Form 8-K Re: Fill & Download for Free

It is a form filed by public companies, or companies required to file public reports, indicating something material has happened. These can be material news reports, earnings reports, offers for sale, exchange, etc, something going on with the company between filing periodic reports, etc.The requirements state that, essentially, any company subject to SEC reporting obligations has 10 days after a material (re: noteworthy) event to report such event on a Form 8-k, and file any relevant documentation with the Form.It gets incorporated into any ongoing public offerings, and should be incorporated into the next periodic report.Kind regards,Alexandra

There are five basic questions to answer here:What did Musk say?Is what he said genuine?Is what he said legal?How would the proposed deal work?What happens next?As a disclaimer: I’m not a credentialed expert. I have no stake here. This isn’t advice. I’m just trying to give a sense of what it all means.[EDIT: Original answer written Aug. 7th. Some updates added in brackets. Edit #3 at the end is my best recap.]#1: A Most Unusual MessageIn a report released earlier today, the Financial Times unveiled that Saudi Arabia’s Public Investment Fund (a $250bn+ piggybank) had increased their ownership of Tesla to somewhere south of 5% of outstanding shares (the threshold at which an investor has to formally disclose their holdings). Interpreted as a sign of confidence, this set Tesla stock on a nice upward run.Some 30 minutes later, Elon Musk dropped this bombshell:Am considering taking Tesla private at $420. Funding secured.— Elon Musk (@elonmusk) August 7, 2018It would be hard to overstate how unusual and subversive this tweet was. First, public companies don’t make major announcements on Twitter. Second, they don’t make major announcements while the market is open. Third, they don’t make major announcements without hard details.Odds are, this is exactly why Musk did it as he did. But his adored/reviled maverick ways aside, it’s important to be clear about what the tweet implies:Tesla had been facing serious financial risks as recently as a few weeks ago. Estimates were that they’d need to raise somewhere between $2-3bn over the coming year, with many analysts suggesting/betting that capital markets might not be so interested.On account of those risks. Tesla had become by far the most shorted US public company (i.e., the most total money betting against it). We’re talking almost $4bn more in wagers against Tesla than against the 2nd most shorted American stock (Apple, a company 16x larger).Those figures in mind, Musk’s claim of “funding secured” implied that investor(s) had committed $30-60bn (i.e., 10-20x more than the high end of what analysts were worried about Tesla raising elsewise).Understandably, many were incredulous.That said, if we set aside the largeness of the claim, the move does have a certain logic. Musk wants Tesla to cease to exist as a publicly traded company. This would mean that shares would only be available to select people at select times, but it would also mean that no one would be able to bet against them anymore.(With shorting, a skeptic borrows shares from an owner, then sells them on the premise that they’ll be able to buy them back later for less, thus pocketing the difference. Tesla has a history with short-sellers, with Musk being of the belief that they’ve been fomenting negative narratives about his businesses to increase the very risks that would help their bets pay off.)In sum, this tweet was Musk making an announcement he knew would push the stock price up, both costing those short-sellers significant losses today ($1.3bn, reportedly) and cutting them off from betting access in the future.[EDIT: The more I’ve thought about this, the less important I think the point about short-sellers losses is. He would have caused a spike from any privatization talks, however/whenever he announced them. What was time-sensitive in his mind was involving the smaller shareholders in his decision process. While firing off a casual tweet wasn’t the best way to accomplish that, I can see his logic.](There are other reasons that Musk may want to take Tesla private, which Jonathan Brill outlined nicely here. But I think freeing himself from short-seller influence is by far the most motivating factor.)#2: Truth or Scare?If Musk wasn’t being entirely serious, this wouldn’t be the first time.Tesla Goes BankruptPalo Alto, California, April 1, 2018 -- Despite intense efforts to raise money, including a last-ditch mass sale of Easter Eggs, we are sad to report that Tesla has gone completely and totally bankrupt. So bankrupt, you can't believe it.