Lawyers, law professors, and the Delaware bar have spoken out about Elon Musk's vicious lies smearing Chancellor Kathaleen McCormick. Tesla's board, which should speak loudest, is silent.
Thank you Lawrence! You’re one of the few people I trust sees the whole picture, have to look beyond musk’s inner circle of parrots which now includes many of the top podcasters, the incoming president, and twitter army.
Thanks, Graham. There are days I feel like I'm the Ukrainian army, greatly outnumbered by the Vatniks. But those who see Musk for who he is (and Trump for who *he* is) have the advantage of thinking clearly and critically.
Thinking clearly and critically has become a disadvantage in this day and age. My stonk market returns improved drastically when I began working out. Try my morning routine: 3 sets of 10 reps banging your head on a rock.
Governance, governance, governance. In any company operating anywhere in the world, the board is responsible to shareholders, to employees, the law and the company as legal entity. Not for the first time we can see weak governance has led the company into a near impossible position to defend. Any member of the company should not be in a position to drag the entire entity into a dangerous position and then keep going. Will the board finally do their job?
Maybe Musk is just in a litigious fit. The OpenAI lawsuit, the SEC yowling (you'd think he would want to settle that). Or maybe he doesn't have employees left to fire and so has to let it out some other way.
Would you please help me be more certain of this? You could have said this in 2021 at $400/share but here we are it's about to be 2025 and we're at $430 per share.
Your argument is that successful fraud repudiates the fact it’s a fraud. I can tell you with high degree of conviction— it will not end well and spectacularly so.
This is totally par for this course. It’s not Trump. It means financial conditions are loose, interest rates are mispriced. Nothing we have not seen before. What and when will take it all down is impossible to say, but it’s not a matter of if.
Indeed, how else can you explain that Trump winning somehow doubles the market cap of a car company..money because of the CEO and part owner being a finder of Trump. How can it be explained without corruption being involved (naturally that is putting aside the pre-existing bubble)
I am certain that you are nitpicking, as this question completely misses the point of the article.
How about explaining how the inverse could be true? How does this end perfectly well? Historic share prices proves nothing, "stock price bro" is not a meaningful argument for anything.
I am not nitpicking. The article is fantastic as usual. I need somebody to help see how and when this bubble ends because right now it feels like fraud matters more than fundamentals.
FWIW, I have avoided taking any position in TSLA since 2019. I plan to continue that practice. There are just far too many utterly irrational dynamics at play.
Join my morning workouts. 3 sets of 10 reps banging your head on a rock. Then you'll have the skills and confidence to YOLO OTM 0DTE calls and be rich.
Imagine how Per Lekander feels. I believe as of his last 13F he had $1B of TSLA poots now likely worth at least $0.01 but not more than $1. I would LOVE a podcast or youtube of you interviewing him.
The TSLA bubble is not separate from the rest of the market. It has at times separated from other spec assets tightly linked to liquidity, but right now it's pretty much in line with baseline plus specifics.
But other spec assets have seen a sharp rise very recently, most of which are correlated and patterning down. RCAT/SMR that sort of thing.
It really looks as we have a surge of foreign money in the market which pushes on the fringes and is probably moving stuff around with options. They roll into something on any pretext, get a start, and then it's ad astra. Then they pull out some of the money and go to the next thing.
It will end with buyer exhaustion/disbelief/profit-taking. The market as a whole is primed to go down, because this can't continue. Anything really could shift sentiment.
We are in the later stages of this particular outburst of animal spirits.
For the company as an ongoing entity, no, it cannot end well. Musk is clearly in complete control of Tesla, and the crazier and more remote from reality his public dialogue becomes, the more we can be certain that his internal dialogue follows the same path.
All frauds are successful for a while. The problem is the longer run.
That said (so I can stop laughing and get back to business), Tesla is now a slow-growth company with annually declining earnings from continuing ops and trading at something like 170 X forward PE in 2025. The current share price is fueled by belief that Tesla will shortly have autonomy, excess money in the market, and the belief that somehow Trump's victory will turn to Tesla's benefit.
These beliefs are fed by the same guy who is making these very bizarre claims about McCormick.
If this is not a red flag to you, I don't know what is. Really the security for those getting into this trade (and it's a trade, not an investment) is the belief that Musk, the blowhard, will pump and lie with impunity for a while due to Trump's election.
The current rise is also fueled by this decision that so enrages Musk, because it did return nearly 10% in value to the current shareholders, and everyone believes that Musk will hold on and get a new package passed in TX. But the timing here (the appeal plus wait for decision) is four to six months, so traders feel pretty safe for a few months. Plus, Musk is unlikely to sell more shares until he gets a new options package, so this provides a speculative base.
