Wednesday’s earnings report was a bust for Tesla. The company reported a huge loss of $702 million and missed revenue expectations.
In the conference call that followed, forlorn Tesla boss Elon Musk mused about taking Tesla private again:
“I would prefer we were private, but unfortunately I think the ship, that ship, has sailed.”
Elon Musk desperately wants to pull Tesla off the stock market and return it to private investors. And he’s right. Going private is exactly what Tesla needs right now to avoid a death spiral.
“TAKING TESLA PRIVATE… FUNDING SECURED”
Musk first hinted about his ambition to take Tesla private in August 2018. In a now infamous tweet, he said “Am thinking about taking Tesla private at $420. Funding secured.”
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
The tweet landed him in hot water with the Securities and Exchange Commission (SEC). The Commission accused Musk of fraud, claiming the “funding secured” tweet was “false and misleading.”
3 REASONS TESLA SHOULD BE A PRIVATE COMPANY
Although Musk is resigned to keeping Tesla public, it’s the wrong decision for three reasons:
- Tesla is forced to perform to an arbitrary quarterly earnings cycle rather than focusing on long-term ambition.
- Tesla is open to short-sellers which ravage Tesla and its stock (and Musk can’t stop baiting them).
- Tesla still operates like a startup. It needs time to experiment and mature.
Let’s go through them one at a time.
1. TESLA SHOULD FOCUS LONG-TERM, NOT QUARTERLY REPORTS
Being public means delivering knock-out performances every single quarter. But a company like Tesla should be looking five years in the future.
Listening to Wednesday’s earnings call, you could sense this conflict in Musk’s delivery:
“If we were to fully optimize for profitability in Q2, I think we could do it, but then we would be unable to unwind this crazy wave of deliveries.”
Rather than focusing on Tesla’s long-term strategy, Musk is being forced to think about how to appease investors in the next three months.
Stock price is noise generated by commercial investors scratching their heads because they don't get what he's trying to do. Main reason Tesla should've been private, but here we are. It's not just about profits, although they are of course essential.
— Mark B (@voytechs) April 25, 2019
Going private would allow Tesla to ditch the quarterly pressures and get back its ambitious roots. Elon Musk himself admitted:
“Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term.”
2. SHORT-SELLERS RAVAGE TESLA ON PUBLIC MARKETS
Tesla is notoriously one of the most shorted stocks on the market. There is an entire community on Twitter dedicated to betting against Tesla, known as $TESLAQ.
The sheer volume of shorts means there’s an incentive to find and spread negative angles on Tesla for financial gain. As one analyst explains:
“[Short sellers] puts downward pressure on the stock, and that’s not good, when your daily report card is the stock price.”
Elon Musk’s war with #Tesla's short sellers just got weirder as shorts rise again. The electric carmaker claims a California man who it says is part of an online group of short sellers has been stalking its Fremont factory and harassing its employees. https://t.co/s9YMZBU1QN pic.twitter.com/vhp95qOHSh
— Holger Zschaepitz (@Schuldensuehner) April 22, 2019
More importantly, Elon Musk gets massively distracted by short-sellers. He constantly baits them and interacts with them.
The constant obsession with short-sellers and stock price volatility is pulling Elon Musk’s attention in all the wrong directions.
Oh and uh short burn of the century comin soon. Flamethrowers should arrive just in time.
— Elon Musk (@elonmusk) May 4, 2018
3. TESLA STILL OPERATES LIKE A STARTUP
Companies typically go public when they are sufficiently grown, stable, and somewhat predictable.
While Tesla is a large, well-capitalized company, it still operates like a startup. Its forecasts are volatile and unpredictable. Tesla constantly shifts focus and explores new directions in a mission to define the future of driving.
Going public means there’s less freedom to experiment which is Tesla’s modus operandi.
Ultimately, Tesla should go private while it hones and defines the company. And as Elon Musk said, the company could return to the public markets at a later date:
“In the future, once Tesla enters a phase of slower, more predictable growth, it will likely make sense to return to the public markets.”
JP Morgan CEO “wouldn’t spend too much time on” Libra
In a recent interview with CNBC, the head of JP Morgan has claimed that he doesn’t see the release of Libra as a major issue. Discussing how to deal with the threat it potentially poses, Jamie Dimon said that he “wouldn’t spend too much time on it”.
