Elon Musk Tweets About Tesla Sales, the SEC, and a Special Offer From SpaceX (marketwatch.com) 147
Tesla's model 3 is now one of the five top-selling sedans in America (while sales of the Mercedes-Benz C-Class are down 28 percent through September), Bloomberg reports. Elon Musk tweeted out a link to their article on Thursday -- but it was his other tweet, a satirical criticism of the SEC, that made headlines. MarketWatch reports:
Tesla shares ended 7% lower on Friday as Wall Street reacted to Musk's tweet seemingly out of nowhere late Thursday about the "Shortseller Enrichment Commission." Musk also tweeted that day that short sellers were "value destroyers" and should be illegal. Friday's losses for Tesla "produced more than half a billion in paper profit for the shorts," S3 Partners LLC, which tracks real-time short interest data, said in a note. Since news of the Musk's settlement with the SEC, shorts are up $941 million, S3 Partners said. "Clearly short positions are building in the wake of strong selling by longs, as Musk demonstrates a refusal to keep away from controversy," the note said.
The article notes that last Saturday the SEC settled charges that Musk misled investors with a tweet about taking Tesla private. "Terms of the settlement included requiring Tesla to rein in Musk's social-media communications, but it was unclear when Tesla intends to implement that.... The settlement has yet to be court-approved."
On Friday Musk was back on point, tweeting out the news that Tesla owners "can refer someone to buy a Tesla & get any image they want laser etched in glass & sent to deep space for millions of years."
The article notes that last Saturday the SEC settled charges that Musk misled investors with a tweet about taking Tesla private. "Terms of the settlement included requiring Tesla to rein in Musk's social-media communications, but it was unclear when Tesla intends to implement that.... The settlement has yet to be court-approved."
On Friday Musk was back on point, tweeting out the news that Tesla owners "can refer someone to buy a Tesla & get any image they want laser etched in glass & sent to deep space for millions of years."
Jerk or genius? (Score:2, Funny)
Itâ(TM)s a thin line.
Re:Jerk or genius? (Score:5, Insightful)
Some of both, obviously, but more of the latter IMHO. The guy is under a lot of stress lately, and he's letting his inner demons spill out via Twitter occasionally, leading to some serious consequences for himself and his companies (and shareholders [youtube.com]).
Ironically, this is all happening just as Tesla is ramping up Model 3 production to break-even level, where they'll be able to start posting legitimate GAAP profits. If he can just contain his demons for a few more weeks, Tesla will be in a much better position, and the short-sellers will be less of a concern.
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He's acting like a drug abuser, the paranoia and erratic statements are classic symptoms.
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burn out (Score:2)
I think he has been acting like somebody going towards a major mid-life burn out from working too hard with too much stress... He likely copes with his problems with more work / obsessing and now he is in a situation where he's pushed himself too far for too long and he is coping with it by pushing himself more. He is also older and has been doing the stuff for many years to himself.
Drugs may become a part of that downward spiral but they do not need to be before he ends up needing a vacation in a padded
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If the shorts were just making an honest bet on the downfall of the company by selling shares and waiting for the price to drop, that wouldn't be so bad. They don't limit themselves to that, though. Plenty of inaccurate and downright made up stories have been spread to push share price down so the shorts can profit. Like the yellow lines story (factory is unsafe, has no yellow lines because Elon doesn't like the color yellow... quickly debunked with an actual picture of the factory floor full of yellow line
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Whenever a bad rumor comes out, lots of people freak out and sell. I've seen many occasions where the stock dropped 5% or more based on a rumor that later turned out to be false. Sometimes it recovers the same day after the rumor is debunked. Lots of small investors together can have a big effect on the stock price.
Also, I think you overestimate the intelligence of the big investment houses. Lehman Brothers comes to mind...
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That's an ... interesting point of view. One not taught on most conventional accounting courses.
Re:SHort sellers are never a concern. (Score:5, Informative)
Shorting inherently reduces the stock value. Hence, your argument is that the stock value has no effect on a company's operations. But this is obviously false; many things related to a company's ability to raise capital or obligations related to existing debt are tied to the company's stock price. Hence, shorting a stock inherently - on its own - hinders a company's finances.
