of billions of dollars all the non-Elon shareholders have at stake.

He spent 20 minutes answering softball questions from a youtuber instead.

> He spent 20 minutes answering softball questions from a youtuber instead.

Not just softballs... questions that have nothing to do with Tesla today or the near future... rather... questions about Elon's whimsical dreams of the far future and how Tesla might possibly play into that.

Questions about fully autonomous electric vehicle taxi fleets, etc... but he skipped all the questions about how he's going to get Tesla there or how to survive long enough to see that future.

see that you are not defending, but this is not a meeting. it is an investor conference call - most if not all of the entire point is to clearly and openly answer their questions about financials...

Yeah, it’s not like a weekly status update meeting. It’s a tad unprofessional IMO. As the CEO of a public company, you are accountable above all to your shareholders.

Are these shareholders he’s talking to, or investment bank analysts trying to get the CEO to fill in their spreadsheets for them? I guess I’d be a bad CEO but I don’t get why an “investor” call should be about the company showing respect, bowing down and kissing Wall Street’s ring.

There is a difference between asking straightforward financial questions from his shareholders with grace and tact and "bowing down and kissing Wall Street’s ring"

Yes his shareholders, you know the people that were specificly invited to this call, own the company and that he has to directly answer to, by law.

Instead musk decided to childishly deflect.

On this specific point, he refused to answer two questions from (Wall St) analysts, and instead got questions from a (retail) shareholder. That would seem to be the right priority, even though his attitude was wrong.

There's nothing to "defend". These articles are entirely misleading and absurd. What he said wasn't even noteworthy.

I recall reading an interview with musk on wait but why (edit: https://waitbutwhy.com/2017/03/elon-musk-post-series.html ) where the interview mentioned researching musks intolerance for "boring" questions and even trolled him a bit.

Obviously the appropriateness is different, but this is not new behavior. Anyone trying to draw conclusions about the state of tesla from his behavior here is probably making mistakes (or at least using bad data) unless they thought the same BEFORE this call.

To be fair, he's not entirely wrong. I guess people just don't expect this type of response. But then, acting within the confines of normality isn't really the trait that may bring the dawn of a new era of humanity.

Interestingly though, markets are reaction to this response emotionally.

Er, why is asking for something fundamental to running a business (i.e. "How much money do you have/need?") a partly boring/boneheaded/uncool question?

>Er, why is asking for something fundamental to running a business (i.e. "How much money do you have/need?") a partly boring/boneheaded/uncool question?

Some people on HN think Musk is doing us all a favour by allowing us to participate in his projects. Evidence of this is the inevitable, "Elon should take the company private" that seems to surface in these threads. As if going public is a favour from Musk, as opposed to a way to raise capital.

The company is public and the CEO is accountable to the shareholders. Period. The hubris with this company is shocking.

Also, TSLA is basically the kind of company that couldn't even exist as a private company. Access to the broad capital and debt markets is the only reason they still exist.

Because he's Elon Musk and he doesn't care about investor returns, he wants to build rockets, cars, tunnels, and explore space.

No matter what he does he'll more than likely be fine on the money side.

> he's Elon Musk and he doesn't care about investor returns

Then he shouldn't be the CEO of a public company which continues to sell stock and debt to investors on the promise of a return.

Also, Elon Musk very much does care about returns. He has a great track record in that department. He's just learned it's not something that's healthy to focus on in the short-term. Unfortunately, running out of cash forces the compression of time horizons. The latter is what investors are rightfully worried about.


The west coast bias in Hacker News is always shocking. The capital markets exist for a reason, and the people he's mocking on this conference call are the ones that he's going to need to be begging for billions if things don't deliver in Q3 or Q4.

I realise we're not meant to meta-discuss here, but that post you're replying to was flagged and dead, and I vouched for it.

For what it's worth, I agree that the post was ridiculous - Musk's behaviour is dumb and with every week that goes by I expect reality to catch up with him more and more. But I don't think the HN community should be flagging and killing posts for being naive and un-business-like. I struggle to identify what rule was broken there, and (supposedly) west coast "money is free" bias is not a good reason to suppress someone's post from being visible.

If the price drops and someone else thinks its undervalued they'll buy it. Elon doesn't have to brown nose to Wall St. bigwigs for that to happen.

I don't think "answering basic questions about the financial health of your company" really should be considered "brown nosing", but to each their own.

And it's not that simple that he can just raise debt or equity if Tesla's stock starts tanking. There aren't billions of dollars out there to be invested or loaned to money losing companies whose stock price is tanking. If come Q4 Tesla is having to raise money at a lower valuation, it becomes even more difficult to see the path to success.

>I don't think "answering basic questions about the financial health of your company" really should be considered "brown nosing", but to each their own.

Tesla has been thoroughly analyzed every which way, moreso than other companies. Really there is no end to the amount of info that Wall St wants, everyone is trying to make a buck and wall st senses the hype.

>There aren't billions of dollars out there to be invested or loaned to money losing companies whose stock price is tanking.

Tesla is public. Yes there is. Just depends on whether you can stomach the risk.

Tesla’s reporting leaves a lot to be desired.

Why wouldn’t Musk release a detailed plan of what is going to materially change in their production goals and capital expenditures over the next sixth months in order to finance their debt? Explain the process for how the make their projections and pronouncements? Explain why it is prudent to invest in multiple new models and production lines when his company is burning through $4 billion a year and can’t meet current production targets? Why doesn’t he explain how many of the 500,000 Model 3 deposits remain, given that at current production rates that will take almost a decade to meet? Why doesn’t he provide monthly sales figures like every other automaker?

