Comment by dcow
4 years ago
Are you long on Nikola?
The group releasing the report stands to lose their position if their claims are false or even if the market ignores them. I’d argue it’s a lot harder to convince a bunch of people with long positions making the market that they pumped the wrong company than it is for the makers to ignore the ruse long enough to diversify the inevitable failure and pass it into your retirement fund.
You don't just short companies for fun with no ramifications. I think you’re painting an exaggerated picture of the nature of taking down a company. You only attempt to do so if you are extremely sure of your convictions and have overwhelming evidence to support your case. You make enemies and you risk losing your connection to other market makers.
I came across Nikola last month and didn’t need a report like this to smell something fishy. But this one is especially damning. I see no reason to not believe the evidence in the report.
Not long on Nikola, and like I said, I am not making any judgement on the facts or evidence presented whatsoever.
But I was long Tesla during a similar period in their own existence, while short sellers tried to make a similar case that Tesla was a fraud and certain to go bankrupt any day.
There is always a strong reason to question a report when the authors have an extremely vested interest in people believing it, and in fact when the objective truth of whether they are right is less important than how many people they can make believe that they are right.
You're making an underappreciated point: Activist short sellers can be capable of torpedoing a company that would have been successful in their absence, if the company's development depends on financing and goodwill.
It does present a bit of an ethical conundrum. Is it ethically correct to not point out something you believe to be fraudulent?
It's certainly unethical to deliberately slander something you believe to be viable, purposes of profit or not, but it can be hard to tell the difference when judging any such initiative.
I could see the case for banning advocating a short position, reasoning in terms of market manipuiation, but I don't think it's clear-cut. Was also a very close observer to the Tesla shennanigans two years ago, and there were some shameful tactics being used at the time.