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Business

Tesla’s Elon Musk Turns on Bill Gates Over Tesla Short

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Tesla (TSLA) – Get Tesla Inc Report CEO Elon Musk thinks he’s saving the world with his electric-vehicle and solar-power efforts (and he might be doing just that).

Microsoft Founder (MSFT) – Get Microsoft Corporation Report Bill Gates has followed a more traditional path to philanthropy. His foundation, which he runs with his ex-wife, Melinda, has devoted billions to solving inequities around the world. 

The Bill and Melinda Gates Foundation has worked on everything from bringing vaccines to parts of the world that don’t have them, to making sure people have clean water, and to all sorts of projects designed to protect the planet.

The Gates Foundation has a clear philosophy when it comes to how it plans to achieve its goals.

“We can’t achieve our goals on our own. We work together with businesses, government, and nonprofits, and each partner plays a specific role in accelerating progress,” the foundation says on its home page.

Bill Gates was hoping Musk would consider partnering on those efforts and the two were planning to meet, according to a text chain that has been widely reported on and that Musk has since confirmed.

It was a pleasant enough, mundane conversation until Musk dropped a bomb and did the real-life version of when a pro wrestler turns on his partner by hitting him over the head with a steel chair. 

SUZANNE CORDEIRO/AFP via Getty Images

Musk Really Hates Twitter Shorts

Musk has generally taken a very negative approach to anyone who shorts Tesla shares. He repeated that approach with Gates and broke off their planned meeting because Gates has a significant short position against the electric-vehicle company, which he Tweeted about.

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In the text chain, which Musk has confirmed as real, the Tesla CEO questioned Gates’s commitment to the environment due to his Tesla short position.

“Sorry, but I cannot take your philanthropy on climate change seriously when you have a massive short position against Tesla the company doing the most to solve climate change,” Musk apparently texted to Gates, who has not confirmed the exchange.

Musk then completed his dismissal of Gates by sharing an image of him on Twitter with a mildly profane (and heavily insulting) joke.

A short is essentially a bet against a stock. A short position pays off if the price of the stock drops.

Musk Is More Forgiving of Himself 

Musk tends to publicly take a “you’re dead to me” approach to anyone who shorts Tesla. He has made clear that he considers that a bet not just against his company but against its environmental efforts. Tesla lays out its environmental mission in its annual ESG report.

At Tesla, we strive to be the best on every metric relevant to our mission to
accelerate the world’s transition to sustainable energy. In order to maximize
our impact, we plan to continue increasing our production volumes and the
accessibility of our products. In more concrete terms, this means that by
2030 we are aiming to sell 20 million electric vehicles per year (compared
to 0.5 million in 2020) as well as to deploy 1,500 GWh of energy storage
per year (compared to 3 GWh in 2020

Musk has been a leading proponent of not just EVs but also solar power. He has also been an on and off fan of both bitcoin and dogecoin, two cryptocurrencies that have come under fire for their impact on the environment.

The Tesla CEO did (eventually) reverse his stand on both cryptocurrencies, dropping bitcoin as a way to pay for a Tesla.

Musk clearly gives himself room to make multibillion-dollar mistakes but has taken a much less forgiving approach with Gates, 

And while the theater of it may enhance Musk’s maverick image, what has actually happened is that the Tesla CEO has passed on an opportunity to work with Gates to further both men’s environmental goals.



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Business

Former Employer of Memestock King Gets Hit With $4 Million Fine

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A GameStop store in Alhambra, California in January 2021.
Photo: Frederic J. Brown / AFP (Getty Images)

The former employer of “RoaringKitty,” the online trader who helped spark off a Reddit-fueled short squeeze on hedge funds betting against Gamestop stock, has agreed to shell out a $4 million fine.

Keith Gill, who went by RoaringKitty on YouTube and DeepFuckingValue on Reddit, was a registered securities broker who worked as a financial wellness education director at insurer Massachusetts Mutual Life Insurance Company (MassMutual) when he began promoting ailing video game retailer GameStop as a surefire rebound bet in mid-2019. Eventually, he became one of the central personalities in a coordinated run against hedge funds that had taken short positions on GameStop (like Citron Capital and Melvin Capital) that was organized on Reddit’s r/WallStreetBets board in January 2021.

