1 00:00:10,160 --> 00:00:13,640 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:13,680 --> 00:00:17,599 Speaker 1: I'm Joe Wisenthal and I'm Tracy Alloway. Tracy, you know 3 00:00:17,640 --> 00:00:22,160 Speaker 1: what story has made this summer really fun? I do. Actually, 4 00:00:22,280 --> 00:00:26,480 Speaker 1: it has to be Tesla, right, Yeah, So the last 5 00:00:26,600 --> 00:00:31,640 Speaker 1: few weeks have just been this incredible saga of Tesla, 6 00:00:32,280 --> 00:00:36,720 Speaker 1: starting with early August when it's CEO Elon Musk, said 7 00:00:36,760 --> 00:00:39,960 Speaker 1: he was going to take the firm private at a 8 00:00:40,000 --> 00:00:43,760 Speaker 1: price of four a share, and then he said in 9 00:00:43,800 --> 00:00:46,560 Speaker 1: the same tweet that he had funding secured, and ever 10 00:00:46,680 --> 00:00:49,839 Speaker 1: since then, there's just been this mad scramble on the 11 00:00:49,880 --> 00:00:52,960 Speaker 1: part of everyone to figure out what that tweet meant, 12 00:00:53,720 --> 00:00:56,480 Speaker 1: whether it was legal, what the story behind it was, 13 00:00:56,600 --> 00:00:59,640 Speaker 1: and everything. And I just found it to be incredibly 14 00:00:59,760 --> 00:01:02,640 Speaker 1: fun and amusing the whole thing. Oh yeah, I mean 15 00:01:02,680 --> 00:01:06,440 Speaker 1: we thought that people dissected Donald Trump's tweets quite a bit, 16 00:01:06,920 --> 00:01:11,200 Speaker 1: but the way they've been examining Elon Musk's tweets is 17 00:01:11,240 --> 00:01:15,000 Speaker 1: definitely even more intense than that. And I gotta say 18 00:01:15,080 --> 00:01:17,680 Speaker 1: when he first tweeted it, I don't know about you, 19 00:01:17,720 --> 00:01:19,920 Speaker 1: but I was really scratching my head at the four 20 00:01:20,000 --> 00:01:24,039 Speaker 1: twenty reference. A lot of people thought that could potentially 21 00:01:24,040 --> 00:01:29,360 Speaker 1: be a joke because four twenty is well code for marijuana, right. Yeah. 22 00:01:29,640 --> 00:01:33,240 Speaker 1: I have to say I was on vacation during during 23 00:01:33,240 --> 00:01:35,399 Speaker 1: the week when it happened, but of course even when 24 00:01:35,400 --> 00:01:38,720 Speaker 1: I'm on vacation, I'm like still checking Twitter every ten minutes. 25 00:01:39,080 --> 00:01:41,080 Speaker 1: And as soon as I saw that tweet, I was like, 26 00:01:41,120 --> 00:01:43,080 Speaker 1: there's just no way this is real. Like I didn't 27 00:01:43,120 --> 00:01:46,480 Speaker 1: for a second actually believe this could possibly be a 28 00:01:46,520 --> 00:01:50,720 Speaker 1: real thing. And of course Tesla hasn't gone private at 29 00:01:50,720 --> 00:01:54,520 Speaker 1: fo dollars a year, but of course, uh, this raises 30 00:01:54,520 --> 00:01:57,160 Speaker 1: all kinds of questions about the legality of just tweeting 31 00:01:57,240 --> 00:01:59,840 Speaker 1: something like that, and what funding secured means and what 32 00:02:00,080 --> 00:02:03,960 Speaker 1: CEOs can tweet, and you know, Elon's already unusual. And 33 00:02:04,040 --> 00:02:06,680 Speaker 1: I think our guest today to help us understand this 34 00:02:07,200 --> 00:02:10,360 Speaker 1: is probably the very best person to talk about it, 35 00:02:10,400 --> 00:02:15,120 Speaker 1: because as soon as this happened, the entire internet was like, 36 00:02:15,440 --> 00:02:18,640 Speaker 1: we have to hear from this columnist his take, because 37 00:02:18,680 --> 00:02:21,280 Speaker 1: it's definitely going to be the best take. Yeah, um, 38 00:02:21,320 --> 00:02:23,880 Speaker 1: I would probably agree with that, and uh, you know, 39 00:02:24,400 --> 00:02:28,520 Speaker 1: talking about us disclosure rules is always fun, but this 40 00:02:28,600 --> 00:02:32,480 Speaker 1: particular person makes it even more so. And On that note, 41 00:02:32,520 --> 00:02:35,480 Speaker 1: I would like to bring in this week's guest, Matt Levine. 42 00:02:35,520 --> 00:02:39,960 Speaker 1: He's an opinion columnist here at Bloomberg, And like I said, honestly, 43 00:02:39,960 --> 00:02:42,760 Speaker 1: I think with in a few minutes, everybody was like, 44 00:02:42,760 --> 00:02:44,880 Speaker 1: we gotta get Matt Levine's take on this, and then 45 00:02:44,960 --> 00:02:48,120 Speaker 1: over the next several weeks, all of Matt's columns on 46 00:02:48,200 --> 00:02:52,240 Speaker 1: Tesla became must reads. So here to sort of help us, 47 00:02:52,280 --> 00:02:54,720 Speaker 1: what help us understand everything that happened is Matt, thank 48 00:02:54,760 --> 00:02:57,800 Speaker 1: you very much for joining us. Thanks for having me. Matt, 49 00:02:57,880 --> 00:03:02,160 Speaker 1: where were you talking? I forget where I was exactly, 50 00:03:02,160 --> 00:03:05,040 Speaker 1: but my column. I've been not writing my column regularly 51 00:03:05,040 --> 00:03:06,960 Speaker 1: for the last couple of weeks, and I was planning 52 00:03:06,960 --> 00:03:10,360 Speaker 1: to not do it, and then Ellen came along, and 53 00:03:10,400 --> 00:03:13,320 Speaker 1: I've been writing mostly about him for a couple of weeks. 54 00:03:14,080 --> 00:03:17,520 Speaker 1: So when you saw the first tweet, the infamous funding 55 00:03:17,600 --> 00:03:21,800 Speaker 1: secured uh four dollars a share tweet, what did you 56 00:03:21,840 --> 00:03:24,239 Speaker 1: think about it? I didn't think it was a joke 57 00:03:24,360 --> 00:03:27,200 Speaker 1: per se, But my first reaction was kind of, he's 58 00:03:27,240 --> 00:03:29,679 Speaker 1: got a little farther than he thinks he has here. 59 00:03:29,720 --> 00:03:31,880 Speaker 1: You know, I've written about a lot of people who 60 00:03:31,919 --> 00:03:36,680 Speaker 1: have ah, you know, launching fake takeover offers is a 61 00:03:36,720 --> 00:03:40,320 Speaker 1: thing that happens, and the SEC and the regulators and 62 00:03:40,440 --> 00:03:43,280 Speaker 1: prosecutors take that seriously, and people have recently gone to 63 00:03:43,320 --> 00:03:46,640 Speaker 1: prison for launching fake tender offers. So I think that 64 00:03:46,680 --> 00:03:50,200 Speaker 1: Ellen Musk has this funnest for sort of making bold 65 00:03:50,280 --> 00:03:53,440 Speaker 1: claims that he can't necessarily always back up on Twitter, 66 00:03:54,040 --> 00:03:57,360 Speaker 1: and I think he was kind of going along with 67 00:03:57,400 --> 00:04:00,400 Speaker 1: that without without really kind of considering the This is 68 00:04:00,440 --> 00:04:02,720 Speaker 1: a bit of a more serious there the gravity of 69 00:04:02,760 --> 00:04:04,920 Speaker 1: what he just said. You know, if he's like, I'm 70 00:04:04,920 --> 00:04:07,480 Speaker 1: gonna make a car that flies everyone like Ellen, all right, 71 00:04:07,480 --> 00:04:09,800 Speaker 1: but he's gonna take take the company private at four twenty, 72 00:04:09,840 --> 00:04:13,240 Speaker 1: it's a little more serious. It just occurred to me that, um, 73 00:04:13,560 --> 00:04:16,120 Speaker 1: we should back up a second, because, like I said, 74 00:04:16,560 --> 00:04:20,560 Speaker 1: this sort of intersection of finance and law is kind 75 00:04:20,600 --> 00:04:22,760 Speaker 1: of your specialty, which is why so many people want 76 00:04:22,839 --> 00:04:26,520 