> Tesla is public. Yes there is. Just depends on whether you can stomach the risk.

You understand that greater risk necessitate the possibility of greater return, right? What interest rate is it going to have to be paying on debt it raises? TSLA bonds are already at 8% interest, in junk bond territory.

If financials deteriorate further is he paying 10%? 12%?

In that situation how much of Tesla’s revenue is just going to be eaten up paying interest on the $10 billion in debt it currently has, plus an additional capital raise? That makes the cash flow issues even worse.

If Tesla raises equity, how much of a hair cut does the enterprise value take? With the amount of debt it currently has, it doesn’t take much before you start thinking insolvency.

This kind of talk is exactly why Elon pulled the plug on the wall st questions.

Society is PLAGUED with people who can't see any subject outside the lens of money. It's all people think about, it's disgusting.

Tesla's CEO is an engineer first and foremost. He doesn't give a s* if a worthless day trader doesn't know how to position. If the company dips into unforeseen debt while ramping up production, whoops.

They're pushing cars that will contribute to a sustainable future, that's what important here.

Tesla will still be fine in the long run. Tesla cars are still high in demand. You still have to wait weeks/months to receive one.

Sorry to all the vampires who don't know how to make a quick buck.

> Society is PLAGUED with people who can't see any subject outside the lens of money. It's all people think about, it's disgusting.

I'm sorry, but when trying to value an investment, or determining whether I should make a loan, I think the lens of money is important. There's a reason people form corporations rather than charities. Corporations are able to fund themselves sustain driving new things year over year. Charities finish when the money runs out.

What is Musk trying to build if it isn't a sustainable corporation?

> Tesla's CEO is an engineer first and foremost. He doesn't give a s* if a worthless day trader doesn't know how to position. If the company dips into unforeseen debt while ramping up production, whoops.

This sort of flippant comment is naive. You don't think the employees whose stock is vesting in the company care about how it is going to be valued or fund itself in the future? If I'm a talented engineer, why should I work for Tesla if the stock the grant me could be worthless in 6 months? Or what about those on the production lines, worrying about whether their factory might close down?

If you care so much about the company's ambition, you should care about their financial situation. Without it, they aren't going to be able to do any real research and development, hire the best talent, or do any of the basic functions necessary to make electric cars in the future.

> They're pushing cars that will contribute to a sustainable future, that's what important here.

If you care about that, you should care about the company actually having a financial plan to achieve those goals.

> Tesla will still be fine in the long run.

Why? Without answering the financial questions I described above, there isn't any way to predict that accurately.

> Tesla cars are still high in demand. You still have to wait weeks/months to receive one.

That's less of an issue with demand than an issue of supply. Tesla is struggling to put out 4000 cars a week, and there's a Ford F-150 sold every minute in the United States.

> Sorry to all the vampires who don't know how to make a quick buck.

I'm sorry you believe that those who care about Tesla's financial situation are just trying "to make a quick buck". To build the future, you first have to fund it.

I can tell you have your money spectacles on.

Tesla is doing fine. If you don't think the stock is worth it, don't buy it. There are plenty of other companies out there that need funding.

At some point you have to stop worrying about the monthly cash flow and believe in the product, although if you view everything through the lens of money I doubt that's possible.

It shoudn't shock you. It should be expected based on the demographics of the people who read HN.

Goldman Sachs has more developers than Facebook. It's not like Wall Street isn't filled with software people.

Those people don't go on HN. This is a forum mostly comprised of college students, web developers with <5 years experience, Silicon Valley startup/tech company developers, and a few experts that have stuck around.

Hacker News has been a repository of software/tech news long enough that I would bet the audience is more diverse than you think.

Whenever I see a ridiculous reaction on HN (like on the Signal/AWS article a few days ago), I just wait and watch how the same folks bend over backwards to defend Musk.

Maybe he knows something you don’t.

As an investor, I do...they get 4 chances a year to ask questions. Considering Elon lies with every 3rd breath he takes, wanting concrete factual numbers not sky high goals let's me know whether to get out or not. I love Elon's vision, but I think he made a downright idiotic nepotism filled move buying solar city when Tesla was already burdened with so much debt. He had the same attitude then, ignoring and dismissing all dissent and now Tesla is just straddled with debt.

Elon Musk cares what Wall St thinks when they supply the billion-per-quarter Tesla burns through. He just doesn't want to answer the questions that come with the money.

Tesla may survive, as there seems to be no end of people bad at math, but a company doesn't burn through a billion per quarter for too long before "fine" is no longer the correct word.

According to Investopedia, Musk is worth $20B. As a first-order estimate, at last year's spend rate, he could fund Tesla for 10 years. But, those leaches are why he's worth $20B and the results of this call probably lopped a goodly chunk out of that $20B.

Tesla may not be fine. One ought not to go out of one's way to bite the hand that feeds one.

Wall Street's money pays Tesla's bills.

Your pension fund, rather...

Tesla is a public company.

Wall Street acts as a leaky pipe funneling money between investors and Tesla.

Wall Street sounds pretty terrible. So why isn't Tesla using a non-leaky money pipe?

> So why isn't Tesla using a non-leaky money pipe?

If such a thing existed that would bring in the amount of money to Tesla that it has needed, it would.

If it seems Musk/Tesla have conceded to working with Wall Street in order to achieve its long term goals, then isn't it reasonable to assume Musk/Tesla does care about what Wall Street thinks?

Tesla wouldn't have grown if it weren't for Wall Street and investors.

