Bloomberg Businessweek - USA (2020-01-27)

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BloombergBusinessweek January 27, 2020

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ofAmerica’smostvaluablecarmaker.“They’veputTesla

undera microscope,andtheyhavesucceededindilutingthe

company’ssuccess,”saysGeneMunster,a managingpartner

atLoupVenturesanda prominentbull.“Itleavestheaverage

personwholooselyfollowsTeslaconfusedandconcerned.”

Muskhasrepeatedlyacknowledgedtheimpactofcritics

andshortsellers,oftenwhileindulginghismorejuvenile

impulses.Heoncesenta packagefullofshortshortstoa reg-

ularheckler,theinvestorDavidEinhorn,andhe’sblockeda

handfulofjournalists’accountsonTwitter,includingmine.

Initsmostrecentannualreport,Teslacited“scrutinyofcrit-

ics”asa risktoitsbusiness.

“Youhavea fundamentalpublicdisagreementonthe

socialvalueofTesla,”saysshortsellerFahmiQuadir.Sheisn’t

activeonTwitterbutsayssheadmiresTSLAQ’sdemocratiza-

tionofduediligence.“Therearealsovalidquestionsabout

governance,sustainedprofitability,andproductintegrity.”

Hothi’smainclaimtofameintheTSLAQcommunity

washisdetailedreportingonthefactory

inFremontin2018.Hisproductionesti-

mateswerereliableenoughtobecited

widelybybothbullsandbears.InJuneof

thatyear,whenTeslaerecteda massive

tenttohousea newModel3 assemblyline,

Hothiflewa dronetopeerinside,reveal-

ingthatthecarswerelargelybeingbuilt

byhand.Thiswasa majorscoop,under-

cuttingthecompany’shypingofitssophis-

ticatedroboticassemblyline—its“alien

dreadnought,”asMuskcalledit.

Hothiwasborn 33 yearsagoinPunjab,

innorthernIndia,andgrewupinFremont,notfarfrom

thefactory.A voraciousreaderanddevoutSikh,hewas

obsessedwithphilosophyinhighschoolbuthadtrouble

focusing.Hefailedout,thenturnedthingsaroundata local

communitycollege,eventuallytransferringtotheUniversity

ofCaliforniaatBerkeley.Hegraduated with a bachelor’s in

philosophy in 2009.

The following year, Tesla went publicandtookovera

shuttered GM-Toyota facility in Fremont,whereit planned

tobuild the Model S. The company and its

unconventional CEO became an irresistible

story for the tech press, which routinely

asked if Musk was “the new Steve Jobs.” In

2013 the Model S was named Motor Trend Car

ofthe Year, the first electric vehicle to win the

award in the magazine’s history.

By then, Hothi was in graduate school, but

he’d developed a side interest in the stock

market. When he wasn’t inhaling the work

of post-Marxist French philosophers, he

was lurking on Yahoo! Finance message

boards and shorting dozens of compa-

nies, including Tesla and SolarCity. His

skepticism was rooted in the realities

oftheautoindustry—a“capital-intensive, operationally

demanding,low-marginindustry,”hesays—but it was also

a contrarianbetagainstMusk,whoHothi knew had been

firedasCEOofPayPalInc.beforethepayments company

wentpublic.“Peoplearealwayslike,‘Never bet against Elon,’

butI’mlike,‘AlwaysbetagainstElon.’He was a problem at

PayPal,SolarCitywasa disaster,andTesla is a disaster.”

Hothiarguesthere’sa profoundphilosophical question

inthewayMuskis perceived—onerelated to a core tenet of

Sikhism,theprohibitionofidolworship. “I see people like

SteveJobs,orElonMusk,orDonaldTrump,orBarackObama

forthatmatter,andI’mnotinclinedtofallonmykneesand

worshipthesepeople,”hesays.“Forme,they’rejustordi-

narypeoplecaughtupinsituations.”

In2016,Hothicreatedanaccounton Seeking Alpha, an

investingwebsitepopularamongshortsellers, and started

postingabouttheSolarCityacquisitionand other investment

concerns.Hesaysit becamecleartohim,as he learned more

aboutfinance,operating metrics, and regu-

latorydisclosures,thatTesla was in a tough

spot.“Therewasnevera momentwhereI

hadtorealize,Ohman,thisgeniusis nota

genius,” hesays.“Forme, it was more that

thisfellowsellingthese cars is trying to get

byina reallydifficultenterprise.”

Over time, the Tesla shorts on Seeking

Alpha largely moved their conversa-

tiontoTwitter,a worldofbrevityand

memes.HothijoinedinMarch2017.For

skabooshka’savatar,hechosea dystopian

paintingbythelatePolishartistZdzislaw

Beksinskiofa skeletonplaying the trumpet.

I first contacted skabooshka in June 2018 while reporting a

story about Tesla’s new Model 3 assembly line in the tent.

I thought he might be a contractor or a supplier, or even,

based on his apparent knowledge of the factory and his

photos of the tent going up, a current or former employee.

UnsurewhetherI waslooking at the right tent among the sev-

eraloutsidetheFremont plant, I sent him a photo from the

train platform overlooking the factory.

This it? “That’s it,” he wrote back.

That June 19 he posted his first accu-

sationthattheassemblylinewasn’tfully

automated.“Thisisthealiendread-

naughtElonpromised:hand-building

cars,”hewrote.(Muskhadacknowl-

edgedonTwitterthat“excessiveauto-

mationatTeslawasamistake.”) Later,

afterhe’dposted his drone footage to

YouTube, I asked skabooshka

if he wanted to meet in per-

son.Hedeclinedbecause, he said, people were trying

to dox him.

In July 2018 an obscure Twitter account with few followers

12/2010 12/2019

60%

40

20

SHORT INTEREST SHARE

OF TSLA’S EQUITY FLOAT

@MARKBSPIEGEL:

GOOD

LUCK

GETTING NON-CULT MEMBERS TO CROSS

OVER AND BUY A NEW $TSLA WHILE THE SUDDEN ACCELERATION AND

(SOON) AUTOPILOT INVESTIGATIONS ARE GOING ON.#NOTAGROWTHCULT (JAN 17 2020)

@BGRAHAMDISCIPLE: SO,

REMEMBER HOW I TOLD YOU

ALL MUSK IS DONE? WELL, HE

IS DONE. FINISHED. SEE YA.

WOULDN’T WANT TO BE YA.

BUH BYE. THE SEC JUST SUED

HIM FOR SECURITIES FRAUD

AND THEIR CASE IS AIR

TIGHT. THEY ARE SEEKING

A LIFETIME OFFICER AND

DIRECTOR BAN. $TSLAQ.

(SEP 27 2018)