The War On Tesla By “Click Reporters” Reaches A New Low

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By Peter Forman, aka Papafox

Disclaimer: TSLA long since 2012

With the advent of the internet came a new type of information gathering we’ll call the “click reporter.” This new breed lives by provocative headlines that bring in clicks from the mouse or touchpad of internet viewers, and it’s those clicks that bring in the ad revenue. Get the scoop, create the enticing headline and some text to support it, and you’re golden. Elon Musk’s reaction to such reporting has really stirred this month.

A feud was already very much underway between certain members of the media and Musk’s Tesla. In recent years, no other US company has stirred segments of the media into such a lasting frenzy of negativity as shown towards this CEO and his company. Causes of that negativity include Tesla’s disruptive threat to many legacy industries, a very real threat to the billions of dollars short-sellers have bet against Tesla’s success, the company’s history of spending nothing on advertising (the lifeblood of news organizations), and Musk’s billionaire status (which makes him a target not likely to stir sympathy in readers). The result is a bias against Musk and Tesla that sometimes borders on the absurd. A recent CNBC segment aired on July 11, 2018, highlights both the nature of the click reporters controversy and the ludicrous lengths that some news organizations will go to in order to discredit Musk and Tesla.

On Sunday, July 1, Tesla announced it had reached its goal of producing more than 5,000 Model 3s during the final week of June. Some investors were excited about the expected big jump upward in the stock price, and shortly after market open on Monday, the stock price did indeed jump above $360. Then TSLA sank that day as it fell prey to a short-seller “bear attack,” just like the one conjured up in the 4th of July week of 2017. Big investors often take that week off and thereby enable manipulations to be carried out just that much easier. An essential ingredient of a successful bear attack is the appearance of FUD to both accelerate and disguise the heavy short-selling activity (which reached nearly 50% of all Tesla shares sold on July 3), and it was Linette Lopez’s Business Insider article “Elon Musk ordered Tesla engineers to stop doing a critical brake test on Model 3s” that was maybe-not-so-coincidentally released that date by Business Insider and helped the stock fall a full $50 in the day and a half trading between July 2 and July 3. The title was so long that it was more a story-in-itself or an indictment than a simple invitation to read further.

Of all the words in the title, the one that really stood out was “crucial.” It implied that Tesla, under Musk’s orders, had cut serious corners on safety and/or quality in order to meet its production goals. In reality, Tesla gave track tests to all Model 3s, thereby making the production line brake and roll test redundant, but the title of this piece implied that Tesla had instead forsaken its customers. Other media outlets quickly picked up the story and most included that pregnant word “crucial”, thereby perpetuating the safety/shoddy quality implications.

Musk and his team at Tesla had other concerns about the article. It contained an image of a Tesla log detailing the brake and roll process, and the article was peppered with information that was proprietary and almost certainly provided to her by Tesla saboteur and former employee Martin Tripp, whom Tesla had tracked down and from whom they had allegedly extracted a confession of sorts. The company accused Tripp of hacking into its computers and providing both false information and confidential data to the media. Tesla filed a million-dollar lawsuit against the man who claimed innocence by suggesting he was just a whistleblower. Beginning on July 4, Musk engaged in a tweetstorm, calling out Reuters for its consistent negativity towards Tesla, and CNBC for not sharing with viewers the ludicrously dismal tiprank of one of its Tesla-bashing analysts. Musk then questioned Lopez on various aspects of her connections with Martin Tripp and with short-seller Jim Chanos. An eventual reply to these provocative questions would be needed, and so CNBC brought Lopez to the studio on July 11 for a 12 minute televised event.

CNBC’s Scott Wapner hosted the session, which began with an interview of Lopez. He repeated Musk’s question regarding whether she had ever paid or offered to pay Martin Tripp for information. She responded in the negative. So far, so good — some hard news had been unearthed. It was now time for Lopez to speak.

Would she try to balance her previous story to give a more accurate take on the brake and roll article and thereby prove that she was, indeed, a fair-minded journalist who had been inappropriately maligned by Elon Musk? Nope, she spoke of the brake test subject without even mentioning a word of Tesla’s mandatory test track drives, and then proceeded to take as many digs at Tesla as her time on camera allowed. At one point she changed the subject by stating, “I would prefer to talk about the reporting, and it’s up to the shareholders of a 50 million dollar company to decide whether their CEO should spend his time yelling at reporters on Twitter” ($50 billion blooper, but could have just been her nervousness). She suggested that Tesla was not delivering “a high-quality car that is environmentally friendly,” then began an oration about how Tesla’s use of straight assembly lines at the Gigafactory was resulting in shoddy products because she had been told that rectangular assembly lines were better for quality because you could see problems better but Tesla was stuck with the straight lines because Elon Musk insisted on doing things differently than everyone else. When Wapner questioned her regarding feeding insider information to Chanos, she denied doing so.