There are elderly people with their futures invested, pension funds that will pay people's bills, etc. Tesla really should answer the questions of its owners.

Then he should be fired because he doesn't care about his job.

I am so sick of the cult of Elon. There is no defending his behaviour here.

You've been downvoted but I don't know why. It's clearly true. He wants the power that comes with CEO, but not the levelheadedness to run what is now a large company making large promises.

What he's done is remarkable. But he should step down, assign himself a founder/chief scientist title, and move forward with "fixing" his company. No fear of ejection; I suspect he's a major shareholder.

Was he not CEO when Tesla went public in 2010?

Guy has been instrumental in a couple hundred billion $$ in market value and you’re suggesting he doesn’t care about investor returns? Wow.

I'm not sure I'm following you. Creating market value and returning money to the investors as an ROI are not the same things. An earnings call is an opportunity to tell shareholders when - and if - they can expect some of their money back by giving them a more complete picture about how the company is doing. It is part of the role of a CEO in a publicly traded company to continue to inspire investor confidence. Value creation is the easy part, value capture the hard part and without that second bit Tesla's stock will implode. So he will have to talk to those investors to address their worries or the stock value will drop rapidly.

A crazy high valuation is no guarantee that a company can not go bust at some point, though in Tesla's case if they run out of money all that will likely happen is that their next round will be one at a lower valuation and with a group of investors that cares less about the short term.

Elon made the decision to play on Wall Street, that decision comes with some responsibilities and it is downright strange to see him literally bite the hand that feeds him. Without the cash he picked up through the IPO Tesla would be in a completely different position. He's made a couple of boneheaded moves (such as rolling Solar City in with Tesla), which have so far been accepted because of the halo and the promises. But there is a limit to how far that will stretch and I'm confused why he would stretch that on purpose if he has other alternatives (such as simply answering the questions). If he doesn't have any answers, which is one way to interpret his refusal, then Tesla is already in trouble.

txsh 11 months ago [flagged]

He doesn’t want to do those things. He wants people to give him billions of dollars on the promise to do those things. Musk survives on putting in a minimal ammount of effort and having a great marketing team. The guy is a fraud.

Please don't do personal attacks here. It damages the community, regardless of what you think about Musk.


Ha. Pretty weak attach. The dude literally sleeps at work at times, and his companies have produced things that have never been done before. Stuff that you can't really do as a weekend warrior, like rockets and the fastest/longest range EVs that people wait in line to buy

Been running it fine for 10 years. Does sound boring.

I'm not sure it's "fine" if you're posting record losses, still more than 50% under capacity to make a profit later in the year, and dealing with recent manufacturing problems so serious that you literally had to close the production lines down.

As I write this, TSLA is down about 6% on the day, and it's not as if sharp drops or a general downward trend are unusual over the past year. They're in real trouble, and this doesn't seem like a good time for Musk to let his ego out of its box.

But time is a factor, especially in relation to milestones. I think everyone would agree that Tesla's Autopilot and full-self-driving aspirations were going extremely well in 2016 [0], and we can safely assume that progress is still being made into 2018. The more relevant part, though, is the amount of progress relative to Tesla's earlier assumptions [1], and of course, compared to its competitors' progress.

[0] https://twitter.com/elonmusk/status/799908000689336320

[1] https://twitter.com/elonmusk/status/823727035088416768?lang=...

Tesla barely talks about self-driving any more. Their no-LIDAR approach didn't work.

Has he? They still deliver less cars than Henry Ford did in the 1930s.

That's interesting. In 2017 Trek manufactured more than 350 different models of bicyle[0].

I'm not sure how that reflects on Tesla. Tesla is not manufacturing bicycles. Nor are they manufacturing Model As in the 1930s automobile market.

[0] https://archive.trekbikes.com/us/en/2017

Why should Tesla not be compared to historical parallels?

It's also worth noting that Ford Motor company was founded in 1903. They installed their first moving assembly line at the end if 1913. This is the innovation for which Henry Ford is most famous.

By the 1930s, Ford Motor had 30 years of experience. Between 1908 and 1924, Ford built 10 million Model Ts.[0]

I don't know if Tesla will build 10 million cars by 2024. I think that would be incredible if they did. Nor do I know if they will be manufacturing 2 million/year by 2030. If that happens, they will have matched Ford. They will have done it in a mature market, unlike Ford. They will have done it with modern manufacturing technology. They will have done it when owning a car is taken for granted. I'm still not sure how that comparison would reflect on Tesla.

A comparison with 1918 Ford vs 2018 Tesla seems more relevant than a comparison between 1930s Ford and 2018 Tesla. But it still doesn't seem like a very clean comparison.

[0] https://www.history.com/this-day-in-history/fords-assembly-l...

As I wrote, I think that the comparison is interesting.

I'm just not sure how applicable the comparison is. I think you could compare 1930s Ford vs contemporary automakers to 2018 Tesla vs contemporary EV makers. But comparing 1930s Ford vs horse and buggy to 2018 Tesla vs contemporary automakers seems less apt to me. I think the move from horse and buggy to automobile was very different than the move from ICE vehicles to EV vehicles.

I do think that Ford's early success is incredible. It is astonishing to me that Ford could be selling millions of cars a year in 1930. I'd be interested in other transitions involving such a large expense that happened so quickly. It is interesting to wonder what the equivalent would look like today. But I don't think it is exactly fair to label someone a disappointment if they don't measure up to 1930s Ford.

> markets are reaction to this response emotionally

I don't think so. The material takeaway is Tesla will need to raise new capital in 2018. The numbers implied it. The market previously guessed Musk had some genius plan to avoid it. On this call, the lack of such a plan became evident. Dilution and/or increased default risks/interest costs are being priced in.