The subreddit /rWallStreetBets sent Gamestop stock skyrocketing, caused huge losses for some vampiric hedge funds that had been shorting the company, shook markets enough that Congress held (useless) hearings, and made Gill a hefty chunk of wealth. The short squeeze also kicked off a wave of speculation in other “meme stocks” like AMC, causing major problems for stock-trading app Robinhood, which alienated a large number of its users by halting trades in some of the affected stocks.

The New York Times reported on Thursday that MassMutual has reached an agreement to pay a $4 million fine to resolve Massachusetts securities regulators’ claims that the company didn’t do enough to supervise Gill and his colleagues’ trades and doings online. Additionally, the state regulators claimed Gill carried out trades for three people with no connection to MassMutual without obtaining company permission. The Times wrote that the settlement reached between MassMutual and the state contains no admissions of wrongdoing but does include other additional measures, such as a compliance review and audits.

MassMutual had previously said that if it had been aware of Gill’s online activities, it would have asked him to cease them or even simply fired him. He was technically employed at the company through Jan. 28, when the GameStop fiasco was still running its course; as Gill was a licensed professional, he had obligations to notify his employer of outside activities. MassMutual was similarly obligated to monitor for any undisclosed activity by its staff, and financial firms generally aren’t supposed to allow their analysts to go around promoting various stocks when they’re not on the clock.

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The investigation was originally opened by the office of Massachusetts Secretary of the Commonwealth William F. Galvin. According to the Wall Street Journal, Galvin says state regulators concluded MassMutual didn’t have “reasonable policies and procedures in place to detect and monitor” any moonlighting workers.

The Times wrote that other parts of the settlement detail how Gill conducted 1,700 trades for three other people in a manner that went against state regulations. While MassMutual denied permission for Gill to manage one of those individuals’ accounts, it didn’t catch on to the other two. Galvin’s office determined that the insurer had third-party software that should have alerted it to trades of more than $250,000 in a single security, the Journal reported, but the feature in question was turned off. Beyond that, regulators were not happy that MassMutual failed to become aware of Gill’s prolific online alter ago at any point. According to the Boston Globe, that included over 250 hours of YouTube videos with stock tips, 590 tweets related to securities, and his Reddit account.

A spokeswoman for MassMutual told the Times the company “is pleased to put this matter behind us, avoiding the expense and distraction associated with protracted litigation.”

“As far as MassMutual is concerned they were obviously totally at fault for not supervising him,” Galvin told the paper. “I mean, it was beyond a small matter of negligence. It was complete and thorough.”

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Technology

New GameStop Discord Plagued By Stonk Bros And Store Complaints

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Image: GameStop Discord/Kotaku

GameStop decided to meet the gamers where they live today, opening a new Discord server where thousands are coming together under the enriching banner of a video game retailer. The community launched without a filter, as evidenced by a torrent of the n-word flooding chat on Tuesday night. The moment I first peeked into the server, several hours after launch, was precisely when one particular user was successfully halting all conversation with an unending spam of “CLITTYS.”

I’ve refreshed throughout Tuesday night, and events on GameStop’s Discord remain somewhat hectic. Chat has improved enough to have the occasional coherent thought or vague conversation, they’re just peppered with outbursts of dicks and poop. Given media attention revolving around the GameStop server’s unruly state earlier on Tuesday, it seems possible that someone at GameStop HQ will become aware that a ruckus has unfolded under the company name. Hopefully, then, it’s just a matter of time before moderators set everything straight. While you’d think that a gaming company would be familiar with the concept of trolls, stuff like this happens all the time, unfortunately.

But let me ask you something. What, exactly, would a person want from a GameStop Discord server? The value proposition for GameStop is obvious; a Discord channel could be a great way to share promotions and products of interest, perhaps tempting someone to make a purchase. And sure enough, the Discord has channels that the company is using to share branded content, like YouTube videos. For users, the appeal is less straightforward.

Would you go into a GameStop server to find a gaming buddy when there are dedicated Discords for specific popular games? Probably not, right?