— Elon Musk (@elonmusk) April 1, 2018The difference of course, is that the above tweet was sent on April Fools’ Day, was obviously insincere, and wasn’t followed by an official Tesla blog post.By all accounts, Musk isn’t intending this as a joke. Trading of Tesla shares was even halted this afternoon for almost two hours to verify the reports, as share prices were leaping from the mid $300s towards Musk’s $420 target.But it not being a joke doesn’t necessarily mean that his claim about having funding secured was 100% genuine. If one were to be cynical, they might argue that Musk sent the tweet for the express purpose of burning those short-sellers. Exact accounts vary, but today’s bloodshed brings their net losses for the year to no less than $3bn. Unless Musk’s premise is proven untrustworthy, prices will continue their march towards $420, and those losses will rise to ~$4.4bn.This naturally leads us to our next consideration…#3: What Sayeth the Law?To be clear, we’re asking two different questions here, based entirely on whether Musk was being honest in his claim of having secured sufficient funding.In the event that he was telling the truth, his crime seems to be mostly one of decorum. While SEC lawyers will make the ultimate judgement call (all “no comment” thus far), a former SEC chairman suggested to reporters that the real concerns would center on whether Musk had lied and/or had announced it purely to impact stock prices. (Announcing on Twitter is allowed in some circumstances, and the market hours rule is mostly a gentlemen’s agreement.)While some are arguing that Tesla should have filed an 8-K SEC disclosure first, others have counter-argued that it isn’t clear which specific event in the privatization sequence would trigger a 8-K requirement, and that, even when reached, companies have up to four days to file. I’m not competent to judge here, but the consensus thus far seems to be in the direction of Musk being onside.But if he did lie, we’re talking a very different scenario.Those short-sellers that got burned today would almost certainly claim their losses under SEC Rule 10b-5, arguing that Musk intentionally deceived the market to their disadvantage. Compounding this, the unveiling of said lie would also likely cause prices to crash, erasing gains for those who bought in on the news. I’d imagine a number of said investors would file their own suits/grievances as well. And then you have the loss of faith in the Tesla brand, and the internal dissent within Tesla (as all employees are shareholders).The severity of those consequences makes it exceptionally hard for me to see this as an outright lie. Tesla has been on its best run in a long time, having finally approached profitability. Why risk all that just to stick it to the short-sellers one more time? That’s the calculus of a madman. And while some do believe that Musk has indeed gone mad, it would be stunning for him to have slipped this far, especially without his team intervening. This is their future too.#4: The Brass TacksGiven the vagueness of the statements thus far, one wonders exactly what sort of deal Musk has in mind. “Going private” is a destination with many approaches.As has been pointed out by others on Quora (hat-tip to Marc Bodnick and David Friedman), if Tesla is planning to actually sell itself whole to some new consortium, this would very likely require Tesla’s board to uphold their Revlon obligations. In layman’s terms, they’d have to put the company on auction to secure the highest possible price. As a point of context, when Dell went public-to-private back in 2013, they opened themselves up to offers for 45 days.But as per Musk’s tweets, it isn’t obvious that he has this in mind.Shareholders could either to sell at 420 or hold shares & go private— Elon Musk (@elonmusk) August 7, 2018He seems assured that no higher offer would arise, or that no higher offer would have to be entertained (bearing in mind that a higher bidder wouldn’t need to honor Musk’s promise to allow existing shareholders to maintain ownership). This could be because he simply believes that no one would possibly outbid him (likely), or because he has some other mechanism in mind (not impossible).My hope is *all* current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment.— Elon Musk (@elonmusk) August 7, 2018This is also curious. The SEC has a rule about the max number of shareholders a private company can have before needing to make similar disclosures to public companies. That number is 2,000.* What he’s describing with the SpaceX deal is a fund that counts as one investor to SpaceX, but that actually has a much larger number of participants. Whether this scheme would work with the much larger number of Tesla’s current investors is a matter of some debate online.