Dimon has been deeply critical of Bitcoin and the cryptocurrency space in the past, but recently his attitude towards crypto seems to have changed slightly.
A few months ago, his own bank launched its own token, JPM Coin. This institutionally-focused remittance system was received with very little enthusiasm from the crypto community, and many pointed out that it was entirely centralized and didn’t count as a crypto at all. However, these same criticisms have been levelled at Facebook’s upcoming Libra stablecoin, and the two could potentially compete for some clients.
The JP Morgan CEO insisted that he didn’t perceive Libra as a threat at all: “To put it in perspective, we’ve been talking about blockchain for 7 years and very little has happened,” he said during a conference call with analysts. “We’re going to be talking about Libra three years from now. I wouldn’t spend too much time on it.”
As for regulations concerning Libra, Dimon said that AML and KYC rules will need to be followed by everyone: “The request is always going to be the same: We want a level playing field. And governments are going to insist that people who hold money or move money all live according to rules where they have the right controls in place; no-one wants to aid and abet terrorism or criminal activities.
Chainlock makes Dash immune to 51% attacks, claims Ryan Taylor
Dash was recently in the news for the implementation of Chainlock, a protocol which helps the Dash network become immune to 51% attacks or a chain re-org.
Ryan Taylor, Dash CEO, was recently featured in an interview where he spoke extensively on Chainlock, New InstantSend and more. Taylor first spoke of how Dash is different from other cryptocurrencies and how it was focused on making “Point-of-sale” for users a more seamless process.
With the implementation of Chainlock on the Dash network, it can now settle payments instantly and can quickly be re-spent without any risk to the receiver.
In the interview, Taylor also spoke about the issues Proof-of-Work-based chains face. According to him, these chains follow the block that has “the most work associated with it,” and always go with the first block they see, even when there are two potential blocks. The validity of a block is confirmed only after the next few blocks are formed in the network.
He then spoke of projects using a checkpoint system, a system that carries its own cons. Taylor said that Dash had solved these issues. Dash has created a network that votes by itself on the blocks created. It does so through developed layers of a network called “Master Nodes.” These master nodes then randomly select 400 nodes to form a “Quorum,” members of which then vote when a block is sighted. The purpose of the voting is to term a block valid for it to be added to the network.
A block is only valid if 60% of the members agree to it. Later, a message is sent via the network and mentions the details of a block at a particular height, while also informing about any other block which is rejected.
When asked about the importance of Chainlock and reducing the chance of a 51% attack, Taylor said,
“The cost of attacking the Dash network for an hour isn’t just rent some hashrate like it is for all other cryptocurrencies, you also have to control 20, 25 percent of the coin supply before you could even attempt it. That makes Dash, probably, the most secure cryptocurrency, even more so than Bitcoin.”
Binance CEO Hosts Fifth Live AMA On Company’s Latest Objectives For Futures And Smart Contracts
Binance head CZ sat down for his latest edition of his famous AMA where he addressed numerous rumors and questions around Binance.
He said that while the arrival of institutional demand is one of the most cited reasons by cryptocurrency proponents for this year’s rally, individual investors are still playing a key role in driving the dramatic price gains. While both institutional and retail trading is growing at Binance, individual investors account for about 60% of trading volume which is the same proportion as the last year. This growth comes in part thanks to greater availability of margin trading.
Expanding on this, CZ said:
“So far, there’s more than $15 million borrowed for margin trading, so clearly there’s a very strong demand for that, and we’re happy to finally push the product out, and have more people use it.”
He even said that there is a possibility of a Future launch:
“The simulation market price will roughly follow the real Bitcoin price, which is the real contract price. We will do a simulation first. Then, in 10 to 20 days, we’ll make the futures testnet live.”
He was proud of the fact that the Binance DEX has been received with open arms by the crypto community.
“I think Binance DEX offers many many advantages. I mean in terms of technology, it is faster, cheaper etc, etc but also in terms of economics, when a project is on Binance, we help it market and provide a lot of service around it, which also helps promote the growth of our Binance DEX.”
Binance team is all set to burn off all the BNB tokens that were allocated to them in order to burn a mountainous 100 million BNB in total. CZ said that rather than linking BNB with market projects or holding BNB buybacks, the Binance team will be burning all of their tokens first, all the 2.4 billion USD.
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