Wapner wasn’t going to allow Lopez’s weak performance spoil the broadcast. He turned to talented writer Bethany McLean, who years earlier had been alerted of certain information about Enron by none other than Jim Chanos. It was an article written for Fortune by McLean that really sped up the demise of Enron and the incredible enrichment of Chanos. The nearly two decades of working with Chanos proved lucrative for McClean, leading directly and indirectly to a pair of million-dollar book deals. In introducing McLean, Wapner made a point of saying, “In no way are we trying to equate Enron with anything about Tesla,” and then turned the mike over to McLean and the other guest to do exactly that. The other guest brought Theranos into the conversation and delighted Tesla short-sellers around the world by promoting their secret fantasy of Tesla being a house of cards and Musk presiding over the mess in his role as P.T. Barnum. It was so bad it was almost comical. McLean then went on to defend click reporters by stating, “I’ve never believed that reporting bad news was somehow biased.” When asked about a CEO who is combative with reporters, McLean replied, “I think Musk should be ashamed of himself and shareholders should think about running for the hills.”

Then Wapner turned the questions over to Jeffrey Sommenfeld, an associate dean of the Yale School of Management. Surely, the good Professor Sommenfeld was an unbiased professional who would weigh in on this matter. In reality, short-seller Jim Chanos was a graduate of the Yale School of Management and a visiting lecturer there, working with Sommerfield. The two were cohorts and CNBC didn’t even bother to make this connection known to viewers! If Chanos was watching this show, and he surely must have been, he would be laughing his ass off. Here was Sommerfield acting as the impartial expert on management styles, appearing with Chanos’s Enron revealer Bethany McLean and click reporter Linette Lopez, who had taken unethically obtained secrets from Tesla and spread a potent FUD piece on exactly the right day of the 4th of July weekend to enable that $50 drop in Tesla’s stock. What a perfect collection of actors all pretending to be unbiased.

CNBC, do you mind my making a suggestion for your network? Next time you put together such a one-sided hit piece, please call it “business theatre” or “a complimentary infomercial for Tesla short-sellers,” but please don’t try to pedal it as a news show. Here’s why: People listen to business-oriented programing to figure out how to invest their hard-earned money. They need an honest evaluation of various investment opportunities, and you’re not giving it to them with regards to Tesla. You need a few real journalists on your staff (Phil LeBeau comes to mind as one) in order to keep click reporters and ethically-challenged actors under control. Otherwise, your network loses its value for people who invest. Business news companies need more journalists with the ethics to treat the reader right by being accurate in research and non-biased in presentation. They don’t need more click reporters.

Who are the real casualties of your business theatrics? I’ll say Tesla is one because biased reporting does indeed make it more expensive for the company to borrow money and it thereby artificially slows the automaker’s expansion. I’m not worried about the company’s survival, because after hitting 5,000 Model 3 production in late June using extraordinary efforts, Tesla learned from the experience, tweaked the production line, and is now rapidly approaching 5,000 Model 3s per week production on a sustainable basis. Gross margins should actually be higher than previously expected because of positive changes that will result from more attractive pricing to the performance version of the Model 3. Will Tesla be cash-flow positive by early next month? I am willing to bet on it.

No, the people who are harmed most often by artificially biased reporting on Tesla are actually the short-sellers. I’m not talking about the informed shorts such as Chanos or the nefarious shorts who are primarily interested in killing Tesla — I’m talking about the small retail shorts who for years now have been listening to business news that is distorted far to the negative side by bad actors such as Reuters, Business Insider, and certain elements within CNBC, to name just a few. Every year, shorts lose hundred of millions to billions of dollars by shorting Tesla’s stock, and 2018 looks to me to be shaping up for the biggest losses to TSLA shorts of all time. Might these shorts, after losing billions, consider class-action lawsuits against news outlets that intentionally distorted the prospects for Tesla’s stock? It’s a thought worth considering.

Journalist Elon Musk questioned over Tesla reporting speaks from CNBC.

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