[I’ve decided to leave the rest of this section blank as I wait on commentary from experts in private equity and securities law. This stuff gets really heady, and I’ve seen a bunch of arguments from smart finance people that all seem to contradict each other in places. Point is, there’s a lot we don’t know, and whatever Tesla has in store won’t be a simple/clean/quick process.][EDIT: That previous note was from the original. I’m leaving it in place, as it seems that much of the ongoing speculation will prove wrong/misinformed. The list of people who can answer these questions conclusively is pretty low, and not all of them have the necessary specifics to judge on all points. Lots of commentators are also judging it by norms for an LBO, which this isn’t.]*Per the SEC, “either 2,000 persons, or 500 persons who are not accredited investors”.#5: What Comes Next?None but God or a fool could say with full certainty what’s going to unfold in the next few days. But we can expect for a handful of things to become clear in time:The new hope revealed. The list of plausible investors isn’t huge. Tech giants (Apple, Amazon, Microsoft). Sovereign wealth funds that love renewables (Norway, China). Sovereign wealth funds that love next-gen tech (Saudi Arabia, Japan, Singapore). Maybe a few more. But wherever this money is coming from, it needs to be named sooner than later.The shorts strike back. Do they bide their time and hope for the funding to prove fictional? Do they hold firm by upping their positions? Can they find a way to break market confidence? Stay tuned!Return of the drama llamas. Whichever way this goes, Twitter is going to have a field day. Get your popcorn.EDIT #1: Tesla’s board confirmed that they’d held talks with Musk about his privatization ideas the week prior his tweets. But the first confirmation of any external conversations came today from Bloomberg (emphasis mine):The [Saudi Arabian] Public Investment Fund, which has built up a stake just shy of 5 percent in Tesla in recent months, is exploring how it can be involved in the potential deal, said the people, who asked not to be identified talking about the matter. Discussions began before the controversial Aug 7th tweet by Musk, who is Tesla’s co-founder and chief executive officer, saying he was weighing a plan to take the company private.This doesn’t itself necessarily equate with “funding secured”, but it does suggest that Musk wasn’t speaking out of thin air.EDIT #2: Musk released an update via the Tesla blog on Monday, August 13th. Musk claimed that the managing director of Saudi Arabia’s “sovereign wealth fund” (presumably PIF; they have two) had been inquiring about helping to take Tesla private since early 2017, and that they met on July 31st to discuss it anew. Two days later, Musk initiated talks with Tesla’s board.There’s a lot to unpack in this statement, much of which is beyond my paygrade. At the least, it eliminates outright lying. Musk did have some form of offer in hand that he was seriously pursuing, and some form of disclosure to the public was in order. That said, as to whether Musk stayed on the right side of the rules in how he disclosed it, we simply don’t know. Much will depend on whether the SEC rules his correspondence with the PIF as sufficient for his claim of “funding secured”. (Some may also be decided by the courts, where multiple suits are pursuing class-action status.)We also still don’t understand what form the privatization will take. Musk has made it clear that it won’t be a traditional LBO. He suggested that, by his current estimates, 2/3rds of existing shares (not necessarily shareholders) would be likely to roll over. As such, the only costs would be buying out the remaining 1/3rd at $420 plus whatever legal/banking fees (so $25-30bn). He’s also suggested that though the PIF could fund it all, they may only end up as one of multiple buyers.How this will work with existing securities law (and individual fund rules about holding private shares) isn’t obvious. But Musk subsequently announced that he’s retained a collection of name bankers and lawyers to advise on the deal (for him and the buying consortium, not for Tesla, which is retaining its own counsel). The fact that he named Goldman Sachs is something of a positive to the pro-Musk camp, as (if true) it suggests that Goldman isn’t viewing the lawsuits or any SEC rulings as deal-breakers.EDIT #3: Last Friday, Musk announced (again via the Tesla blog) that his plans to go private had been scrapped. Per the WSJ, he announced his decision to the board immediately following a presentation from his banking advisors (who announced their optimism about moving forward with some $30bn in committed funding). As to his decision, Musk cited four factors: (1) the majority of shareholders being in favor of staying public, (2) some of his largest and most loyal institutional investors not being able to hold private shares, (3) no obvious path to allowing small retail shareholders to stay on board in the desired quantities, (4) the