But maybe you’re looking for a place to talk about video games? Strange choice, but plausible. GameStop did announce the whole thing by suggesting that it could be a place to connect with other obsessed gamers. But if GameStop truly intends to give users a place to talk games, and by extension about places that sell video games, then it has to host folks strategizing on how to best save money at GameStop’s own expense. Or worse, complain about GameStop and its business practices for trade-in games. I observed both in equal measure.

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Read More: GameStop Just Made $1.1 Billion Selling Off Its Meme Stock

“GameStop is literally the worst shop you can go to to get video games stuff,” one Discord denizen noted. Likely, anyone looking to save some bucks will choose to frequent places [like] CheapAssGamer or Wario64 over GameStop itself. So if you’re not there for deals and you’re not there for games, what are you there for?

For some, it was obviously boredom. Nothing about being on a GameStop server sounds particularly cool or enticing, but during a pandemic, anything is welcome as a distraction.

But the most overwhelmingly common type of GameStop Discord user I observed on Tuesday night was memesters. It’s usually hard to capture the pulse of any chat that’s popping off, but the continued appearance and wide variety of Among Us twerking emotes along with the constant stream of rocket ship emojis spoke for itself. Whether ironically or earnestly, GameStop’s Discord server seems to be where people go to repeatedly type “stonks” at each other with the assurance that others will find it funny for the millionth time. This is the community birthed in the wake of the $GME blow-up, and these wayward souls finally have an official place to congregate that’s not r/wallstreetbets and its many offshoots.

Screenshot: Kotaku

By midnight, much of the chat had started discussing whether or not the new Discord needed a dedicated stocks channel. Some were for the idea, because, as one Discord dweller noted, memes were plaguing the chat. “It’s a losing battle on every side to completely shut off stonk talk, but containing it channel-wise is good,” they wrote.

Others were skeptical, obviously wanting to distance themselves from folks running a joke ragged. “Stonk talk 24/7 might not be healthy for the brand,” another wrote. As of this writing, GameStop has not created a stocks channel. Nevertheless, the gamers persist.



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Business

YouTube, Reddit User ‘Roaring Kitty’ Gets Sued for Securities Fraud Over GameStop Short Squeeze

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Photo: Michael M. Santiago (Getty Images)

Keith Gill, also known as “Roaring Kitty” on Twitter/YouTube and “DeepFuckingValue” on Reddit, is facing a proposed class action lawsuit for his role in the massive GameStop short squeeze orchestrated by Reddit’s r/WallStreetBets board, Bloomberg reported on Wednesday.

According to Bloomberg, the suit was filed by Hagens Berman Sobol Shapiro, a securities class action firm, on behalf of Washington state’s Christian Iovin, who sold $200,000 in call options on GameStop stock when it was worth below $100 a share. This proved to be a very bad bet, as users on r/WallStreetBet launched an organized effort to pump GameStop and other poorly-performing stocks, like AMC and BlackBerry, with nostalgia value that ultimately was quite successful. As major Wall Street sharks quickly got clued into and joined the Reddit-driven effort, shares in GameStop spiked to $483, spelling disaster for traders short-selling the company’s stock. Iovin was forced to buy back his calls at inflated rates as a result, according to the suit. GameStop now stands at $46 per share, still significantly higher at the beginning of 2021, when it was trading in the $19 range.

Gill was one of the leading proponents of the rush on GameStop on his social media accounts, and according to CNBC, posted to Reddit that he made at least $7.8 million on the company’s stock. The suit accuses him of not being some layman, but a licensed securities broker that deliberately manipulated the price of the company’s stock to get rich quick.

“Gill’s deceitful and manipulative conduct not only violated numerous industry regulations and rules, but also various securities laws by undermining the integrity of the market for GameStop shares,” the class action proposal said, according to Bloomberg. “He caused enormous losses not only to those who bought option contracts, but also to those who fell for Gill’s act and bought GameStop stock during the market frenzy at greatly inflated prices.”

According to the New York Times, the class action proposal cites Gill’s multiple broker licenses and also names MassMutual’s brokerage arm—where Gill worked until a few weeks ago, and which the plaintiffs claim failed to properly rein in his market activities. Times also noted that securities regulators in the state of Massachusetts are looking into whether his posts potentially violated the law or industry rules. (The Securities and Exchange Commission has issued vague threats to everyone involved involved in the speculative frenzy, including stock-trading app Robinhood, but hasn’t actually carried them out.)

