“There is nothing new in Wall Street,” the famed 1920s investor Jesse Livermore wrote. “There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.”
The original “Wolf of Wall Street,” Livermore’s most famous bet was shorting stocks ahead of the crash of 1929. He made a fortune, as did more modern stock shorters like Jim Chanos, who tabbed Enron as a fraud, and Bill Ackman, who saw Lehman Brothers for the house of cards it was. But shorting stocks isn’t for the faint of heart. Most of the time, most stocks along with the broader market go up.
So it takes a certain kind of investor personality to bet against a hot stock and stick with it. Lately, there have been some questionable high flyers, particularly in tech, and my Fortune colleague Bernard Warner spent some time talking with a couple of the investors who decided to go short (and go public) against the grain. His profile of the shorters includes Muddy Waters chief investment officer Carson Block, who took down Luckin Coffee, and Fraser Perring, founder of Viceroy Research, who scored on Wirecard. And don’t forget Hindenburg Research founder Nathan Anderson. He’s the guy who figured out that Nikola had rolled that truck downhill.
“I think fraud is more pervasive than at any time I’ve been in the market, certainly,” Anderson told Bernard. Despite the accurate takedown of Nikola, however, short sellers still aren’t popular on Wall Street. “We get more angry emails, or death threats to murder me and my entire family.”
And not every short seller target collapses in a heap of fraud and scandals. Among the largest short positions today you’ll find many of the year’s hot tech stocks, including Snap, Beyond Meat, and Peloton.
The inflating bubble in electric vehicle stocks has also drawn attention and the biggest target of short sellers over the past few years has been Elon Musk’s electric car maker, Tesla. It hasn’t worked yet. Short sellers, including Enron-conquerer Jim Chanos, have lost so much money betting that Tesla’s stock price would collapse (it’s up almost eightfold this year) that Institutional Investor dubbed it the “widow-maker trade of 2020.” By this month, the cumulative loss of shorters on Tesla exceeded $35 billion. Yikes.
Chanos hasn’t given up though he’s said to have scaled back the size of his bet. “However you might want to dream about autonomous taxis, spaceflight, tunnels underground, whatever—they are a car company, and they are an unprofitable car company,” he told a Barron’s conference this week. Time will tell whether Tesla’s stock price can stay aloft or whether, somehow, this time is different.
Don't forget the tip. You can't short it quite yet, but DoorDash priced its initial public offering last night at $102 per share, much higher than anticipated and giving the money-losing food delivery service a stock market value of almost $40 billion. It also nabbed the cool stock symbol DASH. Artificial intelligence experts at C3.AI also went public at a higher price than expected and nabbed the cool symbol AI. Expect Airbnb's pricing real soon now. But the symbol ABNB? Terrible.
You had one job. Cybersecurity firm FireEye said it was the victim of a major hacking attack and the crooks made off with some of the tools it uses to uncover security vulnerabilities. The FBI says the methods of the attack "show an actor with a high level of sophistication consistent with a nation state.”
Pricey cans. On the Apple beat, the company announced that its $10-per-month fitness class service, dubbed Fitness+, will debut on December 14. Apple also unveiled long-rumored over-the-ear headphones called the AirPods Max priced at $550. The price surprised some Apple fans, but the company already sells headphones under its Beats brand for up to $400. Apple rival Samsung will unveil its newest phones a little sooner than expected. The Galaxy S21 arrives January 14, according to Android Police.
Violin concerto number 230. The Republican-controlled Senate moved quickly to add a Republican to the Federal Communications Commission, an unusual move during a lame duck period. Attorney Nathan Simington was largely a financial securitization expert (and a trained violinist) before joining the Commerce Department in June of this year, where he helped push to strip protections for tech companies under Section 230 of the Communications Decency Act. Expect that fight to continue at the FCC. In other D.C. news, expect an antitrust case to be filed against Facebook any minute as well.
All her nights have gone sad and shady. A day after Uber announced it was getting out of the self-driving car business, the ride sharing giant dumped its flying car effort too. Startup Joby Aviation will take over the Uber Elevate unit in return for a $75 million investment from Uber. “I know there are questions about whether Uber has any ‘big, bold’ bets left,” Uber CEO Dara Khosrowshahi wrote in an email to employees. “I understand that question, but I think it misses the big, bold bets right in front of us: to become the undisputed global leaders in both Mobility and Delivery.”
The Botticelli black boy with the fuchsias in his hair. Speaking of aiming high, Google opened its new operating system program, Fuchsia OS (boy, that is a hard word to spell), to outside developers for the first time. We're still not sure exactly what Google intends for the OS, which it says is not intended to replace Chrome OS or Android OS but is "a long-term project to create a general-purpose, open source operating system," the company says.
FOOD FOR THOUGHT
I wrote a story this week about the progress at QuantumScape, the startup backed by Bill Gates, in developing better batteries for electric vehicles. It's a solid advance as far as it goes but there's a long way until those batteries are actually on the road. Wall Street Journal reporters Rebecca Davis O’Brien and Katherine Blunt have a cautionary tale about an earlier high-profile green energy startup called Bloom Energy founded by NASA scientist KR Sridhar.
Mr. Sridhar’s proposition to disrupt the energy market came as the world was trying to figure out how to wean off fossil fuels. Instead, the energy industry has disrupted Mr. Sridhar’s strategy, turning to wind and solar power, which have lower costs and deliver cleaner energy than Bloom’s cells, which emit carbon dioxide. Grid power is still less expensive than Bloom’s in most places.
Along the way, Bloom ran into supply issues, its cells remained expensive and it fell short of its projections for how many customers it would win, according to former executives and employees, board materials and public filings.
IN CASE YOU MISSED IT
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Revenue isn’t back yet, but Airbnb’s valuation may well be By Lucinda Shen
Indiegogo founder launches Vincent, a site to discover alternative investments By Jeff John Roberts
A depleted workforce and no end in sight: An inside look at America’s ailing health care industry By Erika Fry
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
Bill Gates published his annual list of book recommendations on Tuesday, this year headlined "5 good books for a lousy year." They're all non-fiction works, which is a little disappointing. But I think I'll pick up The Spy and the Traitor: The Greatest Espionage Story of the Cold War by Ben Macintyre. The story of FBI turncoat Aldrich Ames is so crazy it should match the twists and turns of anything by Le Carre.
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