entire process was distracting from Model 3 production and Tesla’s move towards profitability.While unstated by Musk, I’d add a (5) in that I don’t think he was pleased when he realized how much operational/strategic leverage he’d be sacrificing to his new partners (whether Saudi Arabia or competitors like Volkswagen).That all in mind, my best guesses as to what happened:Musk already wanted to take Tesla private, largely because the short-sellers have been getting to him (and because he’s tired of all the negative/skeptical coverage in general — which he thinks is being driven by the shorts).The PIF approached him (not for the first time) and made an overture about supplying whatever funding would be required to help him move forward. (It seems improbable that they’d bring it up to only promise a fractional amount. Why not just buy more on the public market?)Musk took this to the Tesla board, securing their permission to sound out their larger shareholders on the prospect.Musk wanted to make sure the little guys got the news at the same time, which led him to send out a slapdash tweet while in transit towards the airport.He’d probably had some amount of initial discussion with his in-house legal/financial counsel, but perhaps not enough to be clear on all the complexities/mechanics (e.g., the institutional restrictions on holding private shares, scaling limits on SpaceX-style funds to cover small investors, etc).He may have never been all that comfortable with the idea of ceding ~33% influence/control to the Saudis (or any single investor). He may have seen announcing his plans publicly as having the added benefit of drawing other suitors.To the degree that this take is close to accurate, then his real sins were:Including the price target in the tweet (inadvisable).Saying “funding secured” rather than “have strong buyer interest”.Tweeting while driving.Getting ahead of himself on discussing mechanics.I have no idea what will happen with the lawsuits. From my very unqualified POV, the “funding secured” bit is largely a red herring. Musk was indeed able to raise $30bn in committed funds (per Silver Lake), and the PIF almost certainly made some form of serious overture. That the deal didn’t go through wasn’t ultimately about money. It likely wouldn’t have happened even if he’d had a signed cashier’s check from the PIF (per reasons above). But this is why we have a judicial system. We’ll find out when we find out.As for the SEC, they may hold a dim view of the “funding secured” language. They’ll investigate, and they’ll fine/censure Musk as they see fit. But given that a hard conviction would bar him from serving as an officer of a public company, I interpret Musk’s decision to drop privatization as a signal that he views the evidence as more an issue of looseness than any intent to mislead. Else why not continue with privatization and remove that massive risk?PS - I forgot to give this hat-tip/correction earlier, but I was wrong when I originally said that Tesla was the most shorted stock on any US market. Per Glenn Luk, that “honor” actually belongs to Alibaba. Tesla is the most shorted American company on a US market. I’ve corrected it above. (I’d also recommend Glenn’s comments below as a counter-narrative re: some of the larger items here.)

Ethics and legal nuances aside (which we’ll get to), my main interest here is just how much of a mess this whole story has been at nearly every level.Now, yes, I promised myself a while back that I’d stop writing about Musk and the media and all my concerns with BuzzFeed. And I really do wish I could honor those promises! I wish, often and in earnest, that I could reach a place of acceptance with the idea of so many professionals not feeling obligated to carefully read the stuff they’re writing about, and I really wish I could think less about how we’re trusting them and the institutions they represent to help keep this world from descending into chaos and darkness and measles epidemics.But here we are again, so we might as well get going.ContextMusk infamously did that thing last year where he tweeted “funding secured” when the reality was more like “some funding verbally offered”, which caused all sorts of market swings and made lots of investors very angry, leading the SEC to punish Musk by stripping his chairmanship of Tesla, fining him $40m*, and making him promise to stop tweeting stuff that would cause markets to flip out without a Very Serious Adult first saying “ok, go ahead”.(Tesla’s resulting comms policy assigned these approval powers to Tesla’s general counsel and a new “Designated Securities Counsel” who cleverly chose to remain nameless, with the CFO serving as backup adult.)It’s now been a little over two months since this new policy kicked in, during which time the SEC hadn’t found cause to complain, right up until Musk decided to shake things up with this tweet last week:Tesla made 0 cars in 2011, but will make around 500k in 2019— Elon Musk (@elonmusk) February 20, 2019Now, I want to call attention to one detail in this tweet that will turn out to be really important: Musk said cars, not Model 3s specifically.