The emotion seems to have been mostly on Musk's end of the line.

> But then, acting within the confines of normality isn't really the trait that may bring the dawn of a new era of humanity.

Tesla is not bringing 'the dawn of a new era of humanity', it's an electric car manufacturer. They came and went and now they're back.

But then, acting within the confines of normality isn't really the trait that may bring the dawn of a new era of humanity.

Truly, this sounds divorced from the reality of anything Elon Musk is involved in. He’s making electric cars, rockets, and solar panels, not fusion power or immortality pills. Let’s be realistic! I think it’s important to separate what he actually does from what you desperately hope he may someday do.

If colonizing a new planet isn't a new era of humanity, I'm not sure what is...

>If colonizing a new planet isn't a new era of humanity, I'm not sure what is...

Do you credit Musk with coming up with the idea of getting to Mars?

Tesla isn't doing that though.

He hasn't colonised a new planet, and frankly my wager is that he never will.

He's never going to colonize mars. It's not possible with out current level of technology.

He might kill a bunch of people trying.

that may bring the dawn of a new era of humanity.

They make cars.

Emotional responses on both sides then?

Letting one person ask 10 questions means less time for other investors to ask their own individual questions.

This is true, but retail investors don’t typically interact at this level. At the beginning of the call Elon said that they would let the earnings call run until they were out of questions. That clearly didn’t happen...

To be fair (edit: figuratively, to state a favorable viewpoint on Elon's decisiont to give more time to one person) he was asking excellent/interesting/challenging questions and it was really interesting to me to hear Elon's answers.

I think Elon might have done well to be less brusque with the more run of the mill questions but I really enjoyed listing to the long exchange there

> he was asking excellent/interesting/challenging questions and it was really interesting to me to hear Elon's answers.

In the context of an investor call, which are supposed to convey an investment thesis for the company, I cannot agree. The questions were too pie-in-the-sky to have any bearing on whether TSLA equity/debt/or hybrid have an attractive relative value. It seemed to me that Elon was simply running out the clock.

> To be fair he was asking excellent/interesting/challenging questions and it was really interesting to me to hear Elon's answers

thats the opposite of being fair, but unfair is fine sometimes.

>thats the opposite of being fair, but unfair is fine sometimes.

fair point ;)

It's a filibuster.

Yeah but his questions weren't really that great. The two questions from analysts he skipped before throwing it to the youtube guy were tough questions asking about specific details that Elon obviously didn't want to answer. Youtube guys questions were softer which is why Elon stayed with him for so long. I have to say I think letting someone like Gali ask questions at all is pretty bad, it specifically degrades what these calls are for. It's basically a filibuster.

So Musk turned a Conference Call that people want to be like a trial... into a commercial for Tesla.

You may not like it as a speculator of the stock, but it might be more in line with his and Telsa's long term interest.

> You may not like it as a speculator of the stock

Or, you know, an owner of the stock with a long position. Someone who cares that the company is a viable business.

> but it might be more in line with his and Telsa's long term interest.

His long-term interests don't matter. It's a public company. His shareholders' long term interests are what's important - his job is to execute on them. If he can't do that, he shouldn't have taken the company public.

He works for these investors, not the other way around.

I disagree - I thought the questions were good. I wish both sides were able to answer questions, as Elon had promised in the beginning of the call! (He said something along the lines of, we want extra time for Q&A, will keep the call running until there are no more questions)

Having a retail investor at the table is a great thing for Tesla shareholders, IMO because so much of the public is interested in the company. I think the split between retail/institutional is 50/50 (I may be wrong on this).

Here are some interesting things that came out during Gali's questions:

- Tesla network/autopilot: autopilot safety data on quarterly basis. Timeline of network depends on regulators. A lot of autopilot crashes are from experienced drivers.

- More info on getting towards level 5 autonomy (hardware is going to be enough, but needs more powerful computers)

- Model Y production - not starting until 2020

- Supercharging network (V3): compared to Porsche’s 350kw supercharger. Tesla's main goal is to increase range.

- Interested in having supercharger network partner with another auto maker

- Tesla Semi - building out batteries/renewable energy to lower cost

- Nikola lawsuit

- Tesla Energy: prioritize power wall backlog now. Gigawatt/hour project coming out soon. How it compares to competition

- Tesla thanking China - possibly building Gigafactory in China

These are interesting questions, but for the most part, don't require concrete answers in the same way that "Do you have enough money?" do. Musk has plenty of places to talk about his bold ambitions and predictions. But the earnings call is one of the few regularly scheduled occasions when he and other executives can be demanded answers about current realities.

Yes, I agree. I do think allowing Gali to ask just one or two questions before throwing it back to the other analysts would have been a better tactic.

Allowing him to ask almost 10, especially after the abrupt shutdown of the other questions, came off as a slap in the faces of the other analysts.

I'm not familiar with these types of calls, but might it be possible he's trying to avoid getting into the nasty bits in front of all of the investors collectively in the hopes of swinging back around and dealing with them individually?

I've found that strategy to be pretty effectively employed by "perception management" types elsewhere. You know, guys with "reality distortion fields?" When you have a large group of people you're trying to maintain context for, you can end up getting into circumstances where you can get caught at giving contradictory statements more easily. Once the group catches that, they tend to dig and twist, and have further ammo for doing what you, the presenter, DON'T want.

Isolating said group members allows you the luxury of being able to devote your full attention to spinning the perception you're managing to only show what you want them to see without getting caught with your pants down by someone else you spun a yarn for previously.

