‘I Began Just Losing Money Every Day’

Even in the normal course of investing, shorting a stock is mentally ruinous. For those betting against Tesla Inc., Elon Musk is an especially maddening adversary. The case that his company is overvalued has seemed at many points to be bulletproof, only for the shares to rise to unimaginable highs. (Musk himself once tweeted that the stock price was “too high imo.” The value rose nearly 500 percent by the end of that year.) Recently, New York convened several prominent Tesla shorts, along with one bearish analyst, for a group commiseration session over Zoom. The stock was in the middle of a nearly 50 percent decline — the outcome these bears had predicted — but most had long ago abandoned the trade.

Andrew Left, Citron Research: I was short, and I began just losing money every day. You’re like, Ugh, is this gonna end? I mean, is this ever gonna end? Every fucking day. And you just keep setting new levels: No way it goes above $200. No way it gets above $400. Finally, I threw that towel in. And it kept going up. Remember when he threw the brick at the car, to show how the window was unbreakable, and the window broke? I’m like, The stock’s definitely going down now! But even bad news was good news. You’re like, I can’t take this anymore. 

George Noble, Noble-Impact Capital: It was clear Musk was gunning for the shorts. Most companies, not so much. This guy? He made a sport out of it. There’s financial capital, which is your P&L, and then mental capital. I’m not going to say this because there are women on the call — okay, fine, I’m gonna say this, but I’m going to sue if you keep it in the article: There are easier ways to get laid. This is just too hard. The brain-damage quotient, the ratio of profit to brain cells destroyed, was too low.

Andrew Left: [Holding up a pair of short shorts that Musk once sold to taunt Wall Street] I bought these on the website when they came out. I have like five pairs. It says “Tesla” here, and on the back it says “S3XY.” Why does Musk even give a shit about shorts? I mean, why would he take the time to make short shorts?

Mark Spiegel, Stanphyl Capital: Because shorts have his number. That’s why he cares. He’s insecure on this.

George Noble: You have to be careful not to let yourself be triggered by Mr. Musk. The outright lies, the violation of laws — you just want to punch the guy out, but you have to resist the temptation. Emotion clouds your judgment.

Doug Kass, Seabreeze Partners Management: But this cultlike status, we’ve never seen anything like it. Elon Musk is our generation’s P.T. Barnum, and remember what he said: “There’s a sucker born every minute.” Ultimately, the iconic figure self-destructs. And we’re not suggesting that Elon Musk is a fraud, but —

George Noble: Wait a second, wait a second. You may not be, but —

Mark Spiegel: We are! I’m suggesting it!

Elon Musk, as understood by …

A baffled, dazzled, incredulous public.

Hollywood.

The towns and cities sold on a hyperloop.

His romantic partners.

Students at the tiny private school he inspired.

His most ardent supporters.

.

Wall Streeters who bet against him.

His 18,000 tweets.

His style sense.

Gordon Johnson, GLJ Research: I think with Elon Musk, you have a CEO who’s willing to do things that other CEOs just aren’t willing to do.

Mark Spiegel: And get away with it!

Gordon Johnson: Like fake a buyout in the middle of a trading day; like tell people his cars drive themselves, knowing that that can potentially lead and has been credibly alleged to have led to deaths; like take deposits on a product that for years doesn’t even exist — the cybertruck. I mean, other CEOs who have done this have gone to jail. But he doesn’t.

Mark Spiegel: Musk gets away with more shit than anybody in history. It’s a complete mystery and fluke. You know, we joke — half-joke — that Musk’s got Epstein’s videotapes. Look at this thing with Twitter. He files the form 10 or 11 days late; that’s a black-and-white violation. He filed it as a 13G and not a 13D — that’s a black-and-white violation. And yet the SEC sends him a polite letter: Dear Mr. Musk, can you please explain? If he gets anything, it’ll be a wrist slap. And Gary Gensler, who is the head of the SEC, we know from his disclosure before he got this job that he owned one individual stock: Tesla. So it’s either all these people own the stock, or they’re getting blackmailed, or they’re getting paid off. I don’t know what it is, but he has got immunity, regulatory immunity.

Gordon Johnson: The deception-slash-lies — it causes real losses for grandmas and grandpas, ordinary investors. It’s infuriating.

Andrew Left: You know, I’ll take the opposite side to all you gentlemen. I’ll say it: He’s not P.T. Barnum. It’s an amazing car. He did it. Call him on the spectrum, whatever he is, he’s wonderful.

Doug Kass: We have to all agree he’s a genius.

Mark Spiegel: He’s not a genius!

George Noble: No, no! Absolutely not. I don’t agree with that at all.

Mark Spiegel: He’s a genius at stock promotion, that’s what he’s a genius at.

Gordon Johnson: This is one of the things that gets under my skin. People say this guy’s a genius. “He did this, and he’s creating batteries” — it’s all untrue!

Andrew Left: I would say earlier in the days of Tesla, it was all Musk. And now, I think Musk could walk away and it wouldn’t be game over for the stock.

Mark Spiegel: Oh, it would.

Andrew Left: I know you say that, but I’ve had enough game overs for this stock. It’s funny — we talked about competition for years and years. Finally, the competition’s there, and they’re still selling the numbers neither of us would have ever thought they would. You gotta give them some credit!

Mark Spiegel: This thing had the most massive margin for error of any short I ever put on, and then it went up 25 times.

George Noble: In 2019, the last time I was short Tesla in any material size, I was playing for bankruptcy. The point is not that I was wrong — it happens all the time; it’s a rite of passage in this business. If you’re not wrong, you’re not taking enough risk. Here’s the incredible thing. I’ve never been this wrong. How many people on this call have ever shorted a stock to see it go up 20 times after you covered it? It’s the power of the narrative. We live in a post-truth society. That’s what we’re dealing with here. It’s all the Fed liquidity and bullshit narrative — and stupid dumbfuck millennial investors who don’t know how to read income statements and balance sheets.

Mark Spiegel: The only catalyst that puts this thing down, you know, 90 percent overnight, is Musk either dead or in handcuffs, right? Other than that, it’s just a deflating bubble. That’s how I think this is going to end.

Andrew Left: Now the important part comes: With the Fed contracting its balance sheet, how will Musk react as his stock naturally goes lower?

Gordon Johnson: I think what’s different with Elon Musk versus everyone else is his willingness to do things — and I don’t know how to say this more intelligently — but to do things that other people would be afraid they’d go to jail for. I think it’s gonna get a lot worse.

Andrew Left: Elon will become unhinged. That’ll be the story of this year. You’ll see it right now, as this price gets lower, he becomes more unhinged as a person. This is going to be the show of the shows. Remember when I was saying, How is this fucking going higher every day? Now it’s that reverse feeling: Musk waking up, being like, How is it going lower every day? He’ll try to pull something out of his hat. He’ll do something irreverent. I’ll hate to see it, too — I hope he doesn’t do anything really stupid. I don’t hate him personally to wish that on him.

George Noble: I do. I do. I do.

Doug Kass: He’s a psychopath.

Andrew Left: His personality reflects the stock price. With fund managers, the toughest part about this job is managing your emotions. On a good day, not feeling you’re King Kong, and on a bad day, not feeling overly down. Musk probably doesn’t have that. He lets himself get a little too excited. Think about it this way: Some guys buy boats. Some guys buy planes. He wanted to buy Twitter.

I just shorted.

Doug Kass: What price you sell it at?

Andrew Left: Like $755.

Doug Kass: I’m short at $755 as well right now.

You both shorted just now? What convinced you?
Doug Kass: You know why. I’m having a good year. I want to get it fucked up.

(This conversation has been edited.)