Beyond this, however, shorting a company creates a strong incentive toward spreading FUD against a company. Indeed, this is the entire means by which "activist short sellers" such as Jim Chanos and Andrew Left operate. Activist short sellers coordinate their short positions with a negative PR campaigns against their targets. These can range from the aboveboard, such as interviews, to the nefarious, such as paying off "independent" analysts to write negative reports (such as what Chanos got caught doing in his Fairfax campaign), to the amateur, like the regular astroturfing campaigns we get on the Tesla forums.
When faced with an activist short campaign, companies have a few options. One is privatization. We saw how that went re: Tesla. The other is to decrease the company's dependence on outside capital, and thus decrease the significance of its stock price on the company's operations and to raise its credit score. While this is an effective strategy, it strongly hinders the company's growth rate. A company fighting off a short campaign in this manner has to heavily cut back on its least profitable activities and its investments in the future and instead focus only on its most profitable activities.
As for the rest of your post:
"Tesla is losing money": "Is" is a present tense verb. Meaning past Q3. We have not seen the Q3 report yet. The goal was to become sustainably profitable in Q3. We'll know in four weeks if it was a hit or a near miss.
"is buried in debt beyond a healthy level": Tesla's debt-to-equity ratio is 60% that of Ford's. I know some people will argue that, "Well, with the traditional automakers you shouldn't count their financing divisions, as they're profit-makers!". But their financial divisions are an essential part of their operations. When comparing companies, you compare all of their components, not just the fractions you want to. And more to the point, the traditional automakers' debt is a lot more risky than Tesla's. Defaulting on auto loans is one of the first things that happens during a financial downturn.
"Of course anyone pointing out those facts are called "trolls" or "shorts". Which he then bullies along with his cult following those people"": Irony alert: Sentence 1: Stop name calling! Sentence 2: Practice name calling!
What he did to that analyst during that conference call: Which analyst? One asked a question that was literally answered right at the top of the Q1 report that everyone was supposed to have read before joining the call. Boldfaced. By re-asking Tesla about that, he was basically accusing them of lying. The other was pushing a conspiracy theory that Tesla's demand was running out. It's five months later and it still hasn't happened, so clearly it was a boneheaded question.
" and to the blogger Montana Skeptic was just pure asshole.": Meh. Musk knew his boss. His boss was an early supporter and fan of Tesla.
"And when you add in the fact that CFOs don't stay": Tesla's CFO has been with the company since 2008.
"Also remember that Model S sales have tanked": They clearly have not, as per the delivery report. They increased over last quarter, and are well on their way to Tesla's max annual 100k S+X production capacity.
"I have a sneaky suspicion that Q3 isn't going to be that good" - Please mortgage your house and short the company, since you both hate Tesla and love short selling.
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26150 S+X Q3 last year vs. 27660 S+X Q3 this year, you mean? Not like it matters. Tesla has the battery supply to make about ~100k S+X per year. Doesn't matter what quarter they move them, that's their cap.
Be sure not to cover before the Q3 report ;)
Simple, readily cross-referencable facts are bullshit. Got it.
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But if you have a long position there is a strong incentive to hype the stock which means that people will buy it when it's overpriced and probably lose money when it returns to more realistic levels. If you drive up the price by lying, I think that should count as fraud. Such lies might include, for instance, telling the World that you have somebody who will buy all the extant shares for $420 when they are currently trading at $360.
Also, if you have a long position, unless you are in it as a long term inve
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"Shorting inherently reduces the stock value."
Incorrect. For every share that is shorted, a new long share is created. The total net outstanding shares remains the same. Therefore the stock "value" nor any common shareholder's voting rights are affected.
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When you short a stock, you take a share that wasn't available for sale, and make it available for sale. You increase the supply on the market. The laws of supply and demand dictate a price drop. When you cover, you take a share that was available for sale and take it off the market. You decrease the supply on the market. This correspondingly dictates a price rise.
Re: SHort sellers are never a concern. (Score:2)
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And nope, shorting does not involve imaginary stock. A short itself is a contract to sell stock to somebody at a particular price on a particular date. It's basically an IOU to the person buying it. When that date arrives, stock is purchased from the open market and given to the buyer. The hope for the short trader is sell it for more in the contract than its worth on the open market on the date the short matures.
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So what you're saying is that it cancels out. Well I suppose a stopped clock is right twice a day.
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No, shorting does not reduce "stock value".
The value of the stock is the net present value of its future revenue stream.
