Twitterin’ Tesla
It is Saturday morning and that time which will forever be cartoon time to me and those in my generation who grew up waiting expectantly for this very time of week. Do you remember Sylvester (a.k.a Sylvester James Pussycat, Sr.)? His catchphrase was a spittle-soaked version of “Sufferin’ Succotash!” We mostly grew up not having a clue what that meant, but being amused by its rhythmic sound. Perhaps we knew that the combination of green and yellow legumes (Lima beans and corn) was high in amino acids and good for us, as succotash supposedly is, but probably not. We just liked the sound of the exclamation and the pronounced lisp that came with it. In actuality, I have now learned that “Sufferin’ Succotash” is what is called a minced oath, or something we say to avoid blaspheming some profanity. It supposedly comes from “Suffering Savior”, which as best I can determine is like saying “Jesus H. Christ”. Well, in deciding what I wanted to write about this morning, I combined the two T’s of Tesla and Twitter tweeting into Twitterin’ Tesla and immediately felt like I had invented a new version of Sufferin’ Succotash.
There are sooooooooo…. many articles out there about Elon Musk today that I can’t help but reflect upon some of what I am reading. I have read that Elon Musk (I can’t bring myself to just call him either Elon or Musk) gets Twitter and its power more than anyone else on the planet (including either Jack Dorsey or Donald Trump), and that is why he is buying it. Apparently he is its eighth biggest user in terms of number of followers (85 million), well behind Barack Obama, who has 134 million followers. The other six ahead of him are a bunch of pop culture icons including Justin Bieber and Katy Perry, so it might be fair to say that he and Obama anchor the top ranks of serious Twitter users. But the two of them diverge tremendously in one technical difference in Twitter terms, Elon Musk’s Twitter feed creates tremendously more engagement than any other Twitter user, by far. In other words, Elon Musk is better at harnessing Twitter to truly influence people than anyone else in the world. It is said that he gets far more value from Twitter than any of us realize because he pushes his views, opinions and thoughts out to the world far more effectively than any PR flack could ever have dreamed of doing, and he does it with just his articulated thumbs, as no other ape could do.
That has given me great pause this morning for a number of reasons. 2020 was sort of my Twitter year and 2022 is shaping up as my sort of Tesla year. Let me explain. In 2020, I was engaged as an expert witness in a case involving a new hedge fund manager who had built an AI-based investment fund which had attracted a $5 billion start-up investment from someone who liked the concept it was espousing. I don’t know what was more startling, that I should somehow know enough to be useful in the realm of AI high-frequency trading, or that someone would put $5 billion to work on an relatively untested investment strategy. The strategy was based on one simple concept, that one could gather overnight twitter sentiment data off the Twitter platform and get a strong enough trading signal to position oneself at the opening of trading to benefit from the bump or drop in certain stock prices. This all required a supercomputer located in Vienna, the mysterious setting of where East meets West and Russian hackers could sneak out into western markets, which would gather this Twitter sentiment and somehow use artificial intelligence to sift and distill those Twitter feeds into a market sentiment. This was less a sure thing than something akin to counting cards in Las Vegas, where knowing the “count” gave you the slightest of edges against the market (or the house if this were Blackjack), so that you could, over time, beat the market. At the time, my work on this case was all about process around things like backtesting and the way in which orders were placed and risk limits were enforced in the trading protocols. I spent very little time thinking specifically about how something as pop culture-driven like Twitter was affecting markets. Nonetheless, my 140-page rebuttal was, according to the client, a critical edge to them successfully settling the case.
2022 is shaping up as my Tesla year for several reasons. First of all, I have owned a Tesla X since the end of 2016 and now, after more than five years, have finally accumulated almost 15,000 miles on the odometer. As gas prices have soared in the world and the country, and especially here in Southern California, it has occurred to me that I am lucky to have an EV (even if, strangely enough, my solar array and Tesla wall batteries cannot be used to charge that very EV…go figure). I have gone so far as to put $100 deposits down on a Tesla Cybertruck (now cancelled by Elon Musk and due back to me) and a Ford Lightning F-150 Truck (I doubt I will lift that offer). But I have also been engaged in another expert witness case that involves some sizable losses incurred over the past few years in the shorting of Tesla stock. Seeing Elon Musk pocket $8.5 billion by selling a small fraction of his Tesla shares at almost $1,000 per share has further reminded me of how markets move and get moved. One of the big topics of the week, one which I forced a debate on in my ethics class, is what obligation Elon Musk has to his Tesla shareholders as he pledges a huge portion of his Tesla shareholdings to back his Twitter bid of $44 billion. It is hard not to think of all the people shorting Tesla stock when one hears about that. Even a small drop in share price will occasion an automatic margin call (bloodless bankers have little sympathy for brilliant billionaires when markets are moving against them) and will amplify any fall in Tesla shares into an absolute rout. And if that’s not enough, Elon Musk trash-talking Bill Gates on Twitter because he supposedly is shorting Tesla stock quickly links the Twitter issue and the Tesla issue into one amalgam.
Someone in my class asked if Elon Musk is also leveraging his Space-X shares for the purchase of Twitter and I had to demure because it was not something I have heard a peep about, so all I could say was that I suspected not. It’s specifically Tesla that has been linked to Twitter and this will undoubtedly give legions of SEC enforcement lawyers full employment as they consider how Elon Musk can, has, is and will manipulate the market for Tesla stock through his privately-owned social media platform on which he himself is by far the most powerful and regular user and perhaps abuser.
This is the point in this story when the 45-year Wall Street veteran turned ethics professor and expert witness, protector of widows and orphans, finds himself saying “Sufferin’ Succotash” or “Twitterin’ Tesla”.