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Gill is strenuously fighting claims he was trying to manipulate the market to his own benefit. The short squeeze was only possible because hedge funds like Melvin Capital had taken out greedily large short positions on GameStop, presenting an opportunity for investors to make big money if the stock rose while the hedge funds lost their shirts. The House Financial Services Committee is holding a hearing on Thursday over the whole r/WallStreetBets fiasco, with Gill scheduled to testify. Others scheduled to speak include Robinhood co-CEO Vlad Tenev, Reddit CEO and co-founder Steve Huffman, and Melvin Capital CEO Gabriel Plotkin.

In his prepared remarks to the House, Gill claimed that his position as Director of Financial Wellness Education at MassMutual had been totally unconnected to his side gig as a stock market commentator and that he had genuinely believed GameStop had “the potential to reinvent itself as the ultimate destination for gamers within the thriving $200 billion gaming industry.” Gill added that as of just a few months ago in December 2020, his YouTube and Twitter accounts had just a few hundred followers each and he did not believe he had the capability to sway markets.

“The idea that I used social media to promote GameStop stock to unwitting investors is preposterous,” Gill wrote. “I was abundantly clear that my channel was for educational purposes only, and that my aggressive style of investing was unlikely to be suitable for most folks checking out the channel. Whether other individual investors bought the stock was irrelevant to my thesis—my focus was on the fundamentals of the business.”

Gill added that “others will have to explain” exactly what happened with GameStop.

“Here’s the thing: I’ve had a bit of experience and even I barely understand these matters,” he wrote. “It’s alarming how little we know about the inner-workings of the market, and I am thankful that this Committee is examining what happened.”

Gill’s attorney, William Taylor, declined to comment to the Times, while MassMutual told the paper it is looking into the matter.

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Business

Dogecoin cryptocurrency rises over 400% after Reddit group talks it up

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In this photo illustration, visual representations of digital cryptocurrencies, Bitcoin, Litecoin, Dogecoin, Ethereum and Ripple are arranged.

Yuriko Nakao | Getty Images News | Getty Images

GUANGZHOU, China — Dogecoin, a digital coin originally founded as a joke, has soared over 800% after a Reddit board talked about making it the cryptocurrency equivalent of GameStop.

The price of dogecoin stood at $0.070755 at around 12.01 p.m. Singapore, up over 800% from 24 hours before, according to Coingecko. It was not far off of its 24-hour high of $0.072330 earlier in the day.

Dogecoin was created in 2013 based on the popular “doge” meme at the time which involved a Shiba Inu dog. The logo of dogecoin is a Shiba Inu. It was initially started as a joke but has since found a community.

While it has taken a backseat to larger cryptocurrencies like bitcoin and ether in recent years, its resurgence in the last few days has been down to enthusiasm from a Reddit group called SatoshiStreetBets. Like the group WallStreetBets, which was behind the GameStop rally, SatoshiStreetBets is looking to pump up cryptocurrencies.

Satoshi is the name of the mysterious founder, or group of people, who developed bitcoin.

At 12.03 p.m. Singapore time, dogecoin had added about $7.17 billion to its market capitalization or total value, in 24 hours, according to data from Coinmarket cap. Its total market cap stood at $8.2 billion, making it the ninth largest cryptocurrency.

On Thursday, one poster claimed Doge is the “crypto gme”. GME is the stock ticker for GameStop.

Another post suggested taking doge to $1 a coin. The cryptocurrency has never been at $1. In 2013, when it began, it was trading around $0.000232.

As the price of dogecoin rocketed, there have been some big dips in the price over the past few hours. Reddit users on the board are encouraging people not to sell and to “keep pushing.”

Elon Musk, the Tesla founder who previously tweeted about stocks before and sent them rising, has tweeted about dogecoin in the past and indicated in April 2019, that it was his “fav cryptocurrency.”

On Thursday, he tweeted out a picture of a magazine cover of “Dogue” — a play on popular fashion title “Vogue.” Many users on Twitter and Reddit took that to mean Musk was throwing his support behind the doge rally.