Speaker 1: to get your take. You are a lawyer by training, right, 77 00:04:27,520 --> 00:04:29,960 Speaker 1: I was an m and a lawyer briefly, Um, nothing 78 00:04:30,000 --> 00:04:32,080 Speaker 1: I say is every legal advice. And then I was 79 00:04:32,120 --> 00:04:34,840 Speaker 1: an investment banker, and uh, I have been a columnist, 80 00:04:35,160 --> 00:04:38,640 Speaker 1: so I've I worked at two of the firms that 81 00:04:38,640 --> 00:04:41,800 Speaker 1: are that we're advising Musk and his going private transactions 82 00:04:42,160 --> 00:04:47,000 Speaker 1: some some exposure to this world. Okay, uh, well you 83 00:04:47,000 --> 00:04:51,120 Speaker 1: were a lawyer, so legal technicalities. What exactly are the 84 00:04:51,240 --> 00:04:56,320 Speaker 1: sort of disclosure requirements? And didn't Musk potentially get in 85 00:04:56,360 --> 00:04:59,320 Speaker 1: trouble because he said something on Twitter? Or is it 86 00:04:59,320 --> 00:05:03,920 Speaker 1: because he said something on Twitter that isn't true? Uh? 87 00:05:04,080 --> 00:05:06,160 Speaker 1: Much more the ladder. You know, people think that they're 88 00:05:06,279 --> 00:05:09,360 Speaker 1: that they're like these real sort of formality rules around 89 00:05:09,360 --> 00:05:11,400 Speaker 1: you have to you know, you can't announce a going 90 00:05:11,480 --> 00:05:15,120 Speaker 1: private transaction without you know, filing a proxy and everything. 91 00:05:15,320 --> 00:05:18,400 Speaker 1: That's not true at all. Like this is how it 92 00:05:18,440 --> 00:05:21,120 Speaker 1: normally happens, is, you know, the CEO of a company 93 00:05:21,160 --> 00:05:23,480 Speaker 1: will go to the board and we'll say I would 94 00:05:23,520 --> 00:05:25,320 Speaker 1: like to take the company private, will say that before 95 00:05:25,320 --> 00:05:27,160 Speaker 1: filing a proxy statement. It won't be all done. It 96 00:05:27,200 --> 00:05:29,120 Speaker 1: will be a sort of the opening of a conversation 97 00:05:29,480 --> 00:05:32,640 Speaker 1: that usually doesn't happen publicly, but it's not like out 98 00:05:32,640 --> 00:05:34,760 Speaker 1: of the question that it might at some point become 99 00:05:34,800 --> 00:05:37,320 Speaker 1: public and the CEO might say, I'm looking into I'm 100 00:05:37,360 --> 00:05:41,839 Speaker 1: exploring transaction. They don't normally do it on Twitter, not 101 00:05:41,880 --> 00:05:44,599 Speaker 1: because like Twitter is illegal, and in fact, the SEC 102 00:05:44,760 --> 00:05:46,520 Speaker 1: has said, you know, if you if you sort of 103 00:05:46,600 --> 00:05:49,200 Speaker 1: follow a few formalities and you make it clear you're 104 00:05:49,200 --> 00:05:51,960 Speaker 1: gonna do this, you can announce material events on Twitter. 105 00:05:52,400 --> 00:05:54,640 Speaker 1: The problem, you know, first of all, is that turned 106 00:05:54,640 --> 00:05:56,400 Speaker 1: out on to be true. But but but even beyond that, 107 00:05:56,440 --> 00:05:59,760 Speaker 1: the problem with doing this on Twitter if you're Elon 108 00:05:59,800 --> 00:06:03,040 Speaker 1: mu Usk is that no one seems to have vetited. 109 00:06:03,080 --> 00:06:04,919 Speaker 1: He didn't run it by the board or any lawyers, 110 00:06:05,400 --> 00:06:08,400 Speaker 1: and so the stuff he said was kind of careless. 111 00:06:08,480 --> 00:06:10,680 Speaker 1: You know, normally, whether you put it out in a 112 00:06:10,680 --> 00:06:12,360 Speaker 1: tweet or a blog post or an eight K or 113 00:06:12,400 --> 00:06:14,599 Speaker 1: a press release or whatever, you would say I'm thinking 114 00:06:14,640 --> 00:06:18,280 Speaker 1: about taking the company public, nothing was assured. You know, 115 00:06:19,160 --> 00:06:21,479 Speaker 1: things might still go wrong. All these all these like 116 00:06:21,520 --> 00:06:25,080 Speaker 1: sort of lawyery language that at least kind of gives 117 00:06:25,080 --> 00:06:27,520 Speaker 1: you cover if it doesn't work out. With Elon Musk 118 00:06:27,600 --> 00:06:29,919 Speaker 1: was kind of the opposite. He said I'm considering, right, 119 00:06:29,920 --> 00:06:31,599 Speaker 1: so he didn't actually say I'm definitely gonna do it, 120 00:06:31,720 --> 00:06:33,480 Speaker 1: and then like two tweets later he's like, this is 121 00:06:33,560 --> 00:06:35,760 Speaker 1: only contingent on a serrel the road. It's definitely like 122 00:06:36,240 --> 00:06:39,720 Speaker 1: everything became just sort of more confident um, because that's 123 00:06:39,760 --> 00:06:42,280 Speaker 1: kind of the way he uses Twitter, which is not 124 00:06:42,839 --> 00:06:45,520 Speaker 1: the way you want to announce a potential but not 125 00:06:45,560 --> 00:06:49,040 Speaker 1: button down transaction. Something about the way he used Twitter. 126 00:06:49,120 --> 00:06:52,400 Speaker 1: I had this thought, which is that within maybe a 127 00:06:52,520 --> 00:06:56,800 Speaker 1: day or two after the funding secured tweet, it's just 128 00:06:56,880 --> 00:06:59,160 Speaker 1: kind of obvious that funding was not secure. Sure even 129 00:06:59,360 --> 00:07:03,200 Speaker 1: arguably with hours but then but whatever, but they were 130 00:07:03,240 --> 00:07:05,240 Speaker 1: like a couple of days of like fund speculation about 131 00:07:05,240 --> 00:07:07,240 Speaker 1: who it might baby. Yeah. But then I know it's 132 00:07:07,279 --> 00:07:10,520 Speaker 1: like a couple of weeks later that some of these 133 00:07:10,560 --> 00:07:12,640 Speaker 1: like analysts who cover the stuff and they're like, it 134 00:07:12,680 --> 00:07:15,640 Speaker 1: appears that funding is not secured, and we're downgrading, and 135 00:07:15,680 --> 00:07:19,200 Speaker 1: I downgrading the stock, and I wonder, you know, you're 136 00:07:19,240 --> 00:07:22,760 Speaker 1: on Twitter, and you also had your background in the 137 00:07:22,800 --> 00:07:25,600 Speaker 1: investment banking world, whether those of us who are sort 138 00:07:25,600 --> 00:07:28,440 Speaker 1: of versened in Twitter sort of so it's like, oh, 139 00:07:28,480 --> 00:07:31,560 Speaker 1: this is sort of you know, this is a guy tweeting. 140 00:07:32,080 --> 00:07:34,440 Speaker 1: Where is that if you're not sort of familiar with 141 00:07:34,520 --> 00:07:37,520 Speaker 1: that world, The thought that you would ever flippantly say 142 00:07:37,520 --> 00:07:41,400 Speaker 1: funding secured is almost unimagined. Yeah, it's a weird intersection. 