By the end of 25 we will discover that Tesla, once again, doesn't have FSD, that it is still a slow-growth company with earnings/margins trending down, and that it is still losing market share in electric vehicles. And Waymo vehicles will be operating in more cities.
Well, it hit a peak, then went down when it became clear that the forward trajectory was weakening. Now back to the original game.
Tesla is a real company, but the valuation appears to be based on both easy money and extremely false statements by the CEO. So a portion of its valuation is fraudulent. An increasingly large portion.
Profiting from fraud is first and foremost destructive, and so I would advise anyone who considers a venture essentially fraudulent to stay away. Those managing OPM often don't have as much leeway to do that as they would like.
The second problem with investing in what you consider to be fraudulent/groundless investments is that it succeeds until it doesn't. In a situation such as the Madoff scheme, it can run for a very long while. True. But at the end the losses are then larger.
As we sit here with vastly overvalued USD markets, a risk-adverse investor would be well advised to stay away from the sketchier segments of that market. They will be more lethal than they usually are in a reversion.
The market may sag for years. The market could suddenly gag, but then we all expect Uncle Fed, the Wise and Benign, to step in to save us all. Given the inflation and deficit picture, Uncle Fed may not have as much scope to do so as hoped and believed.
At best, Tesla's future trajectory is the sag. The worst could be truly epic. There are certainly better things to do with your money than this.
Right now Tesla shares aren't even good as a trade.
I would just make this point: if they truly thought the company was on a neverending climb to success and riches, I don't think you have all the Tesla execs resigning within weeks of each other like they did this year. There's literally only EM and the CAO/CFO running the show now.
Fun fact: The current Tesla CAO/CFO came from PWC-India after they were implicated in the Satyam accounting scandal
Thank you Lawrence! You’re one of the few people I trust sees the whole picture, have to look beyond musk’s inner circle of parrots which now includes many of the top podcasters, the incoming president, and twitter army.
Thanks, Graham. There are days I feel like I'm the Ukrainian army, greatly outnumbered by the Vatniks. But those who see Musk for who he is (and Trump for who *he* is) have the advantage of thinking clearly and critically.
Thinking clearly and critically has become a disadvantage in this day and age. My stonk market returns improved drastically when I began working out. Try my morning routine: 3 sets of 10 reps banging your head on a rock.
Governance, governance, governance. In any company operating anywhere in the world, the board is responsible to shareholders, to employees, the law and the company as legal entity. Not for the first time we can see weak governance has led the company into a near impossible position to defend. Any member of the company should not be in a position to drag the entire entity into a dangerous position and then keep going. Will the board finally do their job?
No. It won't. Not now. Not ever.
You've hit the central issue. Corporate governance.
Maybe Musk is just in a litigious fit. The OpenAI lawsuit, the SEC yowling (you'd think he would want to settle that). Or maybe he doesn't have employees left to fire and so has to let it out some other way.
Another outstanding article. With TSLA at 424. Bringing truth to the power of an unAmerican, oligarchic Musk/Trump alliance that cannot stand.
"Which, you may be certain, will not end well."
Would you please help me be more certain of this? You could have said this in 2021 at $400/share but here we are it's about to be 2025 and we're at $430 per share.
Your argument is that successful fraud repudiates the fact it’s a fraud. I can tell you with high degree of conviction— it will not end well and spectacularly so.
No I am not arguing anything however it bothers me to my core that fraud is the most boolish thing in the world and fundamentals don't matter.
This is totally par for this course. It’s not Trump. It means financial conditions are loose, interest rates are mispriced. Nothing we have not seen before. What and when will take it all down is impossible to say, but it’s not a matter of if.
Indeed, how else can you explain that Trump winning somehow doubles the market cap of a car company..money because of the CEO and part owner being a finder of Trump. How can it be explained without corruption being involved (naturally that is putting aside the pre-existing bubble)
I am certain that you are nitpicking, as this question completely misses the point of the article.
How about explaining how the inverse could be true? How does this end perfectly well? Historic share prices proves nothing, "stock price bro" is not a meaningful argument for anything.
I am not nitpicking. The article is fantastic as usual. I need somebody to help see how and when this bubble ends because right now it feels like fraud matters more than fundamentals.
FWIW, I have avoided taking any position in TSLA since 2019. I plan to continue that practice. There are just far too many utterly irrational dynamics at play.