One Reddit user wrote: “Mr Musk is with us.. to the moon.”

The situation with dogecoin appears different to GameStop, however.

The Reddit group WallStreetBets appears to be pushing the narrative of buying GameStop shares in order to create pain for hedge funds that are shorting or betting against the stock. By buying GameStop shares, a so-called short squeeze is created, forcing funds to cover their losses. This pushes the stock higher.

Short sellers borrow shares to sell them, in order to buy them back at a lower price in future so that they can pocket the profit.

But there is no such shorting dynamic from hedge funds at play with dogecoin. Instead, it appears a group of people are just trying to push the cryptocurrency higher to make money. One of the early posts on SatoshiStreetBets read: “Let’s make DOGECOIN a thing. That’s it, that’s the post.”

Such activity is not new in the cryptocurrency space and has been going on for several years.

In 2018, the U.S. Commodity Futures Trading Commission (CFTC) sounded the alarm on “pump-and-dump” schemes. This is when a certain cryptocurrency is hyped online and then more and more people buy. Those who were in early sell when the price goes high, but many will purchase near the top and lose money.

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Business

Elizabeth Warren slams SEC over ‘market manipulation’

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Sen. Elizabeth Warren, D-Mass.

Tom Williams | CQ-Roll Call, Inc. | Getty Images

Sen. Elizabeth Warren lambasted the Securities and Exchange Commission on Thursday, blaming the regulator and its failure to act for a chaotic dayslong blitz of market speculation.

“We need an SEC that has clear rules about market manipulation and then has the backbone to get in and enforce those rules,” Warren said. “To have a healthy stock market, you’ve got to have a cop on the beat.”

“That should be the SEC,” she added. “They need to step up and do their job.”

The SEC did not immediately respond to CNBC’s request for comment.

The senator from Massachusetts joined CNBC after wild swings forced popular trading app Robinhood to restrict access to the high-flying stocks at the center of the controversy.

Warren, a longtime critic of Wall Street, spoke to CNBC’s “Closing Bell” as individual traders took to Reddit, Twitter and other social media platforms to protest Robinhood’s move to curb trading. But she made clear that she isn’t a big fan of Robinhood, either.

Robinhood and similar firms, which offer signup incentives while forcing customers to sign arbitration clauses, don’t help create healthy market conditions she said.

Those arbitration clauses, she said, protect Robinhood “if it turns out that [it] really did cheat you. It’ll never be made public, there will be very little that you can do about.”

The public outrage toward Robinhood came after the California-based brokerage announced earlier on Thursday that it would bar customers from buying additional shares of companies including GameStop and move theater operator AMC Entertainment. It still allows customers to sell those stocks from their current portfolio.

Investors on the irreverent WallStreetBets Reddit led an effort to “squeeze” short sellers to cover their bets in such stocks and, as a result, have sparked a frenzy of volatile trading in recent sessions. Many of those retail investors sparked the short squeeze through Robinhood’s popular trading app.

Videogame retailer GameStop is up 250% so far this week, AMC is up 145% and headphone maker Koss, another “squeeze” target, is up a whopping 1,100%.

Robinhood’s decision, which it says was motivated by “extraordinary volatility in the markets,” sparked criticism from both sides of the political aisle.

For her part, Warren said she is skeptical of a narrative that would relate the current trading to a classic “David versus Goliath” story that pits a scrappy group of retail investors against a colossal, hedge-fund empire.

“That’s the problem: How do you know who’s manipulating the stock at this point?” she asked. “Are you entirely sure that there aren’t wealthy people on both sides? That hedge funds haven’t moved in on the side of the people who bid up the price of GameStop?”

Rep. Ro Khanna, D-Calif., a progressive who represents Silicon Valley, called for “more regulation and equality” and questioned the fairness of preventing individuals from buying.

“While retail trading in some cases, like on Robinhood, blocked the purchasing of GameStop, hedge funds were still allowed to trade the stock,” Khanna said.

By buying GameStop or AMC equity or call options, retail investors have forced investors betting against the stock, known as short sellers and oftentimes hedge funds, to cover their positions by buying back shares in an effort prevent further losses.

When this occurs en masse, it can lead to a feedback cycle and a spike in a stock’s price.

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