143 00:07:41,440 --> 00:07:43,480 Speaker 1: I mean, like, like you know, as an m and 144 00:07:43,560 --> 00:07:45,360 Speaker 1: al as a form of reor like the fact that 145 00:07:45,400 --> 00:07:47,560 Speaker 1: you would do that is still unimagined, even though you know, 146 00:07:47,600 --> 00:07:49,760 Speaker 1: I joke around on Twitter all the time like it's 147 00:07:49,800 --> 00:07:52,200 Speaker 1: it's it's you're not it's a it's a mixing of 148 00:07:52,240 --> 00:07:55,080 Speaker 1: the world. That just didn't really work right, And I 149 00:07:55,160 --> 00:07:58,880 Speaker 1: doubt SEC rules have been updated to take into account 150 00:07:58,880 --> 00:08:04,480 Speaker 1: trolling or saying outrageous things in order to provoke a reaction. Yeah, 151 00:08:04,520 --> 00:08:07,760 Speaker 1: I mean, he's done. He's made jokes on tweet. He 152 00:08:07,800 --> 00:08:11,200 Speaker 1: joked about Tesla going bankrupt, He's he joked about introducing 153 00:08:11,840 --> 00:08:13,720 Speaker 1: a new model, like a watch. I think he joked 154 00:08:13,720 --> 00:08:16,240 Speaker 1: about a Tesla watch, and I think at one point, 155 00:08:16,240 --> 00:08:18,320 Speaker 1: I think the stock moved on the Tesla watch tweet, 156 00:08:18,960 --> 00:08:21,560 Speaker 1: and I think the SEC was a you know, like 157 00:08:21,640 --> 00:08:27,440 Speaker 1: they just sort of didn't really Ah, there's some awareness 158 00:08:27,480 --> 00:08:29,360 Speaker 1: that like things can be a joke, and like the 159 00:08:29,440 --> 00:08:31,360 Speaker 1: Tesla watch, it was like an April Fool's joke. It 160 00:08:31,400 --> 00:08:32,760 Speaker 1: was just very clear it was a joke and if 161 00:08:32,800 --> 00:08:35,560 Speaker 1: you bought stock on that, like, it's your problem. So 162 00:08:35,640 --> 00:08:39,200 Speaker 1: I think the SEC has has just they're not going 163 00:08:39,280 --> 00:08:41,200 Speaker 1: to pick that fight. But this is this is not 164 00:08:41,240 --> 00:08:42,760 Speaker 1: a joke, you know, And this like did move the 165 00:08:42,760 --> 00:08:45,920 Speaker 1: stock a lot, and this is a little more serious. 166 00:08:46,000 --> 00:08:48,920 Speaker 1: Something we know about Ellen is he really doesn't like 167 00:08:49,000 --> 00:08:53,000 Speaker 1: short sellers. And one of the things people were talking 168 00:08:53,040 --> 00:08:57,600 Speaker 1: about is whether he tweeted this on purpose to sort 169 00:08:57,600 --> 00:09:00,320 Speaker 1: of burn the short sellers. And I'm curious if there 170 00:09:00,400 --> 00:09:05,640 Speaker 1: is a distinction between elon driving to the airport and thinking, 171 00:09:06,000 --> 00:09:09,400 Speaker 1: you know, I think my conversations with the saudis wherever 172 00:09:09,480 --> 00:09:11,240 Speaker 1: bit more or less. I mean, I have the funding security, 173 00:09:11,240 --> 00:09:14,560 Speaker 1: I'm just going to tweet that versus I'm going to 174 00:09:14,600 --> 00:09:17,480 Speaker 1: tweet this to really mess with the shore sellers. And 175 00:09:17,520 --> 00:09:20,520 Speaker 1: whether I get whether intent matters here, yeah, it really does. 176 00:09:20,559 --> 00:09:22,240 Speaker 1: I mean it's it's a little weird. A think of 177 00:09:22,280 --> 00:09:26,920 Speaker 1: a company puts out misleading information about something material to 178 00:09:26,960 --> 00:09:29,480 Speaker 1: the company, that's bad. The company is again to get 179 00:09:29,480 --> 00:09:33,160 Speaker 1: in trouble for that. But Ellen, when he was doing 180 00:09:33,200 --> 00:09:35,880 Speaker 1: this was not acting as the company. He was acting 181 00:09:35,920 --> 00:09:37,760 Speaker 1: as a potential buyer for the company. So I wasn't 182 00:09:37,800 --> 00:09:40,280 Speaker 1: doing it in his capacity as CEO. And if your 183 00:09:40,280 --> 00:09:42,600 Speaker 1: person puts out you know, if I just like say, 184 00:09:42,720 --> 00:09:46,120 Speaker 1: random lies about Tesla, that's probably not securities, not legal advice, 185 00:09:46,120 --> 00:09:48,680 Speaker 1: but it's probably fine The reason people get in trouble 186 00:09:48,720 --> 00:09:51,080 Speaker 1: for doing this stuff is that they have some manipulate 187 00:09:51,120 --> 00:09:53,280 Speaker 1: they want to manipulate the side, they want to um, 188 00:09:53,320 --> 00:09:56,280 Speaker 1: they have some manipulative purpose. And usually what that means 189 00:09:56,720 --> 00:10:00,640 Speaker 1: when like just random people put out fake t cover offers, 190 00:10:00,760 --> 00:10:02,720 Speaker 1: usually what it means they bought some stock. They put 191 00:10:02,760 --> 00:10:05,120 Speaker 1: out the fake taker offer, the stock goes up and 192 00:10:05,120 --> 00:10:08,000 Speaker 1: they sell their stock. It's like a very simple like fraud, 193 00:10:08,120 --> 00:10:11,160 Speaker 1: like a scam. With Elan, it seems very unlikely he 194 00:10:11,240 --> 00:10:14,240 Speaker 1: was selling, right, no indication he was selling. So it's 195 00:10:14,280 --> 00:10:16,440 Speaker 1: not that. So that's not the thing he's gonna get 196 00:10:16,440 --> 00:10:18,520 Speaker 1: in trouble for. And so the question is that you 197 00:10:18,600 --> 00:10:21,040 Speaker 1: have some other manipulative intent. And I think the obvious 198 00:10:21,040 --> 00:10:24,199 Speaker 1: one that people are looking at is he's gone on 199 00:10:24,240 --> 00:10:26,640 Speaker 1: and on about burning the short sellers. He said, you know, 200 00:10:26,640 --> 00:10:28,600 Speaker 1: in a few weeks or they're going to face the 201 00:10:28,760 --> 00:10:32,720 Speaker 1: you know, they're gonna have a terrible they're gonna get burned, basically, 202 00:10:33,160 --> 00:10:37,320 Speaker 1: and uh, you know, having made it so clear that 203 00:10:37,360 --> 00:10:39,080 Speaker 1: he wants to burn the shorts, that he wants to 204 00:10:39,080 --> 00:10:43,360 Speaker 1: squeeze the shorts, it suggests that one possible explanation here 205 00:10:43,400 --> 00:10:47,119 Speaker 1: is that that's what he was doing. There's another facet about, 206 00:10:47,160 --> 00:10:50,160 Speaker 1: you know, whether or not he intended to commit some 207 00:10:50,200 --> 00:10:53,880 Speaker 1: sort of stock manipulation, which is um this notion that 208 00:10:53,960 --> 00:10:57,520 Speaker 1: maybe he was on either drugs or you know, sleeping 209 00:10:57,520 --> 00:11:00,480 Speaker 1: pills or valium or something like that at the time 210 00:11:00,480 --> 00:11:05,360 Speaker 1: when he tweeted. If if his emotional state was UM, 211 00:11:06,280 --> 00:11:09,600 Speaker 1: I don't know, let's say, like, I don't know, if 212 00:11:09,600 --> 00:11:12,920 Speaker 1: his emotional state was fragile at the time, would that 213 00:11:13,280 --> 00:11:15,559 Speaker 1: help him in the eyes of the sec Would he 214 00:11:15,600 --> 00:11:18,480 Speaker 1: get a little bit of leeway because of that? I'm 215 00:11:18,520 --> 00:11:21,800 Speaker 1: not sure there's any precedent for like saying I committed securities, right, 216 00:11:22,559 --> 00:11:24,080 Speaker 1: I mean there is, right, I mean there are there 217 00:11:24,120 --> 00:11:27,640 Speaker 1: are There are insider traders who you know, were addicted 218 00:11:27,679 --> 00:11:30,040 Speaker 1: to things, and they sort of say that at their 219 00:11:30,080 --> 00:11:33,200 Speaker 1: sentencing and it gets them a little leniency maybe here. 220 00:11:33,240 --> 00:11:35,360 Speaker 1: I mean, like if it were a joke, if it 221 00:11:35,400 --> 00:11:37,840 Speaker 1: were like a drug trip, then he would have backed 222 00:11:37,840 --> 00:11:39,280 Speaker 1: away from it, right. I mean. The fact that he 223 00:11:39,559 --> 00:11:43,080 Speaker 1: spent two weeks, you know, putting out blog posts the 224 00:11:43,080 --> 00:11:44,800 Speaker 1: next day and the next week saying this is why 225 00:11:44,800 --> 00:11:47,200 Speaker 1: I said funding was security, they suggests that he was 226 00:11:47,640 --> 00:11:51,520 Speaker 1: a little more serious than that, and that he wasn't 227 