The factors, or the independent variables that influence the stock value are the profit margins, the market share, the qualify of management, the products, etc. These are things that no "shorts" have influence over, this is exclusively Elon Musk's province.
The stock value is not an independent variable in the mix, it is a dependent variable, and whether it goes up or down is the result of
Re: SHort sellers are never a concern. (Score:2)
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Genius? Hardly. He didn't invent PayPal. He didn't invent Tesla. He steps in and takes over other people's companies. He may have an instinct for business, but genius is a bridge too far.
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SpaceX is his own company and it's the best performing of all the ones he runs.
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Bullshit. He does the overall design and conceived the original flight operations regime. He's called the CTO for a reason. He acts much like a chief designer in the USSR would. It's in Tesla that he was only supposed to be a shareholder, but he later took the reigns because he thought the CEO was incompetent. Although, to be honest, the manufacturing problems Tesla had back then were pretty much caused by impositions to the specifications that Musk himself pushed forward. I doubt the company would have gro
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A few notes: There is reporting out a couple hours ago that a financing package is still being attempted: https://twitter.com/CGasparino... [twitter.com] By the wording, it appears to be a DIP package but would be cautious assuming that (still think it's a few months though: https://slashdot.org/comments.... [slashdot.org]).
The Solar City bond payment of $230m is almost here as well as the massive March convert so something needs to be done as the Q3 numbers are almost certainly dismal. And any talk of senior refinancing will certai
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"Bankers inundating Tesla" in no way means that Tesla is seeking it out. It says literally the exact opposite.
$230M is nothing. March is half a year away.
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Incorrect, $230m is a ton of money to them. The Fremont factory has already been mortgaged. A/P is at over $3B. The backlog of ZEV credits are worth a fraction of what they were last year. Have you actually read their the last 10-Q, or at a base minimum, their balance sheet?
And March is actually 11 weeks away, Tesla must have $800m in unencumbered cash by the end of Dec or be in violation of the covenants.
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It really isn't. $230M it's an order of magnitude less than cash on hand. Tesla has some loans against assets (like almost all companies), but not 100%. Bringing up just accounts payable is silly, as if it's the only item on the balance sheet; Tesla's total assets are 27,9B and total liabilities are 22,6B. You have no clue what the current price on ZEV credits is. And yes, duh.
Someone failed math.
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It really isn't. $230M it's an order of magnitude less than cash on hand.
No, it's an order of magnitude less cash than they had on June 30th. They've been burning more cash, probably North of $600MM which means that the $230MM payment due in a few weeks is pushing 17-18% of cash reserves.
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1) A/P is certainly a valid consideration when a company asks their vendors to refund cash. This request made by Tesla was a clear indicator of distress, not a negotiating tactic.
2) Meeting the unrestricted cash on hand requirement (actually $920m+$400m=$1.32b) for the March converts occurs in approx 11 weeks (Jan 1).
3) As requested, citation from the covenants document:
https://mobile.twitter.com/Pau... [twitter.com]
4) As of mid-August that figure was $1.69B per the WSJ. But as you know Tesla does not break out custome
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$230M is nothing.
Bullshit. There are 7 companies on the planet that can pull $230m out of their liquid assets and not notice it, and even they can only do that because they don't treat it as 'nothing'.
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Bullshit. There are 7 companies on the planet that can pull $230m out of their liquid assets and not notice it
Inquiring minds wish to know. Which seven?
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April, based on the balance sheet. Then rolling puts based on the poor manufacturing quality, executive exodus, bond yield crash, etc.
No worries about freedom from oil. The offerings from Jaguar, Mercedes, and Audi will supplant Tesla and drastically increase adoption with more affordable models. Long some NIO too.
Love the electric car concept, definitely planning on buying one of the aforementioned three when the time is right.
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No, Tesla will be in pretty much the same position it is now... With a stock price far in excess of any reasonable value based on revenue and billions of dollars in bonds coming due over the next four
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Yes, he is. Short sellers help make the market, along with every other participant who brings money to the table.
Do you see Jeff Bezos bitching about shorts? Did Bill Gates whine about them, back in his day? How about Steve Jobs?
Or the nutty industrialist who is apparently Musk's role model, Howard Hughes?
