Not good when a CFO abruptly resigns (or is fired). Usually companies project this quarters ahead to the public, with a soft notice that "XYZ will be retiring next year".
Yes, Kirkhorn "will continue to serve Tesla through the end of the year to support a seamless transition", but this reads as a rush notice.
> Yes, Kirkhorn "will continue to serve Tesla through the end of the year to support a seamless transition", but this reads as a rush notice.
I don't own any $TSLA (or one of their cars), but this is like the opposite of a rush notice. Heck, he will continue working for Tesla for almost half the year. Seems like typical HN "everything Elon does is bad" bandwagoning.
I mean, just earlier today the HP CFO resigned[1] and was replaced immediately.
Also not sure Tesla shareholders are going to want folks putting HP and Tesla in the same sentence.
HP is obviously misfiring so the CFO should be turning over based on historical data so its decidedly not newsworthy.
Tesla on the other hand is supposedly firing on all cylinders, so its abnormal for the CFO to exit just before what's expected to be hockey stick profitability given the heavy stock based compensation.
HP P/E is 12x. Tesla P/E is 70x. Tesla at HP's multiple would be a $40 stock.
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Do we know whether "the end of the year" is the fiscal year or calendar year? Given the context fiscal year seems very plausible, and that's less than 2 months away.
When the CEO makes a bunch of fraudulent statements, that is actually bad. It's one thing for people to change jobs, it's another when the guy who is the direct line of fire from Musk's lies leaves. The market can stay irrational for a long time, but at some point reality will enter the equation.
You can only keep the corruption going for so long. Maybe there's someone new at the SEC that will actually go after him, maybe the shareholder have finally had enough. It could be anything but the CFO headed for the door in a company notorious for fraud speaks to a potential reckoning.
Not the OP but we could mention that time where he called a hero a pedophile or when he bought twitter to promote free speech and then banned anyone who said negative things about him. No one human should have 260 billion dollars and be thought of as a good person unless they do a ton of philanthropy.
Now, I'm not saying this is the case for Musk, but surely if a person that rich was heavily investing in technological research that resulted in positive feedback loops that benefitted humankind then they would be a pretty good person, right? Who was really a better person: Mother Teresa or Norman Borlaug?
Because all the other humans throughout history that launched a car they built, on a rocket they built did it better, right?
To be fair, I am actually still annoyed about the whole x.com thing. They closed my account when they sold to Paypal 23 years ago now. Now it is just some message board.
> Because all the other humans throughout history that launched a car they built, on a rocket they built did it better, right?
Musk has never built a car or a rocket. He raises money and hypes things. He is not a builder. Hell, he tried to get Paypal to switch to Windows because he doesn't even understand Linux.
Just to put things in context, the average tenure of a CFO among S&P 500 companies is 3.5 years.
I don't think that's a big deal, but apparently people commenting here think a CFO departing is some kind of major signal of something. At any rate, it's at least worth knowing quantitatively that this happens once every 4 years or so.
agreed, it’s a signal, and in isolation it doesn’t signal much more than the passing of time.
there are any number of things that might cause one to make such a transition, many of which having nothing to do with the company being departed. and, yes, many that do.
it could be because he’s going to be 40 not all that long from now, perhaps a midlife crisis, or an attempt to avert one. or maybe he discovered his true passion in life, basket weaving. (mid-life crisis? mid-life catharsis!)
maybe musk didn’t like his dinner choice. maybe zach laughed when musk said he’d beat zuck in that fight. maybe he failed to laugh at the right time.
right now? who knows.
but a cfo departure with a few months of wind down isn’t conclusive of much more than the cfo leaving and providing a few months of transition time to their successor and the company.
I'd suggest watching the 1420 channel, where they interview Russians on the street. Many of the older generation have a nostalgia of life under communism, whereas the younger generation is more skeptical.
> If payment is done by other banks, doesn't that serve as mitigation?
Seems the exact opposite. Why would any bank ever conduct risk assessment if their potential failure will be paid by the industry as a whole. This effectively tells any other bank that might be fearing for a bank run to stock up on super risky assets and to let the dice roll to see if they end up winning big, or if their competitors end up paying for their losses.
This is not the moral hazard risk he was referring to. The bank still has no incentive to load up on overly risky investments because in the case of an FDIC takeover, they (the investors and executives) will still loose everything. The moral hazard here is for depositors. They have an incentive to put their money in the bank with the highest possible yield no matter what the bank's investment portfolio looks like, since their deposits are now seemingly guaranteed by the banking system as whole.
