After Taunting Shorts With Threats Of "Unreal Carnage", Musk Buys Another $25MM In Tesla Stock

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

One month ago, 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 the company's bizarre earnings call 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 May 7, Musk tripled down, and put money where his trash-talking mouth is, revealing that in a clear attempt to create an upside burst in an illiquid market, Musk bought about $9.85 million worth of Tesla shares in the pre-market just so his limited purchase could have the most outsized impact possible on the price, and force a burst of short-covering which has become Musk's favorite way of keeping the stock levitating above its "intrinsic value."

Things were going ok, with Musk making some vague promises that Model 3 production is ramping up, creating yet another short squeeze, when on Tuesday Musk dropped a bomb when Tesla announced it was firing 9% of its salaried workforce in a drastic cost-cutting measure for a company which has never until now bothered with limiting expenses, and after a bizarre admission to shareholders that “Given that Tesla has never made an annual profit in the almost 15 years since we have existed, profit is obviously not what motivates us”... and adding that “what drives us is our mission to accelerate the world’s transition to sustainable, clean energy, but we will never achieve that mission unless we eventually demonstrate that we can be sustainably profitable"

The stock promptly tumbled on fears that TSLA is no longer a growth stock but merely yet another cost-conscious value proposition, one which has to build a few dozen million cars in the next several years to be even remotely challenging to the established auto industry.

But not for long, because fast forward to today when with the stock red in the premarket then mysteriously spiking back green despite the biggest mass layoff event in its history - not to mention the launch of "not a flamethrower" - Musk has done it again, and literally tripled down in his crusade against the company's short sellers when he bought $24.9 million in TESLA stock, or 72,500 shares, with the bulk of the stock purchased yesterday, and another roughly 15,000 shares purchased today at a price between $342.78 and $347.00.

This was his biggest purchase of TSLA shares since March 2017.

What is notable is that Musk no longer even pretends that he is looking for value, purchasing $25MM in stock when it is trading near the highest level of the year, unlike his latest purchase when he could at least claim to be getting a discount.

 

In some ways the lack of a "value investor" facade is refreshing: for Musk, who is already Tesla’s largest shareholder with a stake approaching 20%, the Wednesday purchase was merely theatrical - and he knew it - and meant to strike even more fear among the shorts. After all, if Musk really cared about the company and reaching maximum output asap, he would have invested the $25MM back into the company to hire skilled workers. Instead, in his latest childish tantrum, he merely wanted to unleash more "unreal carnage" among the shorts.

The only question is whether said carnage was funded with yet more margin loans from Morgan Stanley.

And no, this is not a joke: Elon Musk has personally borrowed $624 million in loans from various investment banks as of March 2017- 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 recently, 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

jcaz Adolfsteinbergovitch Wed, 06/13/2018 - 16:55 Permalink

LOL-  gonna love when the SEC asks him about stock manipulation-  "Yes, I intentionally bot in pre-market when I knew I'd get my ass fucked,  just so I could fuck someone else's ass more"-  yeah, that's some 3D genius there..... Buying on margin, no less- he has no idea how badly his Morgan Stanley broker is fucking him over- wow.   The margin call is going to be EPIC.

Silly me- SEC is a just football conference now- my bad.....

In reply to by Adolfsteinbergovitch

Last of the Mi… Raymond K Hessel Wed, 06/13/2018 - 20:24 Permalink

Biggest stock price manipulation story ever and he gets to slide because of his "master of the universe" ranking. Everyone knows below $300 he gets shorts, electrical, pants, stock price and his fucking Ambien prescription. 

Write this down: This man is a con artist! This will not end well!. The doors to all possible outcomes are closing such that the only remaining ones require massive and I mean MASSIVE government funding to say nothing of the liability issues. It's not an eat shit and die situation, it's a turn into charred carbon powder and die situation. Damn

In reply to by Raymond K Hessel

BlackChicken 1982xls Wed, 06/13/2018 - 17:10 Permalink

From the article:

After all, if Musk really cared about the company and reaching maximum output asap, he would have invested the $25MM back into the company to hire skilled workers. Instead, in his latest childish tantrum, he merely wanted to unleash more "unreal carnage" among the shorts.”