I could be wrong of course, but I've seen it before.

>IMO because so much of the public is interested in the company

What do you mean by "so much of the public"? Outside of tech circles, Tesla isn't as well known as you imagine.

Why do we need to hear about all of their ideas and potential on the conference call? I can read Twitter, Electek, Teslarati, Reddit or others for that.

It is the most popular Retail investor stock, so it's not just tech folks.

"It is the most popular Retail investor stock..."


There was a petition of sorts on twitter to get Hyperchange on to the conference call. I think Elon was trying to segue with a plug to these guys because they aren't the regulars.

I'm asking seriously though, what would he stand to gain from hiding info about capex? Or do you think the reaction from investors is due to his attitude or signs of stress/things going wrong internally?

He doesn't want to admit they company will need to raise money later this year.

He actually addressed capital raise on the call and it was pretty clear when he kept saying that they wouldn't need or want a capital raise

> He actually addressed capital raise on the call and it was pretty clear when he kept saying that they wouldn't need or want a capital raise

Yes, his forward looking statement was clear, just as Tesla's repeatedly-missed production projections have been clear.

OTOH, when your statements about the future keep turning out to be wrong, it's not surprising that people want more than your conclusions but also want supporting evidence that those conclusions are grounded in reality.

Yes, but that is the sort of "boring" detail that he routinely lies about (as are ramp-up schedules, delivery amounts, revenues and that sort of boorish stuff only Wall Street nerds care about)

Yes, but when institutional investors pointed out holes in his explanation about how you could go from burning 1B a quarter with 3B on hand and not need a capital raise, they got "boring" and "next."

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

Jeffrey Skilling had the same approach too. In fact, he was even bolder than Musk because he not only evaded an obviously mean-spirited question, but he called out the investor as an "asshole". You can listen to the excerpt at:


Maybe the CEO of Enron currently serving a prison sentence is not an ideal role model.

That's the joke…

Pretty funny comment on that video (posted 6 months ago):

> Elon Musk in a couple of years I'm calling it now

When my landlord next asks me about when my rent cheque's coming, I'll let him know that I find his line of questioning to be boring fluff.

He's just not ready for me as a tenant.

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

Elon Musk criticising others for making misleading statements to generate hype seems more than a little hypocritical, no?

Neat! Glad to hear it. Do you have a couple billion dollars Tesla can borrow?

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.

> 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.

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.

Why do they keep asking him? It seems stupid. He can tell you very clearly what will do (and he does it). He obviously can’t predict the timeline.

Either it’s impossible to predict, or Elon can’t do it. Either way continuing to expect accurate predictions from him is the definition of insanity.

No, he comes off as someone who has to be the smartest person in the room and when he gets asked questions he doesn't know the answer to, he deflects. This is immature.

That's not "bogged down" to a professional investor. Which is who these conference calls are for.

That x% is the length of their runway. It is fundamental to the future of the company.

Then let his CFO answer the questions. These are important things to shareholders.

It was fantastic to watch him use Gali as a PR tool while he dodged real questions?

Perspective. Listening to a retail investor who never gets a seat at the table get to ask so many questions was a good thing - for Gali.

I can be cynical too and look at it as a PR stunt - in many ways it was given that he allowed Gali to ask almost 10 questions - but at the end of the day I was thinking - good for that guy.

Yeah I concur. The kind of numbers they're talking about are no joke.

Investors immediately responded to Elon's hubris in kind by severely punishing the stock. Seems the joke is on Musk.

How did you figure out that the reason the stock fell was this particular one? (Edit: "Elon's hubris" in particular)

Stock programs have all kinds of explanations they give out as to why a stock moves. Usually, it's a guess.

I had the Google stock chart open while the call was running. It was pretty much night and day. Before the call, it was up by about 0.25%. Then after market, during the call it was hovering between 1% and -1% - then immediately after the dismissal it started dropping quickly.

Sure, but if the stock starts dropping during an earnings call in after hours trading and drops a whopping 5%+ at the opening of the next session then it is a reasonable assumption that something during the earnings call triggered the sell-off. And they were doing ok right up to the point where Elon stopped answering investors questions.

> How did you figure out that the reason the stock fell was this particular one?


Correlation =/= causation. But... its reasonable to see the connection here.

7% drop does not really equate to Tesla Plunges IMO.

Was this bad enough that you wanted to sell?

Really? They beat earnings estimates, so I would assumed the stock would have gone up, at least by a few percentage points.

I would say a 10% drop in a stock over a few hours is "plunging".

I hear plunge and I think time to by, but here are prices from last 30 days:

  + 305.72
  - 289.66
  + 304.70
  - 294.08
  + 300.00
  - 291.21
  + 300.08
  - 280.69
  + 301.15
  - 284.45
I see numbers above the recent peak, and below the current low.

musk is cringey in general

If an investor's decision to buy or sell a stock is based on how "cringey" a conference call is and not the numbers then I think they are in the wrong business. I think Elon did the right thing. It would be better for Tesla in the long term if the day traders sell their stocks. Tesla fans such as myself would love to pick up some stocks at low prices and because we buy into the vision we will not sell it anytime soon which brings more stability to the stock.

To those who are down voting my comment without providing a rebuttal: https://www.barrons.com/articles/family-office-leaders-are-e...

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.

> Elon has always seemed to have the attitude of "not everyone should invest in this stock".

This is financial suicide for the company. TSLA needs more money this year or next year. Losing $1 Billion per quarter means he is relying on his shareholders each time he raises another round of equity.

