I had written you a whole well-considered thing about labor in Silicon Valley and Tesla’s NLRB hearing — and the fucking SEC went and filed a lawsuit about Elon Musk’s “funding secured” tweet immediately after I got that bad boy all edited and ready to run. Welcome to This Week in Elon, which will be more unhinged than usual!
Right, so: The SEC has filed a lawsuit against Musk, and one of the remedies they’re seeking is barring Musk from being an officer or director of any publicly traded company.
One thing that stuck out to me in the SEC complaint is the section regarding Musk’s battle with the shorts. He’s been flipping out about them on his Twitter account for a while, and this is part of the basis for the SEC’s complaint. For instance, when
he blew up at journalist Linette Lopez,
he asked her if she was “an inside trading source for one of Tesla’s biggest short-sellers.” He’s repeatedly warned about
short burn, and — actually you know what,
I’m just going to quote myself from our article on The Verge:
By August 18th, the SEC notes, more than $13 billion shares of Tesla were shorted. And Musk
hates shorts. The SEC cites just two of his anti-short tweets (“Oh and uh short burn of the century comin soon. Flamethrowers should arrive just in time,”
from May; “They have about three weeks before their short position explodes”
from June), though
there are plenty of other taunts
to choose from.
Pressure from the shorts was cited by Musk as a reason to take Tesla private, the SEC notes in its complaint. On August 2nd, Musk emailed Tesla’s board of directors, head of finance, and general counsel to explain his reasoning for taking Tesla private. In the email, Musk wrote that being public “[s]ubjects Tesla to constant defamatory attacks by the short-selling community, resulting in great harm to our valuable brand,” the SEC complaint says.
Wow, spectacular work, Liz and Sean. Anyway, Musk’s short obsession is pretty damn weird —
as Matt Levine has pointed out, if you’re doing well and your company is fine, it really doesn’t matter that someone else disagrees! You can prove them wrong! Just put your head down and do the thing! There are several possible explanations: the first is that Musk’s ego is demanding he fight even though it’s bad for him. The second, preferred by some of the shorts, is that they are on the hunt for clues that Musk is perpetrating an enormous financial fraud — and so Musk is threatened by them
because they’re right. I’ve been trying to come up with a third explanation but like the only one I’ve come up with so far is that Musk is Terminally Online and just enjoys fighting with strangers on the internet as a hobby. If the third thing is right, my guy, I have a suggestion: yoga is a better hobby!
Anyway the shorts are having a
field day. Jim Chanos, as just one example,
tweeted that the reason investors are spooked
now is the possibility that Musk won’t be able to act as an officer or director (
yes, we know Diogenes is Chanos). “Discovery and any related DOJ involvement is why investors should really be worried,” Chanos said.
Look, I know an SEC enforcement action is srs bsns but like I just uh want to talk about this part of the filing:
According to Musk, he calculated the $420 price per share based on a 20% premium over that day’s closing share price because he thought 20% was a “standard premium” in going-private transactions. This calculation resulted in a price of $419, and Musk stated that he rounded the price up to $420 because he had recently learned about the number’s significance in marijuana culture and thought his girlfriend “would find it funny, which admittedly is not a great reason to pick a price.”
First of all: way to narc out your girlfriend, Elon! But second of all, this squares with what appear to be text messages from Grimes, Musk’s girlfriend,
posted by Azealia Banks to Instagram in August. In the texts, Grimes appears to say that she got Musk interested in weed, and “rounded up to 420 for a laugh.”
So here’s the question: is Grimes going to be called by the SEC? Is Azealia? What’s Tesla’s board going to do?
Liiiiiike — things weren’t great at Tesla
before this happened. There’s
that NLRB thing (Tesla is accused of union-busting),
about $11 billion or so in debt, and struggles with production
and delivery of the Model 3, the car that was supposed to make Tesla profitable. Oh, that reminds me: Tesla has never had an annual profit. If I were boring I’d describe Musk and Tesla as “embattled” or “troubled” but I’m me, so: it’s officially a shitshow, folks!
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