If you are also the richest man in the world, you can naturally be capricious in many things without minding the eyes of ordinary people, ideas, and investors, just like Musk has been these past few years. It's hard to seize a single phrase and seek to find the so-called essential truth behind it, even if it's hard to read Musk and Tesla's long-term trajectory as a lay practitioner even if you string them together.
With the recent outbreak of 2 new big events of Musk, we will witness a new performance of the world's richest man in 2022, including the repeated tug and game of acquiring Twitter, including the email not long ago that will lay off 10% of Tesla employees, about 10,000 people and so on. What exactly is the logic of the thinking and behavior of the world's richest man? We can actually restore from the car, capital, the economic crisis from several angles initially.
From the perspective of the car, can not see the signal Musk put out
Foreign media, the earliest released the news that Musk sent an email to Tesla employees, among the evidence released information is that "Musk will cut 10% of the current salary", but it should be noted that other earliest reported media such as Reuters, as of now did not release the chain of evidence related to the 10% reduction in the number of personnel.
The stock price plunged in response, and after a quick clarification by Musk afterwards, there was what you and I have in front of us, "Tesla is optimizing production by adjusting payroll/staffing structure to maintain production fundamentals capacity." Also, Musk's comment, as reported in the media, that he felt bad about the economy was not proven in the email evidence, but rather a similar point he made in a remote conference call back in May 2022. And, it's worth noting that Musk began to express his bearishness on the economy several times back in 2021.
"After the earliest Reuters broke out, many people in the auto industry expressed concern, but the same in the U.S. Ford, GM is still increasing recruitment, so the information contrasts feel very abnormal. But, after Musk's public response, and the Reuters report is not a small discrepancy, the reaction in the auto industry began to gradually calm down." U.S. stock analyst Liu Le (a pseudonym) said to Luqia Auto.
To ensure the number of technical workers, assembly level, further increase the proportion of hourly workers and other informal employees, and further talent recruitment in the Chinese market (just completed more than 100 people at the technical level in May). This is all new landing feedback after the rumors of Tesla laying off 10% of its workforce.
In addition, the United States also recently released 2 important indices, one is the latest ratio of personal savings / consumer debt of 4.4%, has fallen to the lowest level since the economic crisis in 2008 (after the epidemic during the state to send money to quickly stimulate personal savings, but also to some extent in 2 years to change the consumption habits); second, high inflation, unemployment rate of 3.6%, the labor market has been overheated, the recruitment of workers tight The problem has been very serious. Tesla's series of new plans at this time are contrary to the global reality, and it wants to adjust the salary structure by more hourly workers, which is a strong sense of tear.
Meanwhile, U.S. car companies are launching a new round of talent scramble. Right now, General Motors announced more than 8,000 new technical positions open after cleaning the original positions, and Ford also recently said it would add 6,200 positions to match the rapid development of electric vehicles. In other words, if Tesla really cut staff at this time, it will powerful its competitors, and a short time to see, in fact, will not cause profound changes in the market landscape.
In fact, we also need to reflect on one thing, why Tesla layoffs 10% of the information was exposed, the industry's response has been very different, and the reaction is more intense.
Volkswagen + Audi, Mercedes-Benz, BMW, in the last 3 years has been carrying out large-scale adjustments, including personnel, management structure, costs and other aspects, especially the Volkswagen Group in the release of the news of 30,000 layoffs, public opinion is also largely considered to be something that should be, and there is not much reaction.
"The first in market capitalization represents that it is stepping on the windfall of the future, so this relatively large news of layoffs will make ordinary people lack a sense of trust and security." Conversely, a similar event at a tried and tested traditional entity does not trigger too much public opinion, after all, they have been operating cyclically for big decades, Liu Le said.
Shorting Tesla has long been a business in the U.S. stock market
The table at the beginning records how Tesla has grown from a company on the verge of bankruptcy, responding to several crises and growing into a vicious dragon in the capital field. Until it entered the Musk period, its blood-back logic had been, launch products, make deliveries, and boost capacity, with no significant differences from other successes in the consumer market.
The product, delivered, is its most favorable comeback. From the early stages of growth this business has been facing constant questions and the pace of development and stock price has been following a relatively stable and traditional pattern. The business has been unprofitable for a long time, and the stock price has grown more slowly, below $400.
And as Musk began to take over Tesla during a period of capacity hell, unconventional operations such as setting up production lines in tents and sleeping on the factory floor abounded. But as deliveries were secured in Q3 2018, Tesla, which had survived capacity hell, began to kill it in the capital markets. Also right after that, when Tesla's market value finally became the first global car company, after the stock price exceeded $1,400, the market value broke the trillion dollars, Musk sat firmly in the world's richest man. And after this, Musk, who had more resources, began to further let himself go.
At the same time, in Tesla's road to success, in addition to the surface of the market competition this bright line, there is a capital field, a large number of individuals and institutions, and constantly rely on shorting Tesla profit, this dark line. The current outbreak, is the former richest Bill Gates shorting now the richest Elon Musk, but this is just the tip of the iceberg.