(Also, I looked it up and Tesla did produce cars in 2011. Only Roadsters, and only in the hundreds. But this feels like Exhibit #6,676 supporting the case that we should all just agree to take Musk’s tweets for what they are — i.e., shower thoughts and off-the-cuff directional updates, not precise statements of material facts; which is to say that they’re, you know, tweets and not short-form 8-K disclosures. Like, there may be legal arguments against this re-categorization, but I’m pretty sure I speak for ~98% of people in saying that this adjustment would make everyone a whole lot happier, with the added upside of giving the laziest journalists fewer things to pearl-clutch and tut-tut about.)Anyway, the above tweet was followed up some four hours later with this one:Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.— Elon Musk (@elonmusk) February 20, 2019Both were posted while the NASDAQ was closed, which I think is itself a hint that Musk’s intention was maybe less “let’s manipulate the market!” and more “500k is the type of number Justin Timberlake would get more excited about in a dramatic restaurant scene!”. While there’s an obvious and serious argument that CEOs ought to reject these aggrandizing impulses (especially Musk!), there’s also a not-totally-offsetting argument that Twitter has a way of inducing bad decisions, with the sin here being fractional to that of #karajack.(Alternatively, Musk simply got the numbers confused, which would put him in the company of the majority of people involved in this whole dumb thing.)Whatever Musk’s motivation(s), the SEC, uh, didn’t care much for the whole episode. They guessed correctly that Musk hadn’t gotten sign-off on his first tweet, which they opted to interpret as equivalent to Musk saying “lmao, I was crossing my fingers when I said I’d stop doing exactly this sort of thing”.As such, the SEC filed a request with the SDNY district court to find Musk in contempt of his agreement. **And this is where things get interesting:The SEC argued that the original tweet violated both the deal and Tesla’s new comms policy because it contained material information that hadn’t been pre-approved by counsel.Bradley Bondi, a former SEC guy, answered on Tesla’s behalf (pages 24-26 here), arguing that Musk’s original tweet was just a bungled rehash of a disclosure made in Tesla’s Q4 statement (“we are targeting annualized Model 3 output in excess of 500,000 units sometime between Q4 of 2019 and Q2 of 2020”), and that this original statement had been properly vetted per the agreement, meaning that Musk didn’t do anything wrong in repeating it without explicit approval, but simply made an honest mistake in repeating it incorrectly.The WSJ subsequently put out a story about the SEC’s lawsuit, which prompted someone on Twitter to respond back with this:Read the transcripts from Q4 earnings. He said it there pic.twitter.com/Q6kw5oZBdM— JonP (@JPUConn) February 26, 2019(You have to click the tweet to see the whole excerpt. For those who can’t open it, the money quote is Musk saying "maybe on the order of 350,000 to 500,000 Model 3s, something like that this year”, either in reference to hoped for sales or deliveries. Note that this general lack of distinction between production and sales and deliveries leaked into the SEC’s suit and much of the reporting on this subject. Those numbers should all be close-ish, but would never be the same. Using arbitrary numbers, Tesla could very well produce 350k Model 3s, sell only 315k of them, and deliver only 300k within the calendar year, etc.)Anyway, as Musk is wont to do, he then did the other type of tweeting that his employees and peers and friends and loved ones and local baristas probably all implore him to stop doing, opting to respond to the quoted excerpt with:That all in mind, here’s a non-exhaustive list of grievances:The SEC lawsuit failed to note the distinction between “cars” and “Model 3s”, which is almost inexplicable to me (by which I really mean I wish it was inexplicable, as all the obvious explanations seem bad).BuzzFeed News (I’m fighting a powerful urge to put the word news in quotation marks here) also got it wrong: “Musk’s tweet was potentially misleading because it suggested that the company would make 500,000 Model 3 cars this year, conflicting with earlier reports from the company that it would deliver more than 350,000 of those vehicles in 2019.”