The $1.7+ Billion to build the Gigafactory was from the Stock Market (https://electrek.co/2016/05/25/tesla-tsla-stock-offering-pro...). Tesla will need future rounds like this to continue to function.

Pissing off shareholders and reducing the value of your stock is financial suicide.

Not really. Attracting the right kind of investors is more important to him than attracting all the investors. There are folks with dollars who can stomach TSLA, and there are folks who can not. Some might argue that it's better for the company overall (especially in the longer term) to attract the former and ignore the latter. The latter will generate a ton of noise, and cause great instability in the stock price because they frighten easily. Case in point: the price of TSLA today taking a dive because shareholders that cannot stomach TSLA are frightened for no good reason.

Interesting proposition: deflate your stock value which makes the stock more accessible to risk-tolerant investors, while shedding the sort of nervous investor you don't want.

That also deflates your next round of equity offerings. Tesla will likely need to offer 10-million or maybe more shares to the market. Lowering your stock price before you offer equity is incredibly stupid.

Unless Musk has a plan to get money from somewhere else?


It also makes it more expensive to borrow money, pay employees, and opens you to hostile takeovers.

Attracting the right kind of investors is more important to him than attracting all the investors.

That seems a bit counter to the purpose of an open public market.

Is it really though? An open public market just means that anyone can purchase the stock; not that just anyone should.

The GP was saying how important it was to Elon Musk to have the right kinds of investors rather than merely people who give you money. This is sort of the opposite of what a public capital market lets you do.

The open public market means that the market decides who can purchase the stock, and that it's not the sellers place to decide who _should_ purchase the stock.

He's probably planning to ICO. Worked for Telegram, and taking questions from YouTube is a great first step toward raising billions in cryptocurrency.

Also, recent events have proved that pissing off the entire financial community so much that they refuse to lend you money because you always lose it is no barrier to becoming President of the USA - and, in fact, can help, because the entire electorate hates the financial industry anyway. Maybe we'll see Elon 2020 and a government bailout. Hell, government bailouts of the auto industry is pretty par for the course these days.

This comment began with a questionable proposition and then just kept going downhill.

No kidding.

At first I wanted to downvote your comment to the lowest rungs of hell until I actually read it.

+ 1 for the funniest thing I read on HN for a ling time. Kudos!

Not answering a couple of questions (to which he should have had the answers) cost him a substantial premium the next time he has to raise. And almost nobody believes that Tesla will not need money again.

Is this speculation, or are you talking about some previous time where Tesla had to pay a lot more to raise after an Elon comment?

Also, can you point out who said "Tesla will not need money again"? Elon is always careful to say something like "We will not need to raise money in <relatively short timeframe>". And then he raises money, says he did it because the price was right but it wasn't needed. Shorts accuse him of lying. Rinse, repeat.

If you feel that pissing off institutional investors is going to reduce the price of the next raise I'm fine with that.

As for the second part of your comment:

The Economist wrote that Tesla would have to raise money this year, 2.5 to 3 Billion $.

Elon Musk's response to that:


And as far as I can see it has no qualifiers. The complete text of the tweet:

"The Economist used to be boring, but smart with a wicked dry wit. Now it’s just boring (sigh). Tesla will be profitable & cash flow+ in Q3 & Q4, so obv no need to raise money."

Now, that's a pretty strong statement and just like the 5000 vehicles per week production in Q1 that everybody seems to have forgotten about (now it is suddenly good news they do about half that much) it is very much falsifiable. For Elon's sake (and all those employed at Tesla) I hope it works out that way but this could turn out to be a very expensive own goal.

Notice that his response to the Economist is in the form that I said -- the word "need" is present.

As for Tesla's targets, they have changed (downwards) several times, and I've seen plenty of people noticing. IIRC the target announced after Q4 earnings was 2,500 Model 3's per week by the end of Q1, and they missed by 500.

Honestly, this entire discussion is the kind of thing I'd expect on Seeking Alpha, not Hacker News.

> As for Tesla's targets, they have changed (downwards) several times, and I've seen plenty of people noticing

Bloomberg has even charted the successive reduced projections against measures of actual production.


Tesla might raise to accelerate the Semi production line or the Model Y line, but I can’t fathom that’d happen this year.

If we’re talking about Model 3, there’s also no way they’ll have unforeseen expenses in Q3/4. It takes way more than 6 months to plan a billion dollar expenditure, so it seems exceedingly unlikely Tesla’s expenditure model is wrong.

So that leaves their revenue model as the only wildcard. If they dramatically fail to increase production... say they plateau at 3k per week... that’s like $50k * 3k * 35 weeks = $5 billion in Model 3 revenue.

Plus they have a couple billion in the bank?

I just don’t see how this is a bankruptcy year for them.

> Tesla might raise to accelerate the Semi production line or the Model Y line, but I can’t fathom that’d happen this year.

Even with release of the Model Y pushed out to 2020, if they need money and they aren't raising it this year, it probably means more delays.

You seem to think, and Musk seems to represent, that for most investors, investment is about ensuring each investment, in a vacuum, carries zero risk.

Which is not true. Investors want to know about the risks, in detail, because then they can make informed choices. Maybe they'll adjust how much they invest, or look for offsetting investments (other companies or financial instruments that would go up if Tesla goes down), or do any of dozens of other things. But they can't do that if they don't get accurate information about the company, which is what Musk is supposed to provide.

