Tesla, Elon Musk, and Weed

by JDH on September 8, 2018

I listen to the occasional episode of the Joe Rogan podcast every two weeks, when he has an interesting guest.  This week he had a very interesting guest: Elon Musk.  If you have two hours, sit back and enjoy:

If you don’t have two hours, here’s the gist of it: It is possible that Elon Musk is a genius.  He may have brilliant ideas.  Sadly, execution of those ideas is not his strong-point. He needs to be the creative guy in the company, and have a highly competent CEO, CFO, and management team to actually run the business.  Electric cars?  Great idea.  Now find a bunch of people who actually know how to build cars to build them.

So here’s the problem, as described by The Financial Post on Friday:

The turmoil at Tesla reached a fever pitch Friday, as news emerged that two senior executives will leave Elon Musk’s electric-car maker a matter of hours after he smoked marijuana during an hours-long interview with a comedian.

Chief Accounting Officer Dave Morton gave notice Tuesday that he was resigning less than a month into the job, according to a filing. Tesla’s stock plunged, then extended declines after Gabrielle Toledano, the head of human resources who’s been on a leave of absence, told Bloomberg News that she won’t rejoin the company.

So here’s some advice for you aspiring CEOs: you will not inspire confidence by drinking whiskey and smoking a joint on the most popular podcast in America, two days after your Chief Accounting Officer quits after one month on the job, and it may cause your head of human resources to leave and never return.

Dave Morton worked for over 20 years for computer-drive maker Seagate, leaving as the CFO before joining Tesla.  He joined Tesla one day before Musk tweeted “going private,

Of course funding was not secured, and it was at that point that Mr. Morton presumably realized he had made a massive mistake, and began taking steps to exit the company.

Can we trust Tesla’s financial reporting, if the Chief Accounting Officer leaves after one month?

It doesn’t look good to me.

I have purchased puts.  I got creamed on August 8 when Tesla bounced on the “funding secured” news.  Thankfully, over the last two weeks, I have made some of it back.  My strategy is simple: I buy out of the money puts, expiring in six to eight weeks, and when Elon Musk smokes a joint on a live broadcast I sell them, like I did on Friday.  I then buy an equivalent number of puts also out of the money.

On September 4 I bought 10 of the Tesla $270 puts, expiring October 19, for $13.35.  I sold them on September 5 for $19.25.

I then immediately bought 10 of the Tesla $260 October puts for $14.43.  The key point here is that I sold for $19.25 and bought for $14.43, so I “took money off the table”.  I’m not letting it ride; if there is a profit, I take it, because I know there will be a lose down the road.  On Friday I sold those puts for $26.10.  That’s the power of pot smoking on a live broadcast.

I then immediately bought 10 of the October $240 puts, for $17.70, so again, I invested less than I took out.  By the end of Friday that’s not looking like a great decision, as Tesla bounced off the lows, but so be it.

NOTE: This is not an investment; this is gambling.  I’m not playing with huge dollars, so if I get wiped out, so be it.  But, I can’t stand by as some dude destroys a company.  I can’t stop him, so I might as well make a buck off it.

That’s the plan, until he announces “funding secured” on Monday and I get wiped out again.

We’ll see.  More next week.