After Taunting Shorts With Threats Of "Unreal Carnage", Musk Buys $10MM In Tesla Stock

Elon Musk's feud with Tesla shorts is not business, it's just personal.

After lashing out at some vast, anti-Tesla conspiracy (technically, he has a point, Tesla is the most shorted US stock for good reason) in the aftermath of  last week's earnings bizarre conference debacle Musk first warned shorts that "oh and uh short burn of the century comin soon. Flamethrowers should arrive just in time", then followed it up just hours later with another taunt on the coming short squeeze which "Looks like sooner than expected. The sheer magnitude of short carnage will be unreal. If you’re short, I suggest tiptoeing quietly to the exit"...

... on Monday afternoon, Musk decided to triple down, and has putting money where his trash-talking mouth is, revealing that on Monday he bought about $9.85 million worth of Tesla shares on Monday...


... his biggest purchase since March 2017.

Musk's aggressive purchases which were surely leaked by the buying desk probably explains the wide intraday divergence between Tesla's equity and its bonds: because while Musk was buying TSLA stock, he forgot to "dip his toe" in the company's increasingly more distressed bonds.

For Musk, who is already Tesla’s largest shareholder with a stake approaching 20%, the Monday purchase was merely theatrical, and meant to strike fear among the shorts.  The only question is whether it was funded with yet more margin loans from Morgan Stanley, as some humorously asked.

Incidentally, this is not a joke: Elon Musk has personally borrowed $624 million in loans from various investment banks - first mostly Goldman, then mostly Morgan Stanley - as of a year ago to buy Tesla stock. And as we calculated last week, if one factors in his Boring investment as well as various other "sundry expenses", the next public disclosure will likely have Musk at around $800MM in personal borrowings from banks...

... which as discussed last week, when applying to new collateral requirements instituted by Tesla's Board, would require some $3.2B worth of stock. And with 13.775M Tesla shares pledged...

... that implies that at a share price below $232.30 (assuming a current balance of $800 million), Musk would face either a margin call or the need to post additional shares as collateral. (For context, in April, the stock dipped as low as the $244s). For more details please read "Will Elon Musk Be the Next CEO to Face A Margin Call Death-Spiral?"

Comments

Fish Gone Bad Solosides Mon, 05/07/2018 - 19:51 Permalink

Musk is Washington's darling. The banks will loan him "whatever" amount of money to buy stock.  As long as he sends stuff into space he will be protected like all the banks that were "forced" to take money during the bail out.  Good luck with shorting it.  Speaking of shorting, Herbalife must have some kind of voodoo magic too.  Does ANYONE buy ANYTHING Herbalife sells?  Crazy.

In reply to by Solosides

AGuy ChaoKrungThep Tue, 05/08/2018 - 09:56 Permalink

"Irrelevant. There were more electric cars in New York in 1900 (!) than gasoline"

Irrelevent Indeed. Only the top 5% can by Tesla cars and only a very small number of people in the top 5% will buy one. Extermely limited number of buyers. If any thing, People that want electric would buy a plug in hybrid since it does not suffer the limitations of an all electric vehicle.

Sooner or later Tesla will go the way of DeLorean.

In reply to by ChaoKrungThep

yarpos algol_dog Mon, 05/07/2018 - 18:09 Permalink

Not sure how he classifies as a genius.   He is a businessman that has done well primarily through one venture,  that is not genius.

Tesla existed as a venture long before Musk bought into it,  it is not a product of his mind,  he (as he mostly does) is riding on the back of engineers and mostly riding them into the ground.  That is not genius.

SpaceX is looking good so far but has yet to safely deliver human cargo,  and its technology especially at launch is extremely high risk, which keeps beeing pointed out.  Like auto pilot , people will have to die before those concerns are addressed.

 

 

 

In reply to by algol_dog

tangent lester1 Mon, 05/07/2018 - 17:32 Permalink

Tesla is a creation of tax subsidies, so not a free market distortion. Then there is GM, Government Motors. Is that what you'd consider the free market at work too? Oh, and auto makers them self have what, thousands of pages of safety regulations they must comply with with? The entire auto industry is almost a government run program at this point. There is no such thing as the free market in today's world. Hong Kong might come closest, but that is certainly not entirely free either.

In reply to by lester1

LawsofPhysics Mon, 05/07/2018 - 16:45 Permalink

Well, much easier to buy back your stock when you know you are too big to fail!  Musk must know something and is simply taking a page out of the primary dealer playbook.

adr Mon, 05/07/2018 - 16:46 Permalink

Can't someone program an algo to take TSLA down to $150 instead of bidding it up to $300?

Even at $150 the company is hilariously overvalued.

replaceme Mon, 05/07/2018 - 16:50 Permalink

I'm sure he's got The Art of War on him at all time, browses it periodically - he's probably ... where is it? ... here - projecting strenghth where there is weakness. Hmmm. sounds good, maybe a margin call is a good way to do just that. I honestly wonder if he's just that deluded. Or maybe he's a genius, will be laughing at us from an orbiting luxury space station in ten years.

swmnguy Mon, 05/07/2018 - 16:51 Permalink

When a CEO gets upset with short-sellers, it's often a very bad sign.  If things are really going well you let your company's performance do the talking.

Of course, that's wisdom from the age when one respected one's own privacy and didn't feel obligated to tell everyone everything that crossed one's mind.