00:11:51,600 --> 00:11:55,280 Speaker 1: just you know, he didn't back away from immediately one 228 00:11:55,280 --> 00:11:57,840 Speaker 1: of the columns you wrote and just goes back to 229 00:11:57,840 --> 00:12:01,080 Speaker 1: your experience as a lawyer, was essentially Okay, the tweet 230 00:12:01,200 --> 00:12:05,000 Speaker 1: is out there, now, how can a law firm and 231 00:12:05,040 --> 00:12:08,559 Speaker 1: Ellen sort of back in to making the tweet true? Yeah? 232 00:12:08,720 --> 00:12:11,680 Speaker 1: Like so obviously clearly like they scrambled to be like, 233 00:12:11,760 --> 00:12:13,800 Speaker 1: can we make an excuse for this that it looks 234 00:12:13,840 --> 00:12:15,720 Speaker 1: kind of real? Because lawyers are going to take on 235 00:12:15,760 --> 00:12:18,240 Speaker 1: any task and they'll try. So what was in your 236 00:12:18,320 --> 00:12:24,120 Speaker 1: view the most plausible approach to sort of make make it? 237 00:12:24,440 --> 00:12:26,360 Speaker 1: You know, if you were if you were Elon's lawyer, 238 00:12:26,440 --> 00:12:29,000 Speaker 1: what would be the most plausible structure to back up 239 00:12:29,000 --> 00:12:31,640 Speaker 1: the tweet? So they basically did it, which is they 240 00:12:31,720 --> 00:12:34,480 Speaker 1: raised money from people who wanted to invest, and there 241 00:12:34,800 --> 00:12:37,320 Speaker 1: there is commitments, right, and they went out and canvassed. 242 00:12:38,120 --> 00:12:40,280 Speaker 1: You know, one reason that you might want to go 243 00:12:40,360 --> 00:12:43,040 Speaker 1: public with this, with this notion before having it all 244 00:12:43,080 --> 00:12:46,680 Speaker 1: locked down is that way everyone knows about it, and 245 00:12:46,720 --> 00:12:48,839 Speaker 1: if there is someone sitting around being like I'd love 246 00:12:48,840 --> 00:12:51,000 Speaker 1: to put ten billion dollars into Tesla, then they'll call 247 00:12:51,040 --> 00:12:52,760 Speaker 1: you up. And that kind of seems to have happened, 248 00:12:52,760 --> 00:12:54,320 Speaker 1: you know, and he announced on Friday that he's calling 249 00:12:54,320 --> 00:12:55,600 Speaker 1: the deal off. He said, you know, we got a 250 00:12:55,600 --> 00:12:59,920 Speaker 1: lot of inbound interest. So they did find people who 251 00:13:00,040 --> 00:13:02,839 Speaker 1: were willing to explore putting money into it. And the 252 00:13:02,920 --> 00:13:05,280 Speaker 1: journal report that they raised about thirty billion dollars, which 253 00:13:05,280 --> 00:13:08,920 Speaker 1: is not enough to take Tesla private, but you know, 254 00:13:09,720 --> 00:13:11,560 Speaker 1: it's not nothing. It's a lot of money, and you know, 255 00:13:11,600 --> 00:13:14,080 Speaker 1: and it combines with the notion all along was that 256 00:13:14,160 --> 00:13:16,520 Speaker 1: a lot of the public shareholders would roll into the 257 00:13:16,600 --> 00:13:20,400 Speaker 1: new private Tesla. That's not it's not clear they were 258 00:13:20,400 --> 00:13:24,000 Speaker 1: ever interested in that. Um, you know, some some were, 259 00:13:24,080 --> 00:13:25,839 Speaker 1: but had you know, some of the big public mutual 260 00:13:25,880 --> 00:13:29,000 Speaker 1: funds like Tesla, but have regulatory restrictions or have charter 261 00:13:29,080 --> 00:13:32,040 Speaker 1: restrictions on how much private stock they can own. So 262 00:13:32,760 --> 00:13:34,640 Speaker 1: you know, like what they seem to have cobbled together 263 00:13:34,720 --> 00:13:36,680 Speaker 1: is the thirty billion dollars of money and then some 264 00:13:36,800 --> 00:13:39,280 Speaker 1: number of shareholders who would roll you can sort of 265 00:13:39,320 --> 00:13:40,920 Speaker 1: like look at it and it kind of looks like 266 00:13:40,960 --> 00:13:43,600 Speaker 1: you could almost get to a going private transaction. And 267 00:13:43,600 --> 00:13:45,079 Speaker 1: that's kind of what they presented to the board. And 268 00:13:45,080 --> 00:13:48,439 Speaker 1: then Ellen said never mind, So there is a real um. 269 00:13:48,520 --> 00:13:50,080 Speaker 1: So I mean, like, the structure that you do is 270 00:13:50,120 --> 00:13:54,280 Speaker 1: that is offering some combination of new cash from new 271 00:13:54,280 --> 00:13:58,679 Speaker 1: investors plus rolling over big current investors in in Tesla, 272 00:13:58,920 --> 00:14:00,640 Speaker 1: and you try to get those two numbers to add 273 00:14:00,679 --> 00:14:03,679 Speaker 1: to about seventy billion dollars just which is the you know, 274 00:14:04,440 --> 00:14:07,040 Speaker 1: four twenty times the number of shares. So like, the 275 00:14:07,080 --> 00:14:10,680 Speaker 1: other fun problem that that I'm sure that Musk's advisers 276 00:14:10,720 --> 00:14:12,640 Speaker 1: are working on is that when he initially announced this, 277 00:14:13,160 --> 00:14:15,920 Speaker 1: one thing he said was that every shareholder was going 278 00:14:15,960 --> 00:14:18,040 Speaker 1: to get an opportunity to roll over into the new 279 00:14:18,080 --> 00:14:20,320 Speaker 1: private Tesla, which is one of the weirdest things about it. 280 00:14:20,360 --> 00:14:22,760 Speaker 1: The idea that you can take all of your public shareholders, 281 00:14:22,760 --> 00:14:24,440 Speaker 1: all these like mom and pop share olders who have 282 00:14:24,440 --> 00:14:26,920 Speaker 1: ten shares and roll them into a private company is 283 00:14:26,920 --> 00:14:29,440 Speaker 1: not normally how you think of private companies. So I'm 284 00:14:29,440 --> 00:14:32,000 Speaker 1: sure that people were trying to find some way to 285 00:14:32,040 --> 00:14:33,520 Speaker 1: make that true. And I know I read a lot 286 00:14:33,560 --> 00:14:36,200 Speaker 1: of articles analyzing, well, you could do stub equity, you 287 00:14:36,200 --> 00:14:38,560 Speaker 1: could do this or that. It never seemed all that 288 00:14:38,640 --> 00:14:42,680 Speaker 1: realistic to me. And Uh in his latest announcement must 289 00:14:42,880 --> 00:14:45,360 Speaker 1: conceider that there is not really a practical path to 290 00:14:45,400 --> 00:14:48,800 Speaker 1: do it. So in terms of damage control, I mean, 291 00:14:49,240 --> 00:14:52,480 Speaker 1: you briefly mentioned this just that then, but um, the 292 00:14:52,560 --> 00:14:57,520 Speaker 1: four twenty number, Like how much more complicated would that 293 00:14:57,560 --> 00:15:01,760 Speaker 1: have made attempts to contain the damage. And also the 294 00:15:01,840 --> 00:15:04,400 Speaker 1: four twenty number, where do you think he caught that from? 295 00:15:04,440 --> 00:15:06,800 Speaker 1: Do you think it was based on reality or is 296 00:15:06,840 --> 00:15:09,160 Speaker 1: it something he just sort of like pulled out of 297 00:15:09,200 --> 00:15:12,000 Speaker 1: the air. I'll defend that the four twenty number is 298 00:15:12,040 --> 00:15:14,560 Speaker 1: like a premium. I think I think that that what 299 00:15:14,640 --> 00:15:16,800 Speaker 1: he said is that he wanted to offer a premium 300 00:15:16,840 --> 00:15:20,200 Speaker 1: to the trading precess arend around three, and so he 301 00:15:20,760 --> 00:15:23,440 Speaker 1: did that math like multiplying by one point two, and 302 00:15:23,440 --> 00:15:25,960 Speaker 1: he got like four hundred nineteen dollars, and he decided 303 00:15:26,000 --> 00:15:28,680 Speaker 1: that four twenties sounded like a nicer rounder number. And 304 00:15:28,720 --> 00:15:31,520 Speaker 1: everyone kind of scoffed at this explanation, But it's totally reasonable. 