Is Tesla Motors CEO Elon Musk a Hero?

Kazakhstan Soyuz rocket space-travel - Tesla MotorsQ: Is Elon Musk a hero? The mind behind Tesla Motors (TSLA), SolarCity (SCTY), and SpaceX — founded in 2002 by Tesla Motors and not yet public — certainly is to early investors. Will he be their hero tomorrow?
A: It’s unlikely. Musk has done a brilliant job as stock promoter. The rest is still debatable. These three promotions involve unrelated technologies. There’s no reason to believe that Mr. Elon Musk is highly competent or brilliantly innovative in any of them.

Q: Can you give some specifics that disturb you?
A: Yes. Take a look at the two-year charts for TSLA and SCTY. They are too similar for it to be accidental.

Q: What does that mean to you?
A: It means that both are story stocks promoted and supported by the same box.

Q: What do you mean by the term ‘box’?
A: It refers to the practice of so-called bucket shops pre-SEC that never actually executed client orders on an exchange but threw the order into the bucket and kept a small inventory of shares, in certificate form, in a box. Even today, ‘running the box’ is slang for the financial power behind the stock promotion. It doesn’t necessarily mean the stock promotion is a scam.

Q: Who’s running the box for Musk?
A: There was recently a billion-dollar private funding for SpaceX. During my latest flyby of the canyons of Wall Street, I heard that Google did most of the heavy lifting.

Q: Then Tesla Motors (TSLA) could have a big payday when SpaceX goes public?
A: Their share of the spoils will be exactly what the box says. This is a well-financed and well-executed promotion. It reminds me of Amazon.

Q: Maybe it’s too dangerous to short?
A: You certainly shouldn’t fight them head on. William Ackman made that mistake with Herbalife. Think Sun Tzu (The Art of Speculation during Civil War – Sun Tzu Meets Jesse Livermore). Apply economic law (Ludwig von Mises’ Human Action and Murray Rothbard’s Man, Economy, and State). There’s a lot of fun and profit to be had here.

And, always remember: Carthage must be destroyed.


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