Elon hints he'll buy back shares and "taking Tesla private"

[Reality]

Are you seriously considering that he made a botched joke and instead of admitting it wasn't funny, he just decided to roll with it, convince the board to keep a straight face and take the jest seriously. So they're now preparing the biggest buyout of history... to save a joke.

i think there is a non zero % chance one of the following is true:

1) He made a dumb joke without realizing how serious it is (affluenza of sorts) and now has to figure out how to fix it, i think the outcome here is the claim of a deal "falling through" or something like that


2) He wanted to burn the shorts because he really really hates shorts, but didnt realize that he might have committed securities fraud, i mean he has walked that line on twitter so many times he is probably numb to it.

 

[neroden]

So it seems that the term for the sort of deal Musk is talking about is "stub equity", though this would be the mother of all stub deals. Stub equity deals seem to be consistently sloooow to close, because they're complicated.

Dave Morton, Tesla's Chief Accounting Officer, came from Seagate where they did a stub equity privatization.

 

[Reality]

Question for Bulls, preferably ones with market experience


Do you feel Tesla should be trading right now? Is there anything that would make this ok or not ok?


I feel like both sides should agree that trading should have been halted until a material release of information (ie not a blog post) was made. Curious if you feel the same.

 

[Reality]

So it seems that the term for the sort of deal Musk is talking about is "stub equity", though this would be the mother of all stub deals. Stub equity deals seem to be consistently sloooow to close, because they're complicated.

Dave Morton, Tesla's Chief Accounting Officer, came from Seagate where they did a stub equity privatization.

Source? Reasonable speculation but Morton has been there for like a month

 

[Mario Kadastik]

Source? Reasonable speculation but Morton has been there for like a month

Well Elon might have had that in mind when he picked him and he did approach the board a week ago with the motivation and financing outline and the board has been meeting many times since to do the diligence.

 

[oneday]

So it seems that the term for the sort of deal Musk is talking about is "stub equity", though this would be the mother of all stub deals. Stub equity deals seem to be consistently sloooow to close, because they're complicated.

Dave Morton, Tesla's Chief Accounting Officer, came from Seagate where they did a stub equity privatization.

In the Seagate case it looked like it took about a year. I wonder if Tesla can accelerate this? Probably will need to wait to see more details to really know anything.

Here is a link to a Harvard case study on the Seagate deal. It costs $9 but could be worth a read.
Seagate Technology Buyout

 

[Boomer19]

Question for Bulls, preferably ones with market experience


Do you feel Tesla should be trading right now? Is there anything that would make this ok or not ok?


I feel like both sides should agree that trading should have been halted until a material release of information (ie not a blog post) was made. Curious if you feel the same.

i think you should go back to your coop and
take a timeout

 

[mongo]

3k words:

 

[Reality]

i think you should go back to your coop and
take a timeout

see I dont get this, it's a reasonable question.

Whether it is true or not I dont really care when it comes to the question. I am questioning the handling of this by the SEC not the stance of your investment.


Do you know how many BULLS with long dated OTM calls got destroyed yesterday? lots of MM got out because of the way this has been handled and today is allowing for possibly more games. I just dont think it should be trading and wanted to know if bulls agree.

 

[Reality]

 

[Boomer19]

see I dont get this, it's a reasonable question.

Whether it is true or not I dont really care when it comes to the question. I am questioning the handling of this by the SEC not the stance of your investment.


Do you know how many BULLS with long dated OTM calls got destroyed yesterday? lots of MM got out because of the way this has been handled and today is allowing for possibly more games. I just dont think it should be trading and wanted to know if bulls agree.

i understand the implications. my response was more about your other antics as i was reading through the thread.

 

[Reality]

i understand the implications. my response was more about your other antics as i was reading through the thread.

Don't be so emotional, I am down, you are up. I am still here to take the beatings and get banned for light offenses (3 and counting).

I honestly want bulls takes.

 

[mongo]

 

[Reality]

THe best thing going for the bulls right now seems like the stock isn't reacting like someone is just sitting on a bid

 

[Boomer19]

Don't be so emotional, I am down, you are up. I am still here to take the beatings and get banned for light offenses (3 and counting).

I honestly want bulls takes.

my take is that i’m interested to see how the offer will be structured;

i’m guessing exchange offer; where those opting for private shares must be accredited or QIBs

all others will have to take cash, including those in investment vehicles not allowed to hold private equity shares.

and the tax consequences of the deal for holders.

