Tesla shorts go completely off the deep end
Does Tesla have some sort of magical powers? Not only does it produce cars that seem too good to be true, but the company seems to have a way of making those who bet against it lose all perspective (the same may be true of some of the more rabid fans). When TSLA stock recently plunged on the news of disappointing deliveries in the first quarter, some of the pundits who cater to the short-selling crowd went far beyond their usual pessimistic predictions, venturing into the realm of personal attacks and wild allegations completely unsupported by facts.
Above: TSLA shorts are facing off with Tesla fanboys and their rhetoric is starting to sound increasingly far-fetched (Image via Youtube: Transport Evolved)
Michael Brush, writing in MarketWatch, describes a couple of these flights of fancy, which he calls “signs of hubris and mob-like overconfidence,” noting that the short crowd tends to get a little crazy every time the stock falls into the $200 range.
Financial writer Michael Brush has covered US stock markets for 23 years. He produces a stock newsletter called Brush Up on Stocks, and his work has been published in the New York Times and The Economist. He’s far from being a “short-hater” - he’s worked with traders who he calls some of the smartest shorts in the business. “At their best, shorts expose accounting issues and fraud, which helps securities get priced accurately,” Brush writes. “Shorts typically do great research, and they’re usually sober-minded...but like bubble-crazed ‘longs,’ shorts fall prey to sentiment extremes.”
In a March 3 post on his web site Adventures in Capitalism, investor Harris Kupperman ran an article with the headline: “Can’t spell felon without ELON.”
“I’m sure I’m not alone in seeing that and thinking I’ve missed the major development that Musk has been charged with a felony, or that he is about to be,” writes Brush. In fact, to the best of our knowledge, Mr. Musk has never been charged with, or investigated for, any felony. And as Mr. Brush points out, Mr. Kupperman’s article includes no evidence whatsoever that this is the case. “This kind of suggestive headline is unfair to Musk, and a departure from the normal sober-mindedness of short-sellers,” Brush writes.
As good journalists do, Mr. Brush called Mr. Kupperman on the phone, and found him unrepentant. “I am not accusing him of being a felon,” Kupperman says. “I just think you can’t spell felon without Elon, and I think that is an interesting coincidence. It’s tongue in cheek. I’m proud I thought that one up.”
Above: Ahem... A look at Tesla shorts (Twitter: Groggy T. Bear)
In a March 13 post, Kupperman said that Musk “is a compulsive liar who can’t stay sober.” Mr. Brush points out that “there’s no evidence that Musk is addicted to drugs or alcohol. Posting serious allegations like these without evidence seems like some pretty blatant hubris [and] downright unfair to Musk.”
Kupperman cites Elon’s simulated toke on the Joe Rogan Experience podcast (anyone who smokes weed could plainly see from the footage that Elon does not), as well as his infamous tweet about taking Tesla private at $420 per share, to support his substance-abuse allegations. “I don’t think it is over the top to allude to drug use, when he himself has alluded to drug use,” says Kupperman. Yes, says Brush, but saying that someone can’t stay sober is a different kind of charge. Brush calls Elon’s marijuana references “dumb,” but points out that they don’t make him a drug addict.
Whitney Tilson, the publisher of an investing newsletter, also claims to believe that Elon has substance-abuse issues. He recently suggested that “Musk wouldn’t be able to make a court appearance sober, because he can’t avoid drugs long enough to do it.” Brush calls this “so over the top as to be a clear sign of hubris.”
Tilson says he was only passing on the “drug addict” claim, which was made by one of his readers. Brush compares this attitude to “one of the worst mistakes ever made by the media, when they enabled Joseph McCarthy’s ‘Red Scare’ by repeating his unsubstantiated claims of collusion with Communists.”
Why does all this matter? Online loudmouths have been trashing Tesla and Elon Musk for years, some of them alleging even worse things than drug abuse or felonious behavior. But the guys Brush is calling out aren’t anonymous Reddit posters or AM radio shock jocks. They present themselves as serious financial journalists. Brush himself respects both of them, and calls them “bright analysts.”
Above: Jim Cramer talks about some of the tactics employed by Wall Street short sellers to manipulate sentiment surrounding a stock (Youtube: dehurlock)
It’s an adage among contrarian investors that when every analyst in sight is bullish on a stock, it’s time to sell (Tilson recently wrote that this was the case for TSLA, an assertion that proved to be untrue). At the other end of the spectrum, when even the smart bears start writing this kind of crap, it’s “a sign of hubris and overconfidence,” as Brush mildly puts it. “I’ll take it as a bullish signal on Tesla,” he concludes.