(Quick sidebar to unpack how bad and representative this single sentence is. First, Musk didn’t say Model 3s. Second, reports is plural, yet the author didn’t link to a single such report. I looked and couldn’t find any public source for the 350k claim. Third, the author’s use of “potentially” reminds me of how some people feel this reflexive need to lace their arguments with adjectives, yet don’t go on to consider what these added words actually mean. In a similar vein, Musk’s tweet didn’t “suggest” anything. It stated something. I guess this is the standard of copyediting you get after significant layoffs — or just in an era where enough people agree that words don’t have to mean things.)Whatever happened to live pushback? Musk’s estimate on the earnings call (of 350k-500k Model 3s, in whatever context) was more or less irreconcilable with the actual earnings report, which clearly said “we are expecting to deliver 360,000 to 400,000 vehicles in 2019” (emphasis mine). Just under 100k of Tesla’s 2018 deliveries were S and X models, which is a number Musk suggested would decline only slightly in 2019. If we assume 85k non-3 deliveries this year, this means a forecast of some 275-315k 3s, which I’m pretty sure is enough fewer than 350k-500k to be worth at least a quick clarification question. Amazingly, none of the people on the call asked said question, despite the enormous bottom-line impact inherent in the disparity. ***Putting this all together, I’m led to a few conclusions:Nothing in this SEC lawsuit is really about protecting investors. Musk’s tweets came after-hours and were corrected before the market re-opened (some damage can happen after-hours, but you’d be hard-pressed to find real litigants who sustained meaningful losses).[NOTE: Because I’m a curious kitten, I asked Glenn Luk to look into the real-time impact of Musk’s original tweet. His response: “Around 5-10k shares changed hands from 7:15pm to the end of extended trading hours. So around $1.5-3 million worth. These impacted shares traded in the $306.50 to $307.50 range. The official closing price on that day was $305.64.” I have two general comments here: 1. If you aren’t following Glenn, you should be. 2. This impact is trivial. Even at the high end of $3m, that’s 0.005% of Tesla’s float. Also, some of the trades in the remaining 45 mins following Musk’s first tweet actually went for less $/share than those immediately before!]The SEC mostly seems interested in forcing Musk to both respect the system more and to stop making fun of them. While that first concern is certainly valid, their actual response here seems antagonistic to said hopes. Their suit was weak and lazy. Whatever Tesla/Musk did wrong here, they also self-policed. I can see the logic in maybe a stern letter, but it’s hard to see practical value in the route they took. While I’m vaguely sympathetic to what they must have felt were a lack of alternative options, this ultimately feels like a failure of creativity and/or latitude. They should be able to suggest things like “hey, you made a mistake, now go make a $10m good faith donation to charity”, with those amounts doubling for every additional trivial infraction. Or if they really wanted to get through to him, they could force him to donate said money to BuzzFeed (whom I’m told could really use the help).The SEC also over-reached (page 12) in arguing that even if Musk had been accurately quoting his previously-vetted Q4 disclosure, that said vetting is only valid for 48 hours per Tesla’s own comms policy — which I find to be a dubious and/or disingenuous reading of said policy. Like, are they seriously trying to argue that Musk wouldn’t be free to repeat an exact quote from a past disclosure without re-approval? That’s the sort of argument that makes it hard to take the whole complaint seriously.Anyway, moving on from the SEC, let’s talk about the people who make money reporting on Tesla in a professional capacity. My restrained take? Most would benefit from spending less time on Twitter and more doing their homework with an appropriate level of diligence.(If any journalists are reading this and feeling keen to turn the tables, please note that I offer financial rewards for corrections. All are welcome to pick holes where they can. I’ve been careful here, but would also be gracious and enthusiastic in improving the accuracy of this piece where possible. Though I don’t make a dime off these posts, I’m happy to pay such incentives out-of-pocket on principle.)Lastly, we have Musk. He, uh, really needs to stop doing this, if for no other reason than that he’s an example that many model. He needs to lead the way, and that means using Twitter responsibly. The tweet was wrong, whatever the cause, and it should have been right. It’s (arguably) a small thing in itself. But it’s also value-destruction in its purest form. This can only hurt the causes he cares about.NOTES & EDITS:* There were actually two fines: $20m to Musk, and $20m to Tesla. Musk partially offset the latter by buying $20m in stock directly from Tesla. (I say partially because Musk got stock in return, which had a dilutive effect on existing shares. So it’s less that he paid $40m in fines and more that he paid $20m and then supplied Tesla with $20m in ready cash to pay theirs.)