No, those guys all just went to work in the morning, focused on company business, and came home at night. Would be nice if Musk would try that once in a while, just to see how it goes. I'm through car
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That doesn't make him wrong. The matter really has nothing to do with Musk. Without insider knowledge shorts are nothing but pure gambling, they aren't needed for economic benefit, you can simply vote for the segments you believe will win and you've accomplished the same thing as shorts are meant to do and might do a better job of resisting the poison where an entire industry drops in share
WRong (Score:1)
Without insider knowledge shorts are nothing but pure gambling, ...
Shorts are accountants and lawyers and others who really analyze a company's books. They knew about Enron and Lehman before they crashed.
We don't wake up one day and say, "I hate Tesla. Musk is a jerk! Rei flamed me! I'm gonna short!!"
Tesla is losing money, it's cash flow negative and it's piled high in debt - for starters. It can only operate with continuous cash infusions. And it's priced at $270+ a share.
OK?
A company like that and off of the top of my head, I think a fair market value is about $40ish
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There are only TWO reasons to give a crap about the stock price:
1. You believe your job as CEO is on the line because the price is dropped too much from pressure from shorts and the stockholders pressured the Chairman and the board to replace the CEO.
2. You need to have a higher stock price to sell more stock at a maximum value to continue funding operations (running a negative cash flow), and for every dollar your shares drop in value it is that many more shares you must sell
My guess is it is much more
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You may think you have an emotional connection to the company whose stock you hold, but it is completely imaginary."
That would be entirely true, if not for the others doing the same thing. As it is, there is some connection to the company. One, other
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Also, share price most definitely has an impact on the companies credit. Which for a company like AMD which has produced superior technology to Intel and needs to ramp up and expand to capitalize on it is a very big deal.
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Why not both?
In other news, Musk is underwriting drinking water filtration for Flint Michigan schools and households with the highest contamination levels. That's pretty damn awesome, but calling that cave diver a pedophile is pretty damned scuzzy.
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You're two years ahead of where the actual work on Flint's water system is.
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He's losing it. (Score:3, Insightful)
Of course, a lot of that threshold is crossed not that much by him but by the public perception, but the overall effects will be indistinguishable in the long run. I hope he manages to claw back on this. Because it would really be a pity if not.
Mercedes sales decline (Score:1, Interesting)
(while sales of the Mercedes-Benz C-Class are down 28 percent through September)
The Mercedes dealership in Atlanta is basically a huge, 4 story parking garage. About half of the front bottom level is the dealer showroom and there is big facade on the front of the building, so it doesn't quite look like a typical parking garage. The other half of the front of the building is the entrance to the service area -- I think it is about two big garage doors wide. If you drive by before the Dealership opens at (I think) 8 am, you'll see a line of Mercedes cars waiting to get into the servic
German cars (Score:1)
I think German cars are designed for the leasing market - people who keep their cars 3 years max. Mercedes, BMW, Audi.
Here's another anecdote, this guy bought a Mercedes $100K+ something or another and at 56,000 miles the transmission goes out. He brings it into the dealer and they say, "Yep, it's broke. It'll be $7,000 to fix."
Guy says, "What?! It only has 56K on it! Isn't it under warranty?!"
"Nope! It's 3 years, 36,000 miles."
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There's a name for that. I think it's called survivorship bias.
Are there any Victorian houses where you live? I bet they're all solidly built. They built shit houses in the old days too, but those all fell down so you don't see them.
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"The dealership now usually parks a C-class and another car behind that window, and they keep them lit up in spotlights 24/7. It's not a very tasteful display "
Sure, in Amsterdam's red light district they show whores for hire exactly the same way.
Very tasteful.
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you'll see a line of Mercedes cars waiting to get into the service area
[...]
needs to be frequently brought in for fixing
I own a mercedes car. I bought it second hand, several years ago.
It gets love and attention from the service team several times a year. There's the annual or mileage service, there's the Government mandated MOT, there's the way I abuse the tyres and brakes. This year there was the fuck-off big pothole I hit in France that buckled a wheel.
Mercedes sell a lot of cars. Why the fuck would anything I've mentioned above, multiplied by the number of cars they sell, lead you to assume that they're in need of freque
Tweets? Really? (Score:3, Insightful)
Now we gotta have news stories on the front page about ANOTHER jackoff's tweets? You know, for a group of nerds who are supposedly above the plebian social media, we sure do hear a lot about tweets around here.