What an ass-hat..!

In reply to by 1982xls

jcaz 1982xls Wed, 06/13/2018 - 18:04 Permalink

I'm guessing that there is a reason why Elon suddenly jacked $25M into it with borrowed money AFTER it has moved up $60,  and it has to do with being two weeks away from the end of the quarter and nothing about "burning the shorts"-

After all, the shorts "got burned" on the move from $285 to $340,  so why the fuck are you buying at $340+, Elon?

Take a look at how few VIN's are being reported on the 3, despite the expected big artificial ramp into the quarter-  combine that with the pressure from the convertible bonds coming due below the conversion price,  then it makes more sense as to why Elon is suddenly having an "episode".......

In reply to by 1982xls

Conax Wed, 06/13/2018 - 17:05 Permalink

He pulled his gun and shot himself in the foot, buying stocks when he should be hiring good help for his plant. It's ok, he isn't worried about profitability. It's about personality. He's a star!

Karlus Wed, 06/13/2018 - 17:14 Permalink

Good thing is is not buying in front of great news like 5k/wk Model 3 or anything. Its not like that would be insider trading or anything like that.

 

Elon has the SEC cucked just like he did with NTSB

3-fingered_chemist Wed, 06/13/2018 - 17:25 Permalink

If there was good news to report at Tesla, Musk would let everyone know about it. That's what a narcissist does. The fact he has to buy stock to distract from what is a failing company is a bad omen.

not dead yet Wed, 06/13/2018 - 17:32 Permalink

The short interest on Tesla is so big you gotta be stupid to join the short parade. Highly shorted stocks can keep going up forever as they attract the professional gamer's, you think Wall Street isn't a casino, who clean out the amateurs who think fundamentals matter. Tesla has a base of true believers who will hold on and create a bottom as the stock, in their minds, will eventually be in the thousands and make them filthy rich. Two ways for the shorts to win. Tesla goes bankrupt or the shorts gradually cover so as to not create a huge rise in price and when Musk announces some bad news all the shorts pile in at once and slam the hell out Tesla scaring even the true believers. Until then it will be deja vu as the stock goes up on bad news and even when Tesla issues more stock diluting the current holders.

jcaz not dead yet Wed, 06/13/2018 - 17:51 Permalink

Uh, no they can't "keep going up forever"- show me one that has.  Ever.

Eventually, the music stops.  History shows short-squeezes always end one way:  Crash-boom.

I can stay short via synthetic puts longer than Elon's hair plugs take to rejuvenate from scratch-  how often can Elon borrow another $25M from Morgan Stanley to pump his own stock?   Talk about desperate.......

In reply to by not dead yet

DonkeyCoyote Wed, 06/13/2018 - 17:47 Permalink

The Tyler Durden crew is obviously on the short side of this trade. Maybe that is based on fundamentals,  but I find it funny that a crew that pretends to be against cartels are so emotionally charged against an electric car manufacturer. Is this really a Russian think tank that wants more oil sales? Say what you want about Elon Musk, but his car is faster than yours, and I hope that he beats you in this race because he is actually trying to produce something, not just making a living nay saying and short selling.      

jcaz DonkeyCoyote Wed, 06/13/2018 - 17:57 Permalink

LOL-  you're the problem, not the solution.   You actually drank the Kool-Aid.

Do some basic research, for one-  you REALLY think that electric is cheaper than gasoline, cradle to grave?  Is that what Mrs Roberts is telling you in your Earth Science class?  Good God, dude......

Elon sells tax credits- he's created NOTHING.   

Seriously-  how can you be so obtuse at this point?   Does a door knob just baffle the shit out of you?

In reply to by DonkeyCoyote