** More precisely, their request was that Musk “show cause” to prove to the judge that he wasn’t in contempt.*** Emmanuel Rosner from Deutsche Bank kinda-almost asked this question, but ultimately narrowed his context to why their official estimates were so cautious. It isn’t clear to me how anyone could come up with a useful price assessment without clarity on the single largest item affecting Tesla this year. Either there’s a substantial reason to believe that Tesla can produce/sell/deliver 350k+ Models 3s this year, or there isn’t — which feels like something we should desire a clear answer to, which I’m told is the point of earnings calls.PS - One of the things on the call (transcript here) that I’m surprised didn’t get more coverage is the exchange between Musk and Gene Munster about Waymo. Musk laughed off their recent valuation projections, claiming that Tesla has 95% of all accumulated training miles thanks to their fleet size. Now, this isn’t quite the same as autonomous miles. Waymo has more of the latter. But the argument implied here is that miles driven where the autonomous driving system is taking in data even while not fully engaged are still worth an awful lot, with Tesla having the lion’s share of these. There’s a lot to this that’s beyond my pay grade, but I’m a little miffed that more people who do know about this aren’t talking more about it.EDIT (03-12-19)Musk’s legal team (well, one of them) filed a response to the SEC’s “show cause” filing, and, well, it’s a hell of a read. Focusing on just the new stuff:(i) The SEC’s second request for info came at 10:28am PT on a Sunday, with a deadline to respond by 5pm PT the same day. Musk’s lawyer (Bondi) responded back around 5:30pm PT basically saying “I’ve been off email all day dealing with another US Attorney’s office about a different trial, and I obviously can’t get you answers on a Sunday, but I’ll get back to you ASAP”. The SEC responded by filing with the court Monday afternoon (3:10pm PT), which honestly just feels petty.(ii) While I already covered one way in which the SEC misread Tesla’s new comms policy above (i.e., the facially silly argument about needing re-approval for something that had already been publicly disclosed), there’s also this bit:While I’m not entirely sold on Musk’s argument that his “500k” tweet was 100% justifiable, the SEC’s reading here is the sort of thing you kinda expect from a document written angrily and in haste. As Musk’s team points out later in their filing, if you take out the “depending on its significance” qualifier, the level of restriction would almost certainly become a first amendment issue. It’s fine to make Musk look for pre-approval for likely market-moving stuff, but interpreting Tesla’s policy so broadly is a definite reach.(iii) If you scroll down to the bottom of the PDF, there’s an interesting appendice from Christopher Noe, an MIT Sloan lecturer brought on to quantify the materiality of Musk’s original tweet by way of how it moved the market. I’m pleased to report that he came to the same conclusion that Glenn and I did as it concerned the after-hours activity. But where he went beyond us is looking at the pre-market trading the next day (after Musk’s “correction” tweet). Interestingly, the stock went slightly up (0.7%), which indicates that investors saw no net concern. Noe also looked through the analyst reports available on Thomson One and couldn’t find any that referenced the tweets prior to the SEC’s filing, further suggesting that no one really cared. (Noe separately pointed out that after-hours trading following the SEC’s filing was ~17x brisker than after Musk’s original tweet, which does kinda make you think about relative harm.)(iv) While it’s true that Musk has never actually gotten any of his tweets pre-approved since the new policy went into place (though he did begin doing so after the most recent filing), it’s also true that his self-filtering had made said step unnecessary. (His lawyers even went so far as to challenge the SEC to find a single tweet that would have required pre-approval, which is a pretty strong gambit.) And given that the Very Serious Adults were reviewing Musk’s tweets in real-time to flag any that straddled the line (as they did successfully here), it’s hard to argue that they were acting in contempt. IMO, the SEC was so worked up about his TV interview (“I don’t respect the SEC”) that they failed to see this with any objectivity. If they were waiting for their moment to nab him, this wasn’t it.