I thought this was a tech site and not just another outlet for billionaires' bullshit.
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So? Tesla's "official announcements" are just press releases, meant to boost their stock price. Why are they being reported on Slashdot.
And it's not his "tweets" that have gotten Elon Musk's dick caught in a wringer, but the fact that he tried to game his stock value by claiming the company was going private. It's not the tweet that was illegal
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You know, for a group of nerds
Nerds are typically interested in people who do cool shit like launch things into space and shake up a 130 year old car industry with technology.
Don't speak unless spoken to. (Score:2)
"Terms of the settlement included requiring Tesla to rein in Musk's social-media communications, but it was unclear when Tesla intends to implement that.... The settlement has yet to be court-approved."
"In exchange for not having to admit guilt, you agree to give us money and give up your First Amendment rights."
Yeah, that's not gonna work for me. Because it implicates speech, the government should be forced to prove the crime in court, and thus that the speech was part of the crime (like advertising illegal drugs or fraud)...or give up on restricting speech.
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The government was quite happy yo go to court, they *agreed* to this as part of a settlement. Said agreement is still under scrutiny by the court for being too lenient.
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The fact that Mr. Musk and Tesla decided $40 million in fines is a less expensive proposition than paying lawyer fees to defend themselves in court speaks volumes about the advice they got.
The SEC attempt to influence Tesla with the least drastic measures is actually very responsible - had Tesla kept its part of the bargain, the stake holders would have been exposed to significantly less uncertainty and volatility.
Regretfully, it seems Mr. Musk has seen the writing on the wall and is trying desperately to g
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You don't "settle" unless you know that the consequences of not settling would be much worse.
It's a voluntary agreement to avoid - what must be almost inevitable - formal charges.
Not even an idiot like Musk "settles" for that kind of money / restriction without having considered the alternative.
If anything, I think that "settling" with a government entity should be what's illegal. Much like the UK tax authority (HMRC) "settling out of court" with people like Facebook and Apple on their unpaid tax.
Shouldn't
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Both preorders and new orders, but only for a small subset: US and Canada only, LR, PUP, non-lease, no air suspension, no tow package. Tesla is preparing for both their European launch and production of a broader range of options shortly. Pre-orders have priority, but only for within their config and market.
Sedans come before crossovers because they require less batteries for the same range. So long as you can sell as many as you can make, that's what you want first. Whenever you become demand limited, r
There's another outstanding SEC investigation (Score:4, Insightful)
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The SEC should investigate Bloomberg's "sources" of information. One disputed story and a tech stock drops by 50%. I'm willing to bet their anonymous sources benefit in stock market swings.
He's delivering to a years-long waiting list (Score:5, Insightful)
The Model 3 "sales" metric right now is actually how many he's able to produce to satisfy purchasing decisions people made a long time ago, not how many people went out and made a purchasing decision today.
I don't see how the head-to-head comparison against current sales data of other cars could be meaningful without knowing whether the Model 3 waiting list is growing, shrinking, or staying about the same.
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None.
Pick just about any magazine off the shelf and count how many Ford advertisements you see in it. Watch an hour-long TV program and count the number of Chevy commercials shown. Think about how much money traditional automakers spend on advertising. And realize that the only reason they spend that much is because it *works* to create more demand for their product. That advertising is worth the cost to generate sales.
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You can't compare waiting lists to other car manufacturers who don't have them as waiting lists introduce an additional variable on demand (wanting it now, and cognitive dissonance to name two of those variables). Additionally the "healthy" view of a waiting list for a company like Tesla would be for the waiting list to steadily reduce, but that would play into the opposite narrative you're trying to judge.
The irony (Score:2)
Musk ... a little like Banksy, perhaps? (Score:2)
I find it interesting so many investors are trash-talking Elon Musk and his unwillingness to just "pipe down and start acting like a typical, boring big business CEO". Yet you see all the praise of the street artist Banksy, when he trolled buyers at the Sotheby's auction with his self-shredding painting someone paid $1.4 million for.
Of course, what we're going to see with that situation is that the value of the painting will almost DOUBLE thanks to those antics, and both Sotheby's and Banksy win tons of fr
no goatse in space? (Score:1)
I came here expecting the first post to be about etching goatse on glass for future generations to enjoy. Yet not a single post that my simple search found.
Sad.