305 00:15:31,560 --> 00:15:33,680 Speaker 1: That's how every going private deal has done. Like there's 306 00:15:33,680 --> 00:15:36,280 Speaker 1: no you know, there's no he's not doing a discounted 307 00:15:36,280 --> 00:15:38,800 Speaker 1: cash flow analysis. There's no cash flow. It's it's a 308 00:15:39,000 --> 00:15:42,840 Speaker 1: it's the way that you do a going private transaction 309 00:15:42,920 --> 00:15:45,280 Speaker 1: is you offer like a sort of reasonable premium to 310 00:15:45,360 --> 00:15:47,040 Speaker 1: the current trading price, and then you go to the 311 00:15:47,080 --> 00:15:48,680 Speaker 1: board and you see what the board says, and you 312 00:15:48,720 --> 00:15:51,080 Speaker 1: negotiate from there. So I think like offering a round 313 00:15:51,120 --> 00:15:54,080 Speaker 1: number that's from the from the trading price, it's fine. 314 00:15:54,600 --> 00:15:59,040 Speaker 1: The discounted cash flow analysis that that's typically like backed 315 00:15:59,080 --> 00:16:01,040 Speaker 1: into right. They come up with the number, and then 316 00:16:01,080 --> 00:16:03,920 Speaker 1: someone's job is to sort of put together a spreadsheet 317 00:16:03,960 --> 00:16:06,720 Speaker 1: that explains it. At some point, if you were really 318 00:16:06,720 --> 00:16:09,480 Speaker 1: going to buy the company, he would have to come 319 00:16:09,560 --> 00:16:13,440 Speaker 1: up with a sense of how many dollars the company 320 00:16:13,520 --> 00:16:15,560 Speaker 1: was worth, and the board would have to come up 321 00:16:15,560 --> 00:16:17,520 Speaker 1: with a sense of how many dollars the company is worth, 322 00:16:17,840 --> 00:16:19,600 Speaker 1: and they'd have to be not too far apart so 323 00:16:19,640 --> 00:16:22,800 Speaker 1: that they could negotiate a price. Uh. One way to 324 00:16:22,840 --> 00:16:25,480 Speaker 1: do that traditionally is a discounted cash for analysis, where 325 00:16:25,480 --> 00:16:27,760 Speaker 1: you discount the present value of the future cash flows 326 00:16:27,760 --> 00:16:31,120 Speaker 1: of the company. I think it's very hard to predict that, 327 00:16:31,200 --> 00:16:33,160 Speaker 1: and I think there's a kind of wide bit ask 328 00:16:33,200 --> 00:16:37,040 Speaker 1: on what that number is. What do you think about 329 00:16:37,600 --> 00:16:40,640 Speaker 1: CEOs who are obsessed with shorts? Because both CEOs don't 330 00:16:40,680 --> 00:16:42,640 Speaker 1: seem to care that much, but every once in a while, 331 00:16:43,440 --> 00:16:46,880 Speaker 1: there's the CEO comes along that really gets worked up 332 00:16:46,880 --> 00:16:50,120 Speaker 1: about them. There's this belief that the shorts can do 333 00:16:50,240 --> 00:16:53,080 Speaker 1: something to you that I think is mostly wrong. Sometimes 334 00:16:53,080 --> 00:16:54,880 Speaker 1: it's right. So the companies that need a lot of finance, 335 00:16:54,880 --> 00:16:58,400 Speaker 1: particularly like you know, in the financial crisis, banks were 336 00:16:58,440 --> 00:17:00,800 Speaker 1: really worried about shorts because if they couldn't roll their 337 00:17:00,800 --> 00:17:04,439 Speaker 1: financing every day, they couldn't stay in business. Um. You know, 338 00:17:04,480 --> 00:17:06,399 Speaker 1: when Herbal Life was in a fight with Bill Ackman, 339 00:17:06,440 --> 00:17:09,040 Speaker 1: when Bill Ackman was really trying to get regulators to 340 00:17:09,040 --> 00:17:12,000 Speaker 1: shut them down, Like they had a real belief that 341 00:17:12,080 --> 00:17:15,200 Speaker 1: Bill Ackman was doing things to them. Most of the time, though, 342 00:17:15,240 --> 00:17:17,560 Speaker 1: shorts just short the stock and they think the company 343 00:17:17,640 --> 00:17:20,520 Speaker 1: is bad or the or the stock is overvalued, and 344 00:17:20,840 --> 00:17:23,800 Speaker 1: they're like tools to do something bad to the company 345 00:17:23,840 --> 00:17:27,800 Speaker 1: are fairly limited. Um. Tesla, you know, Musk talks a 346 00:17:27,800 --> 00:17:30,879 Speaker 1: lot about how the shorts are pushing a narrative that 347 00:17:30,920 --> 00:17:33,760 Speaker 1: will destroy Tesla, and it's very hard for me to 348 00:17:33,880 --> 00:17:37,199 Speaker 1: understand what that could mean. Tesla cells cars, and like, 349 00:17:37,280 --> 00:17:40,320 Speaker 1: I don't think short sellers are going to like potential 350 00:17:40,359 --> 00:17:42,760 Speaker 1: car buyers and trying to talk them out of buying Teslas. 351 00:17:42,800 --> 00:17:44,240 Speaker 1: I mean they were a little bit they're putting out. 352 00:17:44,280 --> 00:17:46,520 Speaker 1: You know, they would not you know, they will put 353 00:17:46,520 --> 00:17:49,119 Speaker 1: out a little um uh claims that the cars are 354 00:17:49,119 --> 00:17:52,439 Speaker 1: badly made, but like, ah, there's not a lot they 355 00:17:52,480 --> 00:17:55,320 Speaker 1: can do. And I think the focus on short sellers 356 00:17:55,359 --> 00:17:59,159 Speaker 1: is more of a like psychological like aversion to having 357 00:17:59,200 --> 00:18:02,080 Speaker 1: anyone criticized as you than like a real like rational 358 00:18:02,200 --> 00:18:06,240 Speaker 1: analysis of what the company needs. I think most public 359 00:18:06,320 --> 00:18:10,159 Speaker 1: company CEOs recognize that the company needs their attention on 360 00:18:10,200 --> 00:18:13,720 Speaker 1: the business rather than they're like ego driven tweeting about 361 00:18:13,720 --> 00:18:17,480 Speaker 1: how evil short sellers are. Isn't Tesla burning through cash 362 00:18:17,600 --> 00:18:20,879 Speaker 1: quite rapidly though, like I e. Don't they need pretty 363 00:18:20,880 --> 00:18:25,000 Speaker 1: decent access to financing in order to basically stay in 364 00:18:25,080 --> 00:18:27,080 Speaker 1: existence for a time to come. And wouldn't that be 365 00:18:27,119 --> 00:18:30,360 Speaker 1: a vulnerability that the shorts could target by sort of 366 00:18:30,560 --> 00:18:33,600 Speaker 1: interrupting that flow of financing. Yeah, I mean look like 367 00:18:33,640 --> 00:18:36,400 Speaker 1: they do. I mean, like, like, you know, the fact 368 00:18:36,560 --> 00:18:39,080 Speaker 1: is that like the marginal buyer of Tesla stock can 369 00:18:39,119 --> 00:18:41,200 Speaker 1: buy it from a short seller rather than from Tesla. 