To be fair, I'm not sure if this is necessarily a bad thing for certainly types of very low yield accounts (checking accounts with no interest, etc). But there certainly is an element of moral hazard at play.
It’s really amazing the number of people that don’t seem to understand that. It would be like if a dairy farmer overloaded his truck, crashed it and died. The government steps in and makes sure everyone gets milk while they sell off the cows. Then people say “this creates a moral hazard for dairy farmers to overload their trucks without consequences!”. No, dude. He died.
This is incorrect. The correct analogy would be if I set the speed of my automated truck to 20mph over the speed limit causing me to earn 10% more income for 10 years. Then the truck crashes and burns and my neighbors pay for it.
I’d agree that’s what happens with the big rescue loans that save businesses. But, that’s not what’s happening here. There just such extreme hyperbole about how this removes all risk for banks.
I guess where I can meet you in the middle is that in this crash from excessive speed (not over the speed limit, but only because they lobbied to have the speed limit raised) the customers are getting taken care of, the business owner loses his business and his competitors have to pay for the cleanup.
I’m curious how the banks feel about this. I really don’t believe that doubt about the banking industry is in their favor, even if it could be a differentiator in theory. The amount they’ll pay is a tiny fraction compared to the market cap lost this week.
FDIC is arguing that taxpayers will not be affected because they are bankrolling this backstopping operation by forcing other banks to cover losses beyond the limit.
But banks will most likely recover this imposed “fine” from customers, which means that customers (aka: taxpayers) are the ones who are ultimately bankrolling this whole fiasco.
I get what you're saying. But by that token any fines that are levied against banks are also paid by taxpayers. So if you're saying that this move is wrong since it puts the burden on taxpayers, then we shouldn't fine banks either?
The only thing I’m saying is that - technically - taxpayers are footing this bill, even if FDIC claims otherwise. Whether or not this backstop should have even happened in the first place is a different issue.
No it isn't. In the history of the FDIC, no depositor has ever lost money, regardless of balance. The whole point of the FDIC is to avoid contagion, and they nipped this in the bud, again.
Moral hazard is if they made the investors whole. They did not. Depositors are not investors.
> In the history of the FDIC, no depositor has ever lost money, regardless of balance.
This is false. No depositor has ever lost insured money. Uninsured money has been lost.
E.g., Washington Federal Bank for Savings failure in 2018 [0] has resulted in dividend payments for uninsured balances covering only 41.66% [1], and that took nearly three years.
>The whole point of the FDIC is to avoid contagion, and they nipped this in the bud, again.
Maybe. Part of the problem here is related to Glass-Stegall. Depositors are essentially the ones backing the investors at a bank these days. So, they just shifted who's footing things here, from the depositors and investors at SIVB, to depositors and investors at other banks. This approach has essentially dispersed the risk into the broader economy. As so, don't be surprised if this ultimately exacerbates contagion in the end.
I’m inclined to believe that may not be entirely true [1]. It seems there is some evidence of depositor losses but they have been incredibly rare and insubstantial.
I believe FDIC can sell SVB or equity to another bank once it stabilizes (with their help). With the current executive team gone and some adult supervision, it could return to being a valuable company.
SVB doesn’t have to die just because the shareholders get wiped out and management booted. It’s probably better for customers that it doesn’t.
The worst part about this is if SVB does get bailed out by the government, everyone will wire their money out anyway. YC is not going to leave their money if it's back stopped again.
So the message is: "Please shore up and reopen SVB, so we can get our funds out. Then you can shut it back down."
This is basically the same as the VC fund model. They get annual carry (ie percentage) on every fund, and then get a percentage of the gains for every exit.
Often this is "two and twenty" (aka 2% annual carry, plus 20% of the gains). Pretty awesome skimming.
A shocking number of VC's still fail to make much money. The amount of effort to source and manage investments eats up a whole lot of those management fees, and the 20% carry is often after preferential returns up to a certain level and a lot of funds never reach that level.
(I worked for a VC until end of last year; still years of waiting to see if the carry I vested will pay out anything at all)
Yes, Kirkhorn "will continue to serve Tesla through the end of the year to support a seamless transition", but this reads as a rush notice.
His IR page is also gone:
https://ir.tesla.com/corporate/zachary-kirkhorn