Published on September 19th, 2018 | by Vijay Govindan0
Bloomberg On Tesla — #Pravduh Gone Wild
September 19th, 2018 by Vijay Govindan
On September 17th, as a person living on Earth, I was so happy to see Yusaku Maezawa and Elon Musk announce they were sending artists to orbit the Moon via SpaceX’s BFR. It gave me hope that one day my family could go to space! A positive and uplifting message.
Reality intruded and led me to anger and despair. I want to discuss what happened with Tesla and Bloomberg in the early morning on September 18th that made me so upset from the happiness I had from 12 hours earlier.
Three weeks ago, I joined an effort here at CleanTechnica. This effort is called #Pravduh about #Tesla. The idea was simple: We wanted to see if there really was media bias against Tesla in the face of excellent news. Tesla is on pace to double deliveries in the 3rd quarter compared to last quarter, it is on the cusp of turning profitable, Model 3 is the #1 best selling car by revenue in the US, and the 5th most popular car by units sold. What more could you ask for?
Charts by Michael Grinshpun | CleanTechnica
My partner Chanan Bos wrote an excellent article about it this week: 165 Tesla Headlines, 81 Negative & 39 Positive — #Pravduh About #Tesla. Chanan and I decided to split the major websites when we started. I would cover Bloomberg, Business Insider, CNBC, and Yahoo, and he would cover the rest. It worked out to about 50/50 headline coverage.
Inside that article he included the following chart. As you can see from this chart below Bloomberg had the highest number of Tesla-related headlines and the highest number of negative headlines. Some of the criticism we received was that perhaps the negative headlines are deserved. We haven’t tracked accuracy of the headlines — at least, not yet. For the future, we are considering this task.
As I have recently discovered, the same headline can be written many ways.
Here’s an example from 9/17/2018:
Tesla briefly dips after Saudi wealth fund invests $1 billion in competitor Lucid Motors
Saudi Fund Breathes New Life Into Lucid After Going Mum on Musk
Tesla (TSLA) Rival Lucid’s Saudi Funding Is Ominous
Tesla Rival Lucid to Receive $1 Billion From Saudi Wealth Fund
As you can see, Bloomberg took the same headline and negatively portrayed it three different ways. CNBC’s headline is more neutral and conveys the same information. (Note: CNBC is not known for neutral Tesla headlines.)
At 10:42 AM Central Standard Time, Tesla’s stock price dropped suddenly from where it had more or less stabilized at close to $300. More than 300,000 shares changed hands. Large changes on a daily basis are normal for Tesla. Large, sudden intraday moves with a high number of shares traded are not. By 10:56 AM CST, the stock was trading as low as $277.
Later on, I discovered the following headline from Bloomberg. This article came out at 10:45 AM CST. (The time was changed after the fact to 10:42 AM CST.)
“Federal prosecutors opened a fraud investigation after Musk tweeted last month that he was contemplating taking Tesla private and had ‘funding secured’ for the deal, said the people, who were granted anonymity to discuss a confidential criminal probe.
“The tweet initially sent the company’s shares higher.” (emphasis added)
Who were these anonymous people leaking confidential information about a criminal probe with market-moving impact? We will probably never know, but the damage was done. Tesla stock closed lower and did not recover that day. Consider what we wrote from The Billion Dollar Tesla Hit Piece:
“Well, I have found my own unnamed source close to the board and my unnamed source says that your unnamed sources greatly exaggerated the intensity of the COO search. Who is right? We’ll just have to wait and see how things pan out because trying to determine reality by quoting unnamed sources is really a methodology fraught with errors.”
Remember Arthur Anderson? Enron? Worldcom? The stock dropped because a criminal probe is bad news. The longer-lasting effect is that even if Tesla is exonerated, the reputational damage is real. Who wants to buy products from a criminal company or a possible criminal company? No one. Anyone who does want to buy a Tesla or believes in conspiracy theories regarding attacks on Tesla is labeled a cult member by our society. It’s a neat package to deal with problem people.
Later on, the Associated Press published the following: Tesla says it has turned over documents to feds
“Tesla Inc. has turned over documents to the U.S. Justice Department after statements by CEO Elon Musk about taking the company private, the electric car maker confirmed Tuesday.
“The Palo Alto, California, company cooperated with the request and believes the matter should be resolved quickly once federal prosecutors review information they have received, according to a company statement.
“News of a potential criminal investigation pushed Tesla stock down 5 percent in morning trading Tuesday, but the decline subsided a bit by early afternoon to 3.4 percent, at $284.89.
“‘We have not received a subpoena, a request for testimony, or any other formal process,’ Tesla’s statement said.”
We at CleanTechnica reached out to Tesla for comment as well and received the same statement. This is the full response from Tesla:
“Last month, following Elon’s announcement that he was considering taking the company private, Tesla received a voluntary request for documents from the DOJ and has been cooperative in responding to it. We have not received a subpoena, a request for testimony, or any other formal process. We respect the DOJ’s desire to get information about this and believe that the matter should be quickly resolved as they review the information they have received.”
This Bloomberg story could be #Pravduh about #Tesla at its worst. Even as of yesterday, I was not convinced of systemic market bias against Tesla. I still am not. That doesn’t mean certain actors do not have a bias against Tesla in the news they report or the headlines they craft.
“Bloomberg News has an unusual practice of paying some of its reporters explicitly for publishing ‘market-moving’ stories.
“This is one of many metrics that is factored into reporters’ annual bonuses.
“This practice is not widespread in the financial news industry, and journalists we spoke to from other outlets were not aware that it is used at Bloomberg. We also canvassed traders, bankers and public relations professionals. None of them had heard this before, either.
“Most of the people we spoke to, especially traders, were startled to hear about this practice, worrying that it might create an incentive for Bloomberg reporters to ‘push’ or stretch stories with the specific aim of moving markets. Traders react instantly to headlines and news stories, and the decisions they make often make or lose significant amounts of money.” (emphasis added)
The volatile nature of Tesla’s stock + a news service where bonuses for market-moving news are a portion of reporter’s compensation seem like an easily exploited combination. It’s becoming hard for the ordinary person not to suspect #Pravduh against #Tesla.
This episode left me angry with how Tesla is treated. I would like to believe I am pursuing facts — some might call that the definition of old-school journalism. I hope to stick with our effort. If there are positive things to report about Tesla, that is fine. Negative is also fine. I just want the truth. I am not seeing it from the traditional media in the two, short weeks into this effort. It is hard to distinguish the blurred lines between mainstream media and tabloids. Both are tending towards sensationalism and propaganda.
Below are two definitions I want to share. You can judge if Bloomberg’s actions this week were market manipulation and/or unethical. I am sure the SEC will be interested in Tesla, but not at all interested in the other side.
Market Manipulation— Manipulation is intentional conduct designed to deceive investors by controlling or artificially affecting the market for a security. Manipulation can involve a number of techniques to affect the supply of, or demand for, a stock. They include: spreading false or misleading information about a company; improperly limiting the number of publicly-available shares; or rigging quotes, prices or trades to create a false or deceptive picture of the demand for a security. Those who engage in manipulation are subject to various civil and criminal sanctions.
Unethical — not conforming to a high moral standard : morally wrong : not ethical
And Another Thing
If you thought “And Another Thing” meant I was adding something relevant to the article, sorry, you were wrong, unless the following statement matters to you.
The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
I am currently long Tesla shares and Tesla bull call spreads.