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Tesla Desperate To Prevent SEC Inquiry From Escalating Into Investigation.

|About: Tesla, Inc. (TSLA)
Summary

SEC inquiries may indicate the possibility of systemic corporate problems. But an inquiry by the SEC can be managed, problems corrected, and business may continue with greater care and self-regulation.

SEC investigations can be more serious matters. The government must invest a significant amount of resources into an investigation. Investigators may appear foolish if their investigation comes up empty.

The government hates to look foolish. Especially when operating under sharp public scrutiny during high profile investigations. Media darling and high profile Tesla, Inc has received an SEC inquiry.

SEC prosecutions often result in plea deals, penalties, and convictions. The consequences can range from modest penalties to prison time, severe financial penalties, and/or a cease and desist order.

Right now during this SEC inquiry phase is Tesla's best chance of avoiding an escalation to SEC investigation that would likely result in any number of prosecutorial charges.

On 6/12/18 Trader's Idea Flow discussed our strategy to prepare for our first short sale of Tesla, Inc. (TSLA) shares to date. We posted this article for subscribers to our Trader's Idea Flow community to alert them that a short sale opportunity for Tesla shares was likely approaching. The tip-off for us was the telegraphing of an upcoming short squeeze advertised by the flamboyant CEO of Tesla, Elon Musk.

On 8/8/18 Trader's Idea Flow posted to this forum our announcement of our first ever short sale of Tesla shares. Here is that post. And our blog post that was similar is linked here.

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TSLA data by YCharts

We indicated in our short call that we were skeptical of CEO Musk's now infamous "funding secured" tweet and the concept of a Tesla buyout.

We also indicated that the SEC's intervention into this situation was a wild card that could increase profitability for our short sale of Tesla shares.

We are pleased to report that our trading call on 8/8/18 may have nailed the top of the chart for Tesla with our short positions being implemented above $375 per share. Our profitable short is now a gratifying $40-plus in the money in just the last 5 trading sessions.

BREAKING NEWS: As we are building this article the following breaking news has just been disseminated on CNBC.

This fast moving story has now taken another turn for the worse for Tesla and Musk. The short-term implications appear to be impacting this stock negatively. Long-term the possible removal of Musk as CEO would be a benefit for this great American company. But the stock price appears very overvalued at current levels according to fundamentals. We believe there is more downside ahead for shares of Tesla. We remain short shares of Tesla.

Disclosure: I am/we are short TSLA.