Under the circumstances my somewhat and suddenly lopsided (not considering real estate, physical metals and cash) portfolio of short-Tesla-call and everything-else-except-Tesla seem well-timed. Was less sure Friday night and more sure now, Sunday morning.
However, and is a big-enough ‘however’, is it ever wise to short a religion? I aim to find out ...
ft.com
Elon Musk pits an army of Tesla fans against Wall Street
The electric car maker’s chief stokes retail investors’ ardour and levitates share price
February 7 2020
Elon Musk has presided over a sharp rise in Tesla's share price, despite scepticism over the Cybertruck and earlier production problems © FT montage; Getty ImagesOn Sunday, the day before Tesla’s stock would rocket to a new high, Elon Musk, the company’s chief executive, announced an event at his house for computer programmers on Twitter and invited Vivien Hantusch, a student in Germany, to attend.
Ms Hantusch, who studies product design, will sell a single share in Tesla to buy her flight from Düsseldorf to California to take part, she said. Mr Musk frequently responds to her tweets, but “he hasn’t told us anything yet” about the event.
The German student is part of a global Tesla fan base who own the electric car maker’s stock and champion the views of Mr Musk online. They also fight back against Tesla detractors, like the short sellers that have sparred online with Mr Musk for years.
“It was the first stock I ever invested in — with Tesla, I felt I had to support the company, especially [given] the short sellers,” said Ms Hantusch, who bought the shares in 2018. “I don’t do this to get a profit or a job, I do this because I love the company.”
In November Ms Hantusch and a group of Tesla fans launched Third Row, a podcast focused on the company. Last month they recorded an episode with Mr Musk in one of his houses, the former home of Gene Wilder on the slopes of Bel Air in Los Angeles. Mr Musk brought his dog, Marvin the Martian, and his mother Maye Musk, the fashion model, who also brought her dog.
“The dogs were running around and Marvin the Martian was sitting on my lap,” said Sofiaan Fraval, a software engineer in Santa Barbara, California, who produces the podcast and also owns a Tesla and stock in the company. “That was so cool.”
Tesla’s online fan base has spawned podcasts, dedicated channels on YouTube and an incessant stream of social media posts that frame the company as an agent of change at the crossroads of technology and the environment, not simply a carmaker struggling to turn a profit.
In nurturing this group of supporters with daily tweets and face-to-face meetups, Mr Musk has struck a chord with his customers and retail shareholders. In the process, he has built an arsenal of defenders that amplify his views online and take up arms against critics, including the short sellers who profit when Tesla stock falls in value.
Last week Tesla announced a $105m fourth-quarter profit that set the share price alight. On Monday trading volume spiked to a record level and on Tuesday the stock hit a new high of $887 before easing later in the week. The stock has gained 79 per cent this year. These types of moves are driven by institutional investors and momentum-driven automated trading strategies, but retail investors also play a role. Tesla is the 15th most held stock by investors on the Robinhood stock trading app, with more than 150,000 users owning its shares.
The rising price marks a win for Mr Musk against the short-sellers and sceptical Wall Street analysts who complain about the company’s financial picture.
The billionaire founder has stoked an “us versus them” war between his retail investor fan base and Wall Street. In 2018 he stated in a tweet that he had secured funding to take Tesla private at $420 a share. In the discussion online that followed, he promised retail investors that he would find a way to keep them on as shareholders. The funding was not secured, and Mr Musk later settled claimswith the US securities regulator over the episode.
I’m a 38-year-old man and I’m getting excited when a middle-aged man responds to me on Twitter
Sam Kelly, Tesla shareholder
On a public conference call to discuss Tesla’s earnings last week, Mr Musk said many retail investors “have better insights than many of the analysts”. In 2018 he declined to respond to one analyst’s question, saying “boring, bonehead questions are not cool”, and spoke at length instead to Galileo Russell, a retail investor.
Mr Russell has since launched a dedicated YouTube channel called HyperChangeTV, where he speaks supportively of Tesla. The channel has become a full-time job delivering “six-figure revenue”, he said. He has met Mr Musk multiple times, had a private tour of a Tesla factory and has partnered with a start-up to crowdsource questions from retail investors to pose during Tesla’s earnings calls.
“I think the Wall Street complex is crumbling,” Mr Russell said. “People don’t listen to analysts any more because they were wrong on one of the biggest, most disruptive companies in this era, potentially in this whole century.”
Toby Clothier of Mirabaud Securities in London is one such analyst. His sober views of Tesla based on its financial data indicate the current stock price has detached from reality. He points to weakening market share in Europe and a fear the profit generated in the fourth quarter will wither. But he has adapted to the rally. “We have prefaced virtually all of our work on this stock for the last month with the caveat that this stock has developed a life of its own,” he said.
Mr Clothier worries retail investors will buy the stock after the sharp rise of recent weeks just in time for it to lose value. “There is a dream aspect to this whole story that has nothing to do with what is happening now,” he said.
Sam Kelly, a UK expat who lives outside Valencia in Spain, owns Tesla stock and a Tesla car. He frequently posts positive news about the company on Twitter, where Mr Musk has responded to his tweets.
“He’s a geeky guy like the rest of us and that’s why I think people feel that connection with him,” he said. “It’s strange, I’m a 38-year-old man and I’m getting excited when a middle-aged man responds to me on Twitter.”
These Tesla supporters acknowledge their support is beneficial to Mr Musk and Tesla, but insist the interactions with the billionaire are genuine.
“We’re not being used,” said Mr Fraval, from the Third Row podcast. “We love this technology and we really appreciate what Elon is doing.” |