370 00:18:41,760 --> 00:18:44,720 Speaker 1: Um that narrative is complicated by the fact that, you know, 371 00:18:44,840 --> 00:18:48,040 Speaker 1: Musk is not fond of saying that they need financing right, 372 00:18:48,080 --> 00:18:51,600 Speaker 1: and that, and if you're a company that needs billions 373 00:18:51,640 --> 00:18:54,560 Speaker 1: of dollars of financing from the equity markets, it's weird 374 00:18:54,960 --> 00:18:57,080 Speaker 1: to say, you know what, we're gonna buy all of 375 00:18:57,080 --> 00:18:59,480 Speaker 1: our stock back. We don't need any public sheer olders, 376 00:18:59,520 --> 00:19:03,440 Speaker 1: We're gonna buy back. It's like, I tend to agree 377 00:19:03,480 --> 00:19:06,760 Speaker 1: with you that Tesla does require access to the public markets, 378 00:19:06,800 --> 00:19:10,040 Speaker 1: and that short sellers not by like pushing a narrative 379 00:19:10,119 --> 00:19:11,640 Speaker 1: or anything, but just by the fact that they are 380 00:19:11,680 --> 00:19:15,240 Speaker 1: like a supply of shares. Short sellers tend to reduce 381 00:19:15,359 --> 00:19:17,680 Speaker 1: their access to cheap financing not that much, right, I 382 00:19:17,680 --> 00:19:21,040 Speaker 1: mean still seventy sixty billion dollar company, right, It's you know, 383 00:19:21,080 --> 00:19:23,240 Speaker 1: they still have plenty of access to public markets. Short 384 00:19:23,280 --> 00:19:25,360 Speaker 1: sellers do it the margin reduce that, But like that's 385 00:19:25,400 --> 00:19:28,760 Speaker 1: not the narrative that Tesla says. Yeah, this, this whole 386 00:19:28,880 --> 00:19:31,359 Speaker 1: story has sort of coming in a very weird time 387 00:19:31,400 --> 00:19:33,840 Speaker 1: where there's this other big thing people are talking about, 388 00:19:33,880 --> 00:19:37,760 Speaker 1: and that is the supposed shortsightedness of public markets and 389 00:19:37,920 --> 00:19:42,719 Speaker 1: whether investors demand companies hit a number every quarter. And 390 00:19:42,800 --> 00:19:46,440 Speaker 1: Tesla seems like a company that, more than anything, hasn't 391 00:19:46,480 --> 00:19:50,200 Speaker 1: been forced to adear by the demands of the market, 392 00:19:50,280 --> 00:19:53,679 Speaker 1: because they never get punished for failing to hit some number, 393 00:19:53,760 --> 00:19:56,240 Speaker 1: and there doesn't seem to be any particular expectation that 394 00:19:56,560 --> 00:20:00,520 Speaker 1: if they don't nail uh an EPs or that wall 395 00:20:00,520 --> 00:20:02,399 Speaker 1: Streets put out there, that they're going to lose their 396 00:20:02,440 --> 00:20:04,600 Speaker 1: access to the market. It's never an EPs figure because 397 00:20:04,600 --> 00:20:06,800 Speaker 1: they don't make money. Now there are like they do 398 00:20:07,040 --> 00:20:09,720 Speaker 1: sort of announce short term production targets and then when 399 00:20:09,720 --> 00:20:11,680 Speaker 1: they failed to meet them, people say, ah, you failed 400 00:20:11,680 --> 00:20:13,600 Speaker 1: to meet them. And I think that there's like a 401 00:20:13,640 --> 00:20:17,320 Speaker 1: psychological thing where like I think Musk feels like he 402 00:20:17,400 --> 00:20:19,680 Speaker 1: is subject to the short term pressures of the stock market. 403 00:20:19,840 --> 00:20:22,520 Speaker 1: But objectively, there's this enormous valuation on a company that 404 00:20:22,560 --> 00:20:25,760 Speaker 1: doesn't make money, and that valuation is driven purely by 405 00:20:25,760 --> 00:20:27,520 Speaker 1: a belief that in the long term it's going to 406 00:20:27,560 --> 00:20:30,480 Speaker 1: be an enormous success. As you said, it's like it's 407 00:20:30,520 --> 00:20:33,480 Speaker 1: exactly the sort of counter narrative to this idea that 408 00:20:33,520 --> 00:20:36,400 Speaker 1: the public markets are so shortsighted. Public markets are funding 409 00:20:36,680 --> 00:20:41,080 Speaker 1: very cheaply, you know, at very high valuations this total 410 00:20:41,840 --> 00:20:45,240 Speaker 1: long shot, long term company, and nonetheless Musk is like 411 00:20:45,480 --> 00:20:47,240 Speaker 1: public markets are short so short term we have to 412 00:20:47,240 --> 00:20:50,760 Speaker 1: get out of here, sorry, just to take a step back. Then, 413 00:20:51,200 --> 00:20:54,399 Speaker 1: do we have any indication or do we have a 414 00:20:54,480 --> 00:20:58,439 Speaker 1: guess um even about why Elon Musk would have found 415 00:20:58,760 --> 00:21:02,320 Speaker 1: going private desirable, especially if he's talking about going private 416 00:21:02,320 --> 00:21:06,760 Speaker 1: in a way that still brings along the existing public shareholders. Yeah, 417 00:21:06,800 --> 00:21:09,480 Speaker 1: I mean, I don't think he had a fully baked 418 00:21:09,480 --> 00:21:12,000 Speaker 1: sense of like exactly what it would mean. But I 419 00:21:12,040 --> 00:21:16,000 Speaker 1: think that basically I don't think he wanted to go private. 420 00:21:16,000 --> 00:21:17,399 Speaker 1: I think he wanted to be private. I think he 421 00:21:17,440 --> 00:21:21,199 Speaker 1: looked at like the company being like Uber, where you 422 00:21:21,359 --> 00:21:25,280 Speaker 1: don't announce quarterly results and have to do a conference 423 00:21:25,280 --> 00:21:27,680 Speaker 1: call and get questions about how you miss production targets, 424 00:21:27,920 --> 00:21:30,160 Speaker 1: you don't have short sellers, like those are the two 425 00:21:30,160 --> 00:21:32,959 Speaker 1: big things. Like you're like and your stock doesn't move 426 00:21:33,000 --> 00:21:34,720 Speaker 1: around day to day, and you don't like sort of 427 00:21:35,200 --> 00:21:38,760 Speaker 1: have whatever demoralizing or moralizing effect that has on your 428 00:21:38,760 --> 00:21:41,159 Speaker 1: staff when the stock goes down. So I think he 429 00:21:41,200 --> 00:21:44,959 Speaker 1: looks at like big private companies and thinks those companies 430 00:21:45,000 --> 00:21:48,280 Speaker 1: are fine. They have this sort of like public face 431 00:21:48,440 --> 00:21:52,000 Speaker 1: and the ability to access capital that like public companies 432 00:21:52,000 --> 00:21:54,879 Speaker 1: have always had, and they don't have the share price 433 00:21:55,080 --> 00:21:57,760 Speaker 1: moves and the quarter of the earnings reports and the 434 00:21:57,760 --> 00:22:00,560 Speaker 1: short sellers, and he thought that would be more attractive. 435 00:22:01,400 --> 00:22:03,760 Speaker 1: That's not a reason to like do a going private 436 00:22:03,760 --> 00:22:06,200 Speaker 1: transaction and go out to Saudi Arabia and raise money 437 00:22:06,320 --> 00:22:08,800 Speaker 1: to buy out your shareholders. But if you could flip 438 00:22:08,800 --> 00:22:10,800 Speaker 1: a switch and go from being a public company to 439 00:22:10,800 --> 00:22:12,159 Speaker 1: a private company, I think you would have liked to 440 00:22:12,200 --> 00:22:15,199 Speaker 1: do that. That reminds me. Actually, So there were a 441 00:22:15,200 --> 00:22:19,520 Speaker 1: couple of reports recently that the Saudis weren't very impressed 442 00:22:19,560 --> 00:22:24,320 Speaker 1: by Elon Muska, basically talking about conversations that they'd had. 443 00:22:25,000 --> 00:22:29,600 Speaker 1: Does Elon have any sort of obligations to the Saudias 444 00:22:29,640 --> 00:22:32,080 Speaker 1: when it comes to like what he was able to 445 00:22:32,320 --> 00:22:36,119 Speaker 1: reveal and not reveal, Not that I know of. I 446 00:22:36,119 --> 00:22:39,520 Speaker 1: mean I think that normally when things like this happened, 447 00:22:39,640 --> 00:22:42,639 Speaker 1: you know, you sign agreements, and those agreements might include 448 00:22:42,640 --> 00:22:45,840 Speaker 1: a confidentiality agreement, but they more importantly, they just include 449 00:22:45,880 --> 00:22:48,840 Speaker 1: some sort of like