 

[adiggs]

Here's what is bothering me about this offer. I think I can finally put this into words.

The overall situation I see with Tesla today, reasoning by analogy (which is its own problem, but it is nonetheless how I see things today), is very much the $30 Tesla of several years ago that went crazy and reset from $25-$35, to $130 to $180 in a pretty short time window.

I see today's Tesla has having a lot of the same factors line up for it, and if anything, even HIGHER short interest making for an even more tightly wound spring, getting set to take off. In today's dollars, that means I see TSLA getting ready to jump from $350 to $1800 over the next 3-12 months, with the big kickoff starting with the Q3 earnings (and therefore some front running leading into earnings).

Back in 12/13, we first had Model S in really limited numbers, but it was amazing. Then it could be built, and the whole view of the company changed. Reset.


Today, we're hearing that Model 3 is amazing. It's pretty clear to me that the ramp woes are "over" (we're not going to see a quarter where Tesla suddenly forgets how to build M3, and produces 5k units total). 50k units a quarter, with overal company profitability is going to reset the proper valuation of the company.

I don't know it'll be $350 to $1800 kind of reset, but I think doubling is a really low estimate. If I'm right, and there are people with deep pockets who are also seeing the same thing, then of course they want to buy today at $420, and do it in a way that keeps the stock from taking off today. So they can get as much of the increase for themselves as possible.

To me, the $420 price isn't a go-private / buyout premium - it's a discount.


Leading to the obvious corollary - for those shares that I can follow along privately, I will. Because of restrictions on different accounts, I don't expect to maintain even 50% of my current holding through the conversion (not by my choice).

 

[TDog]

@adiggs I agree with you completely. Going private will screw the shorts but many loyal long retail investors are going to end up as collateral damage.

 

[TintDepot.com]

Here's what is bothering me about this offer. I think I can finally put this into words.

The overall situation I see with Tesla today, reasoning by analogy (which is its own problem, but it is nonetheless how I see things today), is very much the $30 Tesla of several years ago that went crazy and reset from $25-$35, to $130 to $180 in a pretty short time window.

I see today's Tesla has having a lot of the same factors line up for it, and if anything, even HIGHER short interest making for an even more tightly wound spring, getting set to take off. In today's dollars, that means I see TSLA getting ready to jump from $350 to $1800 over the next 3-12 months, with the big kickoff starting with the Q3 earnings (and therefore some front running leading into earnings).

Back in 12/13, we first had Model S in really limited numbers, but it was amazing. Then it could be built, and the whole view of the company changed. Reset.


Today, we're hearing that Model 3 is amazing. It's pretty clear to me that the ramp woes are "over" (we're not going to see a quarter where Tesla suddenly forgets how to build M3, and produces 5k units total). 50k units a quarter, with overal company profitability is going to reset the proper valuation of the company.

I don't know it'll be $350 to $1800 kind of reset, but I think doubling is a really low estimate. If I'm right, and there are people with deep pockets who are also seeing the same thing, then of course they want to buy today at $420, and do it in a way that keeps the stock from taking off today. So they can get as much of the increase for themselves as possible.

To me, the $420 price isn't a go-private / buyout premium - it's a discount.


Leading to the obvious corollary - for those shares that I can follow along privately, I will. Because of restrictions on different accounts, I don't expect to maintain even 50% of my current holding through the conversion (not by my choice).

You can buy more shares now & keep your investment when/if it goes private. You don't have to sell your shares; they just become private shares.

 

[adiggs]

You can buy more shares now & keep your investment when/if it goes private. You don't have to sell your shares; they just become private shares.

I'm thinking about that. The challenge for my situation is that the bulk of my shares come from a really early purchase ($27) in a Roth IRA. If I can't continue holding them in that type of account, then I don't see a reasonable way to move that money out of and back into Tesla without generating way more tax and penalty liability than I'm willing to take on.

(Sheer dumb luck - I didn't really think about it when I made that purchase; obviously it's my brilliant investment decision making ).

 

[mongo]

I'm thinking about that. The challenge for my situation is that the bulk of my shares come from a really early purchase ($27) in a Roth IRA. If I can't continue holding them in that type of account, then I don't see a reasonable way to move that money out of and back into Tesla without generating way more tax and penalty liability than I'm willing to take on.

(Sheer dumb luck - I didn't really think about it when I made that purchase; obviously it's my brilliant investment decision making ).

I assume you've had the Roth more than 5 years based on the stock price, so you're speaking of the 10% early withdrawl penalty and income taxes on future earnings?