Shorting, a business in the capital markets, is the act of earning intermediate spreads in anticipation of future stock market declines. According to S3 Partners data, as of January 21, 2022, the shorting industry by market value, the profits of $114 billion. Tesla, which is in the limelight, is naturally the meat and potatoes of the shorting field. To start the year, Tesla shares fell by more than 15%, and short sellers focused on shorting Tesla made away with $2.3 billion.
Another strength, but also faced with falling stock prices shorted, is Netlix Netflix, shares fell 37% at the beginning of the year, short sellers got about $1.6 billion in gains.
Initially, Wall Street did not choose to short Tesla, but after privatizing its equity and directly disliking Wall Street's unreasonable performance targets from 2018, Wall Street began to stare at Tesla.
And, despite the fact that those who shorted Tesla lost more than $40 billion in 2022, five times the $8.4 billion a year earlier, Tesla was hailed as the most unprofitable business for short sellers, and it continues to be targeted.
"Tesla's board of directors assigned Musk CEO rights, no salary, dividends, want to get stock options in 2018 before the task is divided into 2 groups, a total of 5 items per group, unlock stock options 1% to be completed at the same time in 2 groups corresponding to 2 types of projects, set tough, but ultimately completed by Musk. after 2018, Musk wants to get equity and iterate to a higher high goal, simply put, Musk's honor and success, the most fundamental pain point is Tesla's equity." So says Ken Lee (a pseudonym) of the U.S. stock Tesla long institution.
U.S. stock market, long, short game, has lasted for more than 100 years, the current environment is, the Federal Reserve continued to over-issuance of money, and relative to the previous recession crisis earlier to scale back, raise interest rates of early intervention operations, and issued a "look forward to the U.S. economy can be a soft landing" statement, behind the many factors are revealing. The U.S. economy and the global economy of the false high, as well as the U.S. stock market is currently overheated in the bubble.
Although, the share of shorting stocks in the U.S. stock market is roughly between 3%-5%, not much, or long, long-short strategy, but the outbreak of Bill Gates has at least $ 500 million Tesla shorting account in his hands, the outside world predicted 1.5-2 billion dollars personal shorting scale, and set off the tip of a new iceberg.
Bill Gates shorting Tesla, Elon Musk shorting the dollar?
As far as the eye can see, shorting against Tesla and the many giant tech giants under hyperinflation is not an inappropriate business in 2022, with shorters gaining $62.5 billion year-to-date in the tech-focused Nasdaq 100 index. Shorters of Tesla have made about $8.2 billion and shorting Apple has yielded $3.5 billion, according to calculations. Elon Musk's personal fortune, which is shrinking, has a longer period of oscillatory nature. As for why Bill Gates chose to short Tesla, explained by the classic 3L theory of shorting U.S. stocks (L-large companies, L-high liquidity, L-fraudulent), his personal starting point, in addition to the short-term prospects of Tesla is not bullish, more to the decline in existing valuations have relatively certain under judgment.
The risk of shorting is very high, and securities intermediaries borrowed shares, you need to pay the appropriate interest, such as the intervention of those who are long, but also need to pay a high margin to the intermediaries.
Capital markets are not over the house, targeted individually long, short are very small probability events in the market, more behavior or long-short strategy. Someone on Elon Musk's body life Tesla short, Elon Musk and the people behind him that will counterattack, the capital counterattack can be to do more, the reality of the practice or improve vehicle profitability, more delivery, more innovative new technologies to create a moat.
And it is clear that the number of smart class travel technology companies that can currently arm wrestle with Tesla is 0. Also, this has therefore become an important weapon for short sellers to guide investment expectations that the market is not sufficiently competitive and that its current global first market cap is too high.
Elon Musk wants to make wealth preservation as well as further fermentation, naturally there are many other ways, in addition to continue to make a good effort on Tesla against short sellers, there is the wealth transfer to more risk-resistant cyclical assets. This, too, has a new relationship directly with the recent high-profile topic, Musk's acquisition of Twitter.
We can't tell if Elon Musk has lost some confidence in Tesla, for example, the recent news that BYD will supply batteries to Tesla immediately raised new questions about the production and actual effectiveness of the 4680 battery, plus the current hyperinflationary climate, Tesla's supply chain disruptions, no new models launched in 2022, a large number of ghost brakes in FSD facing fines, and many other negative news.
The actual action on the capital operation side is that Elon Musk's acquisition funds from 3 parties totaling $44 billion may not be spent, in other words he is likely to be able to plunge into Twitter. The law of capital under inflation would have been to reduce the cost of investment in Twitter, while enhancing the capital value of Twitter, which has now indicated that it will quickly provide information such as false accounts to Elon Musk. With the core data, the bottom card will next be in the hands of Elon Musk, when the time to buy or not, what price to buy, these initiatives will be in the hands of Elon Musk.
To put it another way, adding long-term low-interest leverage to do capital work in a hyperinflationary environment, such a move is even further in a direct shorting of the dollar. As for the subsequent related actions, it remains to be seen, the upside could be another currency anchored with the dollar. Because, in the currency to carry out a long-short strategy, with shorting the currency anchored by the currency, will be made long.
In short, Elon Musk's layoff plan is full of too many unstable and absurd factors to have a clearer answer from the capital operation point of view.