Being bombastic and arrogant instead of providing accurate information might be good PR in certain circles (like HN), but Musk has, well, literally any other venue he's ever spoken in as a place to be bombastic and arrogant. This is the venue where he's supposed to be actually honest with investors, not the venue to be fake-honest through statements like "not everyone should invest in this" (gee, Elon, that's never been true of any other company in history... oh wait).

Musk is providing accurate information about the company: what they’re spending, what they’re doing, what their plans are.

What he’s not providing is accurate predictions of how long things will take. And he’s not obligated to do.

If investors want to make predictions, that’s their job. The company is only responsible for reporting what it did and what it will do.

“And so where specifically will you be in terms of capital requirements?” Sacconaghi said.

“Excuse me. Next. Next,” Musk said to the call operator. “Boring, bonehead questions are not cool. Next?”

Yeah. Real helpful there in providing financial information to investors.

"God forbid a CEO do anything except try to drive the share price as high as humanly possible."

If he wants to maximize the amount of money he gets the next time he goes to the trough, while minimizing the dilution, then yes, he needs to drive the price up.

That may be true but the shorter-term interests (less than a year or two, commonly) of some of these institutional investors is simply not in-line with the longer-term nature of what Tesla is doing.

It would not be in Musk's best interests to pander to those investors and compromise the actual long-term integrity of a business that has tremendous opportunity to provide substantial returns by avoiding the mistakes of short-term decision-making.

> Elon has always seemed to have the attitude of "not everyone should invest in this stock".

Sounds like the CEO equivalent of a movie director saying "I didn't make this one for the critics." Translation, "I know there are problems but I'd rather have my ego stroked by fans than face real criticism."

It's more like a movie director deciding to make something other than a superhero action movie, and telling critics not to expect one.

Not all investors have the same aims. Shaking off short-termist investors may be sensible to follow long term strategies. Sometimes public companies even have to become private again in order to pursue the course of action that's best for them.

There is nothing wrong with making a small art-house film instead of a superhero action movie.

There is a lot wrong with getting the budget of a superhero action movie and then making the sort of small art-house film that will never be able to pay off the investors.

If this were some quirky, self-funded Musk project, he could do as he pleased. But not only do they have shareholders, they have $1.8 billion in loans due in the next 18 months: https://www.forbes.com/sites/jimcollins/2018/04/02/forget-th...

>> Shaking off short-termist investors may be sensible to follow long term strategies.

While I prefer to focus on long-term over short term, you still can't let the short term kill you. A lot of people think Tesla will be out of money within the year and that's a short-term problem that needs to be solved in the short term. If not there will be no long term.

Or like a director trying to convince a major studio to fund a super expensive non action hero movie ... it would be the major studios more so than the critics who would take issue with a non-blockbustery flick.

"I didn't make this one for the critics" frequently means "I made the movie I wanted" or "I made the movie the studio wanted". That statement could boil down to "I'm not concerned about money, I'm making a movie I wanted to make in service of the fans" or "I made a movie that I knew would make a ton of money, because people go to see this junk even if critics don't like it". CEO's don't have critics in the same sense that movies/art does. The financial/business sector work on completely different axes to judge performance.

Elon seems to be more focused on his vision of the Big Picture (solving transportation problems, moving to new planets, fixing the energy crisis, etc) than making money in the short term (which might be over the next 10 years). He appears to be a man convinced he knows how to help fix global problems, and believes in his mission more than making money. You still need money to change the world, so he's also tried to do very well at the business side of it.

I'm not convinced Musk will fix humanity. I'm also not convinced he won't. I just feel that this specific statement, that Tesla isn't a business everyone should be involved in, feels like a "we're mission driven, not money driven" proclamation to me.

> "we're mission driven, not money driven"

This is easy to say when it's someone else's money you're burning.

To me it sounds like him saying the risk is higher than most investors are willing to accept.

I also hold a wildly different interruption of the saying "I didn't make this one for the critics."

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

> fiduciary duty to maximise shareholder value

This can be and has been widely interpreted. It does not have to mean maximizing profits to the exclusion of everything else.

Or more relevantly to this situation: chasing quarterly financial results to the detriment of long-term growth and profitability.

A lot of people are downvoting, I think, because they believe that you are representing that this is the state of the law, when it's really not so cut and dry.

I think one could say that one's "duty" is more about what is ethically required, however. I tend to think that, ethically, a CEO is required to maximize shareholder value. This doesn't mean that he needs to agree with shareholders about what that means, necessarily, and trading off short-term value for long-term value could be the right call.

I feel like sometimes "caring only about shareholder profits" is some kind of code for being greedy, when I think it's quite the opposite -- it's much greedier to spend your company's money for your own vanity, or to set up your next job, or to do favors for friends -- often the non-profit-maximizing activities a CEO engages in falls into one of these buckets.

It is also completely reasonable to say that it is in the shareholders' best interests that their company act ethically, and in accordance with the law.

Not at all true in the US. See: Supreme Court Hobby Lobby case.

In the long-term.

"Fuck off, I know what I'm doing, and I'm not chasing short-term single quarter results" can easily be fulfilling that duty.

It certainly works for Amazon

That's not entirely true. He has duties to run the company in with good faith and care, but not necessarily to maximize shareholder value.

‘Good faith and care’ is typically understood by US courts to have a strong emphasis on ROI. But you’re right, it is a little bit of gray area, and can be made purposefully more complicated when, e.g., the prospectus puts other duties first. Google’s “we’re not a typical company and we don’t intend to become one” is a famous example. For benefit corporations are the extreme example of this.