coordination on how you'd approach the 450 00:22:48,840 --> 00:22:51,520 Speaker 1: company and how you'd approach publicity, and you'd agree on 451 00:22:51,600 --> 00:22:54,280 Speaker 1: how you'd announced the deal in all these things that 452 00:22:54,359 --> 00:22:56,439 Speaker 1: didn't that doesn't seem to have happened here. Maybe he 453 00:22:56,520 --> 00:22:58,399 Speaker 1: violated a convention of that agreement, but I doubt I 454 00:22:58,400 --> 00:23:02,760 Speaker 1: think more likely is he just had casual, relatively casual 455 00:23:02,800 --> 00:23:05,040 Speaker 1: conversations with them that didn't lead to any sort of 456 00:23:05,760 --> 00:23:13,280 Speaker 1: formal agreement, and they feel burned by his representing it 457 00:23:13,320 --> 00:23:16,920 Speaker 1: as a formal agreement. Let's talk about what's next. So 458 00:23:17,160 --> 00:23:21,879 Speaker 1: obviously Ellen announced late on a Friday, I think it 459 00:23:22,000 --> 00:23:24,520 Speaker 1: was eleven PM that like, actually it's over, We're not 460 00:23:24,560 --> 00:23:27,600 Speaker 1: going to go private, back to business as usual. But 461 00:23:28,240 --> 00:23:33,359 Speaker 1: the whole affair has a perhaps damaged Elon's reputation among 462 00:23:33,480 --> 00:23:36,320 Speaker 1: some in Wall Street, though I don't know how much 463 00:23:36,359 --> 00:23:40,200 Speaker 1: that will actually matter. But more importantly, there's now an investigation, 464 00:23:40,400 --> 00:23:43,280 Speaker 1: and we've and others have reported that the SEC has 465 00:23:43,320 --> 00:23:46,800 Speaker 1: sent subpoenas to Tesla. So, in your view, what are 466 00:23:46,840 --> 00:23:49,080 Speaker 1: some of the ways that this could go? I think 467 00:23:49,119 --> 00:23:53,880 Speaker 1: from like the company's perspective, I think they're on board 468 00:23:53,920 --> 00:23:55,920 Speaker 1: with Ellen, right, Like the board is like sort of 469 00:23:56,000 --> 00:23:58,320 Speaker 1: his buddies, and like frankly, the company sort of makes 470 00:23:58,359 --> 00:24:01,280 Speaker 1: the most sense with this like visionary leader, right, So 471 00:24:01,600 --> 00:24:04,600 Speaker 1: I think it's very important for them, And I have 472 00:24:04,680 --> 00:24:06,439 Speaker 1: to say, it looks like this has happened it's very 473 00:24:06,480 --> 00:24:08,600 Speaker 1: important for them to be like stop doing this, right, 474 00:24:08,600 --> 00:24:11,639 Speaker 1: like pay more attention to like following the rules and 475 00:24:11,680 --> 00:24:16,679 Speaker 1: not misleading shareholders and not like creating enormous painful distractions 476 00:24:16,720 --> 00:24:19,520 Speaker 1: for the company that that reverberate for months just because 477 00:24:19,560 --> 00:24:21,080 Speaker 1: like you like were in a car on the way 478 00:24:21,119 --> 00:24:22,560 Speaker 1: to the airport and you had a whim. So I 479 00:24:22,560 --> 00:24:24,040 Speaker 1: think in the company's preside of like they're not going 480 00:24:24,119 --> 00:24:26,960 Speaker 1: to fire him, you know, but like they really should 481 00:24:27,000 --> 00:24:28,679 Speaker 1: read him the Riot Act and tell him to stop 482 00:24:28,680 --> 00:24:32,240 Speaker 1: doing this. And it seems like that's happened now. From 483 00:24:32,240 --> 00:24:34,360 Speaker 1: the sec IS perspective, I really don't know. I mean, 484 00:24:34,560 --> 00:24:36,400 Speaker 1: I don't think it's like an open and shut case 485 00:24:36,480 --> 00:24:41,320 Speaker 1: that he like, uh like committed the crime or the 486 00:24:41,440 --> 00:24:44,160 Speaker 1: or the you know, the violation of manipulating the stock, 487 00:24:44,200 --> 00:24:47,199 Speaker 1: because I do think that in his mind he was 488 00:24:47,640 --> 00:24:49,800 Speaker 1: sort of just sort of giving a window into his 489 00:24:49,840 --> 00:24:52,440 Speaker 1: thought process and maybe also trying to bring the shorts. 490 00:24:52,480 --> 00:24:54,320 Speaker 1: So I think they have a bit of a tough case. 491 00:24:54,600 --> 00:24:57,760 Speaker 1: If I were the SEC, I would really really really 492 00:24:57,840 --> 00:25:00,000 Speaker 1: want to bring an enforcement action here because it looks 493 00:25:00,200 --> 00:25:04,600 Speaker 1: really bad for a big, famous public company CEO to 494 00:25:04,760 --> 00:25:09,200 Speaker 1: announce a big material transaction when it's not true. Um, 495 00:25:09,240 --> 00:25:13,480 Speaker 1: but I also like it's not such a sort of like, yeah, 496 00:25:13,560 --> 00:25:15,800 Speaker 1: it doesn't have so much bad intent that i'd want 497 00:25:15,840 --> 00:25:18,080 Speaker 1: to like ban him from being the CEO. I'd like 498 00:25:18,080 --> 00:25:20,800 Speaker 1: want to get some money, yell at him and move on. 499 00:25:21,000 --> 00:25:23,320 Speaker 1: You mentioned in one of your columns and everyone found 500 00:25:23,320 --> 00:25:25,960 Speaker 1: out really amusing this idea that like if you were 501 00:25:26,640 --> 00:25:29,440 Speaker 1: an SEC staff or you would really want to be 502 00:25:29,520 --> 00:25:31,080 Speaker 1: on this case, Like this would be like one of 503 00:25:31,119 --> 00:25:35,240 Speaker 1: the juiciest cases of your career, like that it would 504 00:25:35,240 --> 00:25:38,879 Speaker 1: be hilarious to be the person who called Tesla to 505 00:25:38,960 --> 00:25:40,960 Speaker 1: be like, so, where is that funny because everyone else 506 00:25:41,000 --> 00:25:43,280 Speaker 1: is like, where's this? Funding is as real as as possible, 507 00:25:43,400 --> 00:25:45,159 Speaker 1: and yeah, CEC, you could just call up and be like, 508 00:25:45,320 --> 00:25:48,919 Speaker 1: so really, I think that like the initial stage of 509 00:25:48,920 --> 00:25:51,879 Speaker 1: this investigation would be just hilarious because like this like 510 00:25:52,320 --> 00:25:55,320 Speaker 1: very sort of rickety, fake seeming transaction, Like you could 511 00:25:55,359 --> 00:25:56,760 Speaker 1: go and be like is this real or not? And 512 00:25:56,800 --> 00:25:58,600 Speaker 1: like they have every like they have to tell you 513 00:25:58,640 --> 00:26:00,840 Speaker 1: because if you're the regular there and you have a 514 00:26:00,960 --> 00:26:03,360 Speaker 1: you know, primo faciae case that something bad has gone 515 00:26:03,400 --> 00:26:06,000 Speaker 1: on here, I think at this point I'm less envious 516 00:26:06,000 --> 00:26:08,280 Speaker 1: with those people because at this point they kind of 517 00:26:09,000 --> 00:26:11,000 Speaker 1: like we feel it feels like we know all the facts, 518 00:26:11,000 --> 00:26:12,399 Speaker 1: Like they probably know all the facts and they have 519 00:26:12,440 --> 00:26:13,960 Speaker 1: to decide what to do with it. And it's not 520 00:26:14,000 --> 00:26:16,840 Speaker 1: like there's an open and shut like either walk away 521 00:26:16,920 --> 00:26:18,760 Speaker 1: or like throw the book at them. Like there's some 522 00:26:19,520 --> 00:26:21,119 Speaker 1: facts are clear about what you do with them is 523 00:26:21,200 --> 00:26:23,800 Speaker 1: less clear. Yeah, I think it's it's, you know, like 524 00:26:24,040 --> 00:26:26,880 Speaker 1: the idea that like you can't just let him get 525 