IHS Markit: Tesla chief divides opinion
11 September 2018 New York
Image: Shutterstock
Recent incidents involving Tesla chief executive Elon Musk and events surrounding his company have sparked off negative reactions, according to Sam Pierson, a director in Securities Finance at IHS Markit.
After Musk appeared to smoke weed on The Joe Rogan Experience, and witnessed the departure of Dave Morton, chief accounting officer, after just one month, Pierson revealed that Tesla’s share price has dropped 30 percent from the beginning of August.
Pierson stated: “The departure of Morton is probably a bigger deal for investors, as he’d only been there for a month and is leaving a significant amount of money on the table.”
Pierson quoted one specialist investor who said: “I have to admit the guy is a non-starter for me. I have never been a fan from day one … his joint smoking episode is a non-starter.”
The specialist added: “Their [Tesla] leader is an emperor wearing no clothes. How investors see any value with his stock trading at $280 plus is as much a mystery to me as he is.”
“I would never consider buying one of his Tesla cars for a host of reasons…which I won’t detail for fear of provoking a lawsuit […] it does not matter to him what exposure he can gain, just get noticed to keep his name and company in the headlines. Perhaps the only momentum he really has is in his ego.”
IHS Markit statistics show the Tesla share price at $280.95 on 6 September, Pierson noted.
This compares with $385.00 in September last year, suggesting that at least some of the short sellers called it right, in principle at least.
Alasdair McKinnon, chief fund manager, SIT, commented: “Fast cars and a grand vision attracts an enthusiastic fan club, while his critics worry about short-term finances. As Tesla is unprofitable, Musk has to play in both galleries."
“It’s no wonder he’s under pressure—all public companies feel compelled to focus on easy wins, and all eventually succumb. Management teams are human and, like everyone, prefer plaudits to brickbats."
“The problems arise when the pursuit of short-term gains damages long-term prospects. It might seem profitable to pick up pennies in front of a steamroller, but we can all see where this eventually goes wrong."
“Take Kodak. It invented the digital camera but missed the long-term opportunities by allowing others to develop it, responding to the subsequent threat in the immediate term by increasing the price of its highly profitable film. It didn’t work for long."
“Ironically, the companies that have the best opportunity to focus on strong long-term returns are those where expectations are low, as management teams can afford to be candid.”
Using Friday 7 Septmeber's closing price the actual mark-to-market gain for Tesla short sellers on that day was $578 million. Tesla short interest is $8.70 billion, 33.04 million shares shorted, 25.91 percent of its float, said S3 Partners.
“As of this morning's (11 September) 4 percent price increase, much of short sellers’ Friday mark-to-market gains have been given back—they are down $407 million in mark-to-market losses as of mid-morning trading,” it added.
After Musk appeared to smoke weed on The Joe Rogan Experience, and witnessed the departure of Dave Morton, chief accounting officer, after just one month, Pierson revealed that Tesla’s share price has dropped 30 percent from the beginning of August.
Pierson stated: “The departure of Morton is probably a bigger deal for investors, as he’d only been there for a month and is leaving a significant amount of money on the table.”
Pierson quoted one specialist investor who said: “I have to admit the guy is a non-starter for me. I have never been a fan from day one … his joint smoking episode is a non-starter.”
The specialist added: “Their [Tesla] leader is an emperor wearing no clothes. How investors see any value with his stock trading at $280 plus is as much a mystery to me as he is.”
“I would never consider buying one of his Tesla cars for a host of reasons…which I won’t detail for fear of provoking a lawsuit […] it does not matter to him what exposure he can gain, just get noticed to keep his name and company in the headlines. Perhaps the only momentum he really has is in his ego.”
IHS Markit statistics show the Tesla share price at $280.95 on 6 September, Pierson noted.
This compares with $385.00 in September last year, suggesting that at least some of the short sellers called it right, in principle at least.
Alasdair McKinnon, chief fund manager, SIT, commented: “Fast cars and a grand vision attracts an enthusiastic fan club, while his critics worry about short-term finances. As Tesla is unprofitable, Musk has to play in both galleries."
“It’s no wonder he’s under pressure—all public companies feel compelled to focus on easy wins, and all eventually succumb. Management teams are human and, like everyone, prefer plaudits to brickbats."
“The problems arise when the pursuit of short-term gains damages long-term prospects. It might seem profitable to pick up pennies in front of a steamroller, but we can all see where this eventually goes wrong."
“Take Kodak. It invented the digital camera but missed the long-term opportunities by allowing others to develop it, responding to the subsequent threat in the immediate term by increasing the price of its highly profitable film. It didn’t work for long."
“Ironically, the companies that have the best opportunity to focus on strong long-term returns are those where expectations are low, as management teams can afford to be candid.”
Using Friday 7 Septmeber's closing price the actual mark-to-market gain for Tesla short sellers on that day was $578 million. Tesla short interest is $8.70 billion, 33.04 million shares shorted, 25.91 percent of its float, said S3 Partners.
“As of this morning's (11 September) 4 percent price increase, much of short sellers’ Friday mark-to-market gains have been given back—they are down $407 million in mark-to-market losses as of mid-morning trading,” it added.
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