Moneybox

Elon Musk Needs to Stop Tweeting Things He Can’t Prove

And grow up.

Elon Musk listens as Chicago Mayor Rahm Emanuel talks about constructing a high speed transit tunnel on June 14, 2018 in Chicago Illinois.
Elon Musk on June 14, 2018 in Chicago, Illinois.
Joshua Lott/Getty Images

With more than 22 million followers, Elon Musk knows exactly what happens when he uses his enormous Twitter bully pulpit to bully female journalists. Science writer Erin Biba, for one, has made that abundantly clear, with the story of what happened when he merely replied to one of her tweets.

Which is to say: If you don’t have a strong stomach, don’t look at Business Insider reporter Linette Lopez’s @-replies right now. Musk did much more than just reply to one of her tweets: He has gone on a veritable Twitter rampage aimed at her. A smattering:

This is worse than just stalking: Musk is setting his army of fanboys loose on Lopez, he’s retweeting stuff they find, and he’s encouraging them every step of the way. Milo Yiannopoulos was banned from Twitter for setting mobs upon his enemies; Musk should be banned too, but won’t be.

Musk’s harassment of Lopez is obsessive and deranged, to the point at which it should worry every shareholder of any company where he serves as CEO. But since even former journalists seem to think that somewhere in the madness there’s a legitimate beef, let’s put that idea to rest. Lopez has been reporting aggressively on Tesla for a while; her sources include Tesla whistleblower Martin Tripp, whom Musk considers a saboteur for talking to the press. Lopez has also, in the past, written about Jim Chanos, a dogged investor who is shorting Tesla stock.

Chanos talks to many financial journalists—he was famously a key source for Bethany McLean when she was writing the story that brought down Enron—and sometimes he even hires them to leave journalism and make more money doing private research into companies.. Financial journalists and short sellers are in many ways kindred spirits; they both like uncovering companies’ dirty secrets. And here we get to Musk’s beef with Lopez: He’s accusing her as “serving as an inside trading source” for Chanos. This makes no sense.

If Lopez receives confidential information about Tesla from a source, that’s journalism, and there’s nothing illegal about it. Once she publishes that information, it is public, and the whole world is free to trade on it. Musk asks Lopez if she has ever provided Chanos with “material non-public information about Tesla”—but the only way that would even be possible would be if she gave him information before she published it. That’s conceivable, I suppose, and also legal, but he’s given us absolutely no reason to believe that it ever happened.

Musk seems to be implying that Chanos received information from Lopez and then traded on that information while it was still nonpublic—that is, before she published it. But there would be no reason whatsoever for him to do that. Chanos’ M.O. is to take large short positions in stocks and wait for them to fall to what he considers fair value. If Lopez writes an article that brings down Tesla’s share price, that’s good for Chanos, because he’s already shorted Tesla. He has no need to trade the stock in order to profit from the article, which means that even if Lopez did give him material nonpublic information, he would have no reason to trade on it. Chanos’ Tesla short is based on his view of the valuation of the company, it’s not a trading position based on short-term knowledge about upcoming news articles.

The weirdest part of all this is that Musk is on an anti-short-selling rampage at all. Tesla is one of the most-shorted stocks in America, and that’s great for Tesla’s share price: The more shorts there are, the more upward pressure there is on the stock. Shorts only depress a share price when they sell; once you’ve gone public as having a substantial short position, the rest of the market will try to make your life as painful as possible by bidding the stock up. Whatever damage that Chanos has done to Tesla’s share price is in the past; at some point, he will have to exit his position by buying back Tesla stock, and that’s going to help drive the price upwards. Musk should be ecstatic!

It wasn’t that long ago that Musk was much more sanguine about Tesla stock. A year ago, when the stock was trading at roughly its current level, he was happy to admit that it was overvalued, and that, implicitly, anybody shorting the stock had a pretty valid thesis. More recently, however, he has started demonizing Tesla’s short sellers, as well as any journalist who dares to publish negative information about the company. It’s not clear what might have caused him to change his mind.

Musk has now gone wild, making highly charged allegations without backing them up, and posing questions that are clearly meant to imply wrongdoing. For instance, he’s accusing Lopez of compensating her sources—which her editors say is absolutely not true—without presenting any evidence. This is a strange move for someone who claims to hate baseless accusations.

Musk needs to immediately stop tweeting about things he cannot prove. But more importantly, he needs to grow up, fast. He’s the CEO of a $50 billion corporation, and I’ve seen toddlers with more maturity. Lopez is a very, very tough reporter, but the hate and vitriol she’s going to receive in the coming days and weeks from Musk’s army are going to be extremely nasty. Musk knows that, and it’s why he’s bullying her in this manner. If he can’t stop trolling on Twitter, his shareholders should tell him to get off the platform entirely. After all, it’s not like he doesn’t have three different companies to run.