00:26:26,880 --> 00:26:29,199 Speaker 1: away with it because like it just doesn't it's just 526 00:26:29,280 --> 00:26:31,480 Speaker 1: the stock moved a lot on information that seemed not 527 00:26:31,480 --> 00:26:33,080 Speaker 1: to be true. But at the same time, you can't 528 00:26:33,080 --> 00:26:35,720 Speaker 1: be like he can never be a public company director 529 00:26:35,720 --> 00:26:37,840 Speaker 1: anymore because like he's doing a good job for share 530 00:26:37,880 --> 00:26:40,960 Speaker 1: olders in many respects. Yeah, it feels like you have 531 00:26:41,040 --> 00:26:44,560 Speaker 1: to sort of get inside Musk's mind a little bit 532 00:26:44,600 --> 00:26:48,400 Speaker 1: as well, And I wonder, I wonder what those conversations 533 00:26:48,440 --> 00:26:50,800 Speaker 1: would be, like, Yeah, I don't really think you do that. 534 00:26:50,920 --> 00:26:54,840 Speaker 1: I think you do to bring like a case in court, 535 00:26:54,960 --> 00:26:57,280 Speaker 1: and I don't think that's what anyone wants. I think 536 00:26:57,280 --> 00:26:59,919 Speaker 1: what you have to do is there's like probably some 537 00:27:00,000 --> 00:27:02,160 Speaker 1: brob middle ground where it's like they pay a fine, 538 00:27:02,400 --> 00:27:04,840 Speaker 1: he promises not to do it again. The SEC yells 539 00:27:04,840 --> 00:27:07,159 Speaker 1: at him a lot, and everyone kind of moves on 540 00:27:07,200 --> 00:27:09,160 Speaker 1: with their lives. You don't really need to talk about 541 00:27:09,200 --> 00:27:11,000 Speaker 1: exactly what his intent was. You need to be like, 542 00:27:11,280 --> 00:27:15,760 Speaker 1: this wasn't true, So let's announced that let's keep public market, 543 00:27:15,960 --> 00:27:18,880 Speaker 1: you know, do something for the integrity public markets by 544 00:27:19,040 --> 00:27:23,320 Speaker 1: going after Musk in some way for for tweeting this. Though. Well, 545 00:27:23,359 --> 00:27:26,159 Speaker 1: on that note, Matt uh, that gives us something to 546 00:27:26,359 --> 00:27:29,120 Speaker 1: look forward to down the line. And it was great 547 00:27:29,119 --> 00:27:30,800 Speaker 1: to talk to you. Appreciate your coming up. Thanks for 548 00:27:30,840 --> 00:27:48,360 Speaker 1: having Joe. I really like that conversation. I always love 549 00:27:48,480 --> 00:27:51,440 Speaker 1: having matt on. But I think you were right, he's 550 00:27:51,480 --> 00:27:54,840 Speaker 1: sort of the perfect person to talk about this. Yeah, 551 00:27:54,880 --> 00:27:57,840 Speaker 1: and the last point, which is sort of this idea 552 00:27:57,960 --> 00:28:01,639 Speaker 1: that everybody now kinds of nose the facts like that 553 00:28:01,760 --> 00:28:05,360 Speaker 1: was really fun in the immediate days after the tweet, 554 00:28:05,400 --> 00:28:08,320 Speaker 1: because it did not seem very ambiguous. It seemed like 555 00:28:08,359 --> 00:28:11,920 Speaker 1: either he had funding secured or he didn't have funding secured. 556 00:28:12,400 --> 00:28:14,959 Speaker 1: And while all of us on Twitter or sort of 557 00:28:15,240 --> 00:28:17,960 Speaker 1: is this real? It always seemed like pretty straightforward for 558 00:28:18,000 --> 00:28:20,320 Speaker 1: the SEC to just ask the question and find out, 559 00:28:20,760 --> 00:28:24,080 Speaker 1: now what you do with that information, though, it'll be interesting, 560 00:28:24,600 --> 00:28:28,160 Speaker 1: but maybe not quite as maybe not quite as juicy. Yeah. 561 00:28:28,280 --> 00:28:31,880 Speaker 1: I also wonder still about the long term reputational damage 562 00:28:31,920 --> 00:28:35,080 Speaker 1: to Tesla and to Elon Musk in particular. Like, if 563 00:28:35,080 --> 00:28:38,680 Speaker 1: you think that this is a guy who basically made 564 00:28:38,760 --> 00:28:42,240 Speaker 1: his reputation and his career by coming up with sort 565 00:28:42,280 --> 00:28:45,080 Speaker 1: of out of this world ideas and then figuring out 566 00:28:45,120 --> 00:28:48,200 Speaker 1: how to do them, it kind of feels like in 567 00:28:48,200 --> 00:28:51,600 Speaker 1: this instance, he came up with a sort of crazy 568 00:28:51,680 --> 00:28:57,960 Speaker 1: financial idea but had no actual discernible way of knowing 569 00:28:57,960 --> 00:29:00,880 Speaker 1: how to follow through with it. So maybe you can 570 00:29:00,920 --> 00:29:03,280 Speaker 1: be a visionary when it comes to electric cars and 571 00:29:03,320 --> 00:29:06,800 Speaker 1: not financial markets, or maybe people think you should be 572 00:29:06,840 --> 00:29:09,800 Speaker 1: a visionary in all things. I don't know. I do 573 00:29:09,920 --> 00:29:13,600 Speaker 1: wonder whether this really will have any long term ramifications 574 00:29:13,640 --> 00:29:17,600 Speaker 1: on Tesla's ability to borrow money or tap the capital markets. 575 00:29:17,840 --> 00:29:20,200 Speaker 1: People say that it will, and like you see analysts 576 00:29:20,280 --> 00:29:23,840 Speaker 1: talking about how this sort of reduces his credibility, but 577 00:29:23,880 --> 00:29:27,880 Speaker 1: you have to wonder whether it actually will matter. Also, 578 00:29:27,960 --> 00:29:31,320 Speaker 1: outside of financial markets, there's also the whole issue of 579 00:29:31,360 --> 00:29:35,320 Speaker 1: Testlas suppliers and whether they supply parts in exchange for 580 00:29:35,720 --> 00:29:38,360 Speaker 1: payments down the down the road. So there are some 581 00:29:38,400 --> 00:29:42,040 Speaker 1: areas where he does need to maintain trust, but you know, 582 00:29:42,080 --> 00:29:43,959 Speaker 1: I don't I don't know which way. I could certainly 583 00:29:43,960 --> 00:29:47,280 Speaker 1: see this all blowing over. Yeah, And there is a 584 00:29:47,320 --> 00:29:50,160 Speaker 1: sort of ultimate irony in here that a company that 585 00:29:50,320 --> 00:29:54,360 Speaker 1: seems to hate public markets so much has actually kind 586 00:29:54,400 --> 00:29:59,479 Speaker 1: of gotten away with um ignoring certain norms of public 587 00:29:59,520 --> 00:30:03,280 Speaker 1: markets for so long. And the irony that ostensibly one 588 00:30:03,320 --> 00:30:07,360 Speaker 1: reason to go private is to avoid distraction and is 589 00:30:07,400 --> 00:30:10,600 Speaker 1: big of a distraction as they come. Right, Okay, this 590 00:30:10,680 --> 00:30:14,600 Speaker 1: has been the ultimate tale of Tesla irony. Then, um, 591 00:30:14,640 --> 00:30:16,720 Speaker 1: shall we leave it there? Let's do it all right? 592 00:30:16,800 --> 00:30:20,040 Speaker 1: This has been another episode of the All Thoughts podcast. 593 00:30:20,120 --> 00:30:22,719 Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at 594 00:30:22,760 --> 00:30:25,200 Speaker 1: Tracy Alloway and I'm Joe wi Isn't All. You can 595 00:30:25,280 --> 00:30:28,160 Speaker 1: follow me on Twitter at the Stalwart, and you should 596 00:30:28,160 --> 00:30:31,880 Speaker 1: follow our guest Matt Levine on Twitter at Matt Underscore 597 00:30:31,920 --> 00:30:35,959 Speaker 1: at Levine, and you should follow our producer tofur Foreheads 598 00:30:36,120 --> 00:30:39,560 Speaker 1: at Foreheads T, as well as the Bloomberg head of podcast, 599 00:30:39,640 --> 00:30:43,320 Speaker 1: Francesca Levy at Francesca Today. Thanks for listening.