Almost all lawsuits regarding the good faith clause involve some sort of corrupt practice that enriched the executives at the expense of the shareholders (in fact, Tesla is currently involved in a similar lawsuit regarding its purchase of Solar City). It would be near impossible to prove bad faith in choosing one business strategy vs. another if there wasn't some corrupt intent or incentive.

If Tim Cook donated Apple’s cash reserves entirely to charity, or made decisions purposefully wrecking the finances of the company for the lulz, I guarantee there would be a successful shareholder lawsuits. This just doesn’t happen as often. But here have been claims of material harm due to gross negligence before. There are aspects of th Enron case that come to mind, and BP’s shareholder lawsuit after the deepwater horizon disaster.

Apple donating huge amounts to cash to charity would be an... interesting... lawsuit. I agree that they would definitely get sued over it, but I don't believe that they outcome of that lawsuit is necessarily cut and dry.

And the cases you bring up for fraud/negligence are very different, and pretty obviously not covered under running an enterprise in good faith.

Doesn’t he have a duty to be honest to shareholders?

I’m not sure why you are down voted... that is his legal obligation.

It is not. It's what psychopath people use as an excuse.

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."


Unless he was confused (quite possible) Musk would have been referring to the CEO of Daimler Trucks North America, Martin Daum.


You seem to be absolutely correct.

The Diamler Trucks NA CEO is a banker.

Thanks for the link!

Engineering students are usually required to study physics.

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

Nahhh, I can't imagine physics matters much in engineering /s

You don't have to get a degree to study something.

My thoughts exactly. Reading that exchange had me thinking of John Carmack.

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.

> 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.

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)

Who do you imagine being behind your imagined propaganda campaign?

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.

Do I need to know who is behind it before I can tell that it is happening? When every negative event is blown out of proportions and the positive ones are not mentioned it appears that there is propaganda at work. But if I wanted to look I would start here: https://electrek.co/2016/11/22/elon-musk-right-wing-trump-pr...

I read through the transcript of the call [1], and it was not as bad as the headlines make it out to be. But unless they start delivering larger numbers of Model 3s, they will have to raise additional capital later this year or face running out of money. Tesla is still basically a startup and they were hours away from bankruptcy once before in 2008, so this is not entirely impossible. Musk claims they will be cash flow positive in Q3, but so far they have missed Model 3 production targets for the last three quarters, although they got close at the end of Q1.

Under these circumstances, it is not unreasonable for investors to hold you accountable and inquire about the financial situation and plans. Musk's conduct was unprofessional and he could have handled those questions more gracefully instead of dismissing them and berating the people who had been asking them. This kind of behaviour does not exactly inspire confidence, and burning your bridges with the very banks that you might need to raise money later on was certainly not his smartest move.

[1] https://seekingalpha.com/article/4169027-tesla-tsla-q1-2018-...

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

Do you literally mean that Tesla is a scam? (That’s the normal meaning of “confidence game”, i.e. “con game”).

The difference is intent. A con is a confidence play with the intent to deceive. Elon’s MO is a confidence play with intent to succeed — the confidence motivates success of the organization (at great labor cost) that would otherwise be unobtainable.

That’s not the standard etymology, is it? I always thought that a con game was called a “confidence game” because the perpetrator is gaining the “confidence” of the mark.

Yes, exactly. These are all synonyms. People use “con” instead of “confidence game” just to save skme syllables, not to impart a different meaning.

Although abbreviations, as Orwell pointed out, do tend to assume their own connotations—e.g. “Comintern” vs. “Communist International”, or more blatantly, “Nazi” vs. “National Socialist”.

This is a fair comment.

If memory serves it's not his first remarks of this nature. I see my TSLA stock as a way to contribute to the version of the future I want to live in and not a ROI driven investment.

Elon says things like that every quarter.

"Tesla is clearly flying close to the sun"

If by "flying close to it" you mean flailing end over end into it then yes.

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.

Picking stocks like that is not considered a good way of investing your money (unless its a small portion which you specifically don't expect to appreciate). I urge you to reconsider your financial planning and perhaps take a look at ETF's.

well, I do invest in ETFs and also pick the stocks I believe in and invest for long term.

Since I average it out over several years by investing fixed amount every 15 days, it worked out pretty well for me. (esp. investments in BTC, ETH worked out great :-) ). But I agree I might lose in few of these (or most) I pick and I am okay with that.

They used to make us play this game in finance classes in high school. Everyone starts with $100k and invests however they want and you just have to keep track of it. At the end, the class compares what we earned against the class.

My class 90% lost money, 9% broken even, and 1 person got a ridiculous return. I learned from that, just invest in the index. Remember, you have to make more/less than everyone else...a nominal return of 20% doesn't mean anything if everyone made 50%. Last year, the NASDAQ earned nearly 30% two years in a row - that's par.

Maybe not, but it worked out pretty well for him.

Serious question: why do you pick stocks?

For fun and I don't mind losing a portion of my investments on these bets I believe in.

Nice, helping make it cheaper for us :)

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

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.

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.

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

Good for you. Great if every thing works out well and everyone makes money.

There are plenty other good companies selling great products where I can invest my money.

If you aren't investigating to hold, why are you investing? Was a large portion of your investment funds locked up in Tesla or something?

I did invest to hold, but the changes in the last year made be uncomfortable. I didn't like the SCTY bailout, recent departures in finance/accounting teams, not answering finance related questions in quarterly calls, their overall financial position many others.

I honestly think they need to raise more money to be successful. Musk says they don't need money and they can be profitable in next 2 quarters - let's see how it goes.

Sounds like something a bitcoin user might post...

Investing in the stock market is equivalent to buying bitcoin?

Sure you have!

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