Join my morning workouts. 3 sets of 10 reps banging your head on a rock. Then you'll have the skills and confidence to YOLO OTM 0DTE calls and be rich.
lol!
Imagine how Per Lekander feels. I believe as of his last 13F he had $1B of TSLA poots now likely worth at least $0.01 but not more than $1. I would LOVE a podcast or youtube of you interviewing him.
Since 2019…. OUCH. Very sorry for all that lost capital appreciation.
I never feel badly about not profiting from fraudulent enterprises.
The TSLA bubble is not separate from the rest of the market. It has at times separated from other spec assets tightly linked to liquidity, but right now it's pretty much in line with baseline plus specifics.
But other spec assets have seen a sharp rise very recently, most of which are correlated and patterning down. RCAT/SMR that sort of thing.
It really looks as we have a surge of foreign money in the market which pushes on the fringes and is probably moving stuff around with options. They roll into something on any pretext, get a start, and then it's ad astra. Then they pull out some of the money and go to the next thing.
It will end with buyer exhaustion/disbelief/profit-taking. The market as a whole is primed to go down, because this can't continue. Anything really could shift sentiment.
We are in the later stages of this particular outburst of animal spirits.
For the company as an ongoing entity, no, it cannot end well. Musk is clearly in complete control of Tesla, and the crazier and more remote from reality his public dialogue becomes, the more we can be certain that his internal dialogue follows the same path.
Now is the time to sell.
I tend to agree but the people getting rich disagree.
MaxedOutMama has a thoughtful answer, with which I fully agree.
All frauds are successful for a while. The problem is the longer run.
That said (so I can stop laughing and get back to business), Tesla is now a slow-growth company with annually declining earnings from continuing ops and trading at something like 170 X forward PE in 2025. The current share price is fueled by belief that Tesla will shortly have autonomy, excess money in the market, and the belief that somehow Trump's victory will turn to Tesla's benefit.
These beliefs are fed by the same guy who is making these very bizarre claims about McCormick.
If this is not a red flag to you, I don't know what is. Really the security for those getting into this trade (and it's a trade, not an investment) is the belief that Musk, the blowhard, will pump and lie with impunity for a while due to Trump's election.
The current rise is also fueled by this decision that so enrages Musk, because it did return nearly 10% in value to the current shareholders, and everyone believes that Musk will hold on and get a new package passed in TX. But the timing here (the appeal plus wait for decision) is four to six months, so traders feel pretty safe for a few months. Plus, Musk is unlikely to sell more shares until he gets a new options package, so this provides a speculative base.
By the end of 25 we will discover that Tesla, once again, doesn't have FSD, that it is still a slow-growth company with earnings/margins trending down, and that it is still losing market share in electric vehicles. And Waymo vehicles will be operating in more cities.
This fraud has been successful for a very long while.
Well, it hit a peak, then went down when it became clear that the forward trajectory was weakening. Now back to the original game.
Tesla is a real company, but the valuation appears to be based on both easy money and extremely false statements by the CEO. So a portion of its valuation is fraudulent. An increasingly large portion.
Bernie Madoff started his fraud in the 70s and didn't get busted until the GFC in 2008.
OK so lesson learned then: fraud is boolish.
Profiting from fraud is first and foremost destructive, and so I would advise anyone who considers a venture essentially fraudulent to stay away. Those managing OPM often don't have as much leeway to do that as they would like.
The second problem with investing in what you consider to be fraudulent/groundless investments is that it succeeds until it doesn't. In a situation such as the Madoff scheme, it can run for a very long while. True. But at the end the losses are then larger.
As we sit here with vastly overvalued USD markets, a risk-adverse investor would be well advised to stay away from the sketchier segments of that market. They will be more lethal than they usually are in a reversion.
The market may sag for years. The market could suddenly gag, but then we all expect Uncle Fed, the Wise and Benign, to step in to save us all. Given the inflation and deficit picture, Uncle Fed may not have as much scope to do so as hoped and believed.
At best, Tesla's future trajectory is the sag. The worst could be truly epic. There are certainly better things to do with your money than this.
Right now Tesla shares aren't even good as a trade.
TSLA up 4.34% less than 24 hours after you wrote this.
I would just make this point: if they truly thought the company was on a neverending climb to success and riches, I don't think you have all the Tesla execs resigning within weeks of each other like they did this year. There's literally only EM and the CAO/CFO running the show now.
Fun fact: The current Tesla CAO/CFO came from PWC-India after they were implicated in the Satyam accounting scandal