General Discussion: 2018 Investor Roundtable

[SPadival]

Pardon me from going elsewhere than the taking private story. But! Tesla was struggling with logistics lately which wasn't able to keep up with increased production. Tesla filled a few overflow lots with vehicles to the point that some were suggesting that there was insufficient demand and this was really a stockpile. Last week, Tesla started to move a significant number of cars away however, presumably out to deliveries. See this youtube channel with a lot of drone fly-overs to judge yourself (If you take delivery in the coming weeks and you find a discarded Carl's Jr wrapper on the backseat, the last video explains that too.)

Debunked already. Please don't re-spread FUD here.

TSLA Market Action: 2018 Investor Roundtable

TSLA Market Action: 2018 Investor Roundtable

 

[mongo]

Debunked already. Please don't re-spread FUD here.

TSLA Market Action: 2018 Investor Roundtable

TSLA Market Action: 2018 Investor Roundtable

I think you misunderstood @schonelucht , I believe they are saying any logistics challenge (which may or may not have existed) is now in the past and the lots are being drained.

 

[22522]

Can a trust with a million in assets invest in a private company?

 

[saniflash]

Other than the possibility of the deal not going through (or taking a long time), it's a win.

Even in those two cases -- with turning a profit in Q3 and Q4, short pressure should go down and price should go up significantly. Apart from the fact that a profit increases the value of a share from a purely financial standpoint.

so really from this point I don't see huge downside but significant upside.

 

[SPadival]

I think you misunderstood @schonelucht , I believe they are saying any logistics challenge (which may or may not have existed) is now in the past and the lots are being drained.

We have already established that it is not a Tesla site and known to be a distribution center belonging to a third party auto hauler that has been doing this for ages. So why do we have to link to FUD spreader's youtube channel that claims that a Tesla employee is driving a Model 3 to a Drive In restaurant in the latest video?

 

[mongo]

We have already established that it is not a Tesla site and known to be a distribution center belonging to a third party auto hauler that has been doing this for ages. So why do we have to link to FUD spreader's youtube channel that claims that a Tesla employee is driving a Model 3 to a Drive In restaurant in the latest video?

I figured it was due to the videos of vehicles moving out of the lot, but I'll admit to only reading the titles.

 

[EinSV]

Since SpaceX seems to be the model for private Tesla, I thought the SpaceX Cap Table might be helpful -- shows valuation increase over the years (from www.equidateinc.com):

FundingAmt MarketCap Shares PerShare

Series I Apr, 2018
$510M $28B 160M $169.00

Series H (Follow-On) Nov, 2017
$100M $21B 160M $135.00

Series H Jul, 2017
$350M $21B 160M $135.00

Tender offer Mar, 2016 —
$15B 160M $96.42

Series G Jan, 2015
$1.0B $12B 150M $77.46

Tender offer Dec, 2012
— $4.5B 150M $34.68

Series F Oct, 2010
$51M $970M 130M $7.50

Series E Mar, 2009
$47M $550M 120M $4.50

Series D Jul, 2008
$29M $420M 110M $3.88

Series C Feb, 2007
$32M $300M 100M $3.00

Series B Feb, 2005
$11M $160M 80M $2.00

Series A Aug, 2002
$61M $71M 71M $1.00

https://equidateinc.com/company/space-exploration-technologies

 

[EinSV]

From the table above, SpaceX rose from a $420M valuation in 2008 to $28B in 2018.

And share price rose from $3.88 per share to $169 per share over the same period -- a 43.5X return in 10 years. One of the best investments around over that time period.

I am very excited by the prospect of Tesla going private. Eliminating short-seller FUD and all the distractions from the public market's hyperfocus on short-term results should provide a better environment for Tesla to thrive through the extreme growth period on the horizon.

 

[schonelucht]

We have already established that it is not a Tesla site and known to be a distribution center belonging to a third party auto hauler that has been doing this for ages. So why do we have to link to FUD spreader's youtube channel that claims that a Tesla employee is driving a Model 3 to a Drive In restaurant in the latest video?

Because who owns the lot isn't that important to us. It's about what happens to the cars which are owned by Tesla. Those cars being shipped out of that lot in larger numbers than arrivals is new information.

 

[lklundin]

Because who owns the lot isn't that important to us. It's about what happens to the cars which are owned by Tesla. Those cars being shipped out of that lot in larger numbers than arrivals is new information.

With Tesla being the ever innovative company, I wonder if they leverage the capabilities of the M3 with regard to managing this temporary buffering and reshuffling of the cars.

Could each M3 be summoned to drive (up on)to the truck that ships it out?

If not, could it at least indicate to the relevant driver where it is, e.g. when the truck that is to ship a given set of M3s arrives, the truck driver has a tablet that receives for each M3 its (GPS) location and plots it on a screen overlapped on a satellite photo, and each M3 blinks its lights in a certain way, to attract the attention of the driver.

Since this logistics task will only get more challenging with growing production and especially with the growing set of options I would expect the software engineers at Tesla to invest some resources in (also) automating this.

 

[ggies07]

With Tesla being the ever innovative company, I wonder if they leverage the capabilities of the M3 with regard to managing this temporary buffering and reshuffling of the cars.

Could each M3 be summoned to drive (up on)to the truck that ships it out?

If not, could it at least indicate to the relevant driver where it is, e.g. when the truck that is to ship a given set of M3s arrives, the truck driver has a tablet that receives for each M3 its (GPS) location and plots it on a screen overlapped on a satellite photo, and each M3 blinks its lights in a certain way, to attract the attention of the driver.

Since this logistics task will only get more challenging with growing production and especially with the growing set of options I would expect the software engineers at Tesla to invest some resources in (also) automating this.

A few years ago there was some wonderful dreaming how Tesla could just turn on the autonomous driving software and let them deliver themselves. Obliviously Tesla hasn't reached full autonomy yet, but I would think they could geofence to each service center and send them out in batches.....Then turn off the Enhanced driving software if the customer did not pay for it.....

 

[Reciprocity]

I think there's a huge mistake in this assessment, in that all the call options need to be exercised in order to have any shares to return. So revisiting the scenarios ...

if there is a squeeze - the shorts need to exercise their call options in order to limit their losses to whatever the strike price is. 400 Jan 19's are still going for $28 per option, so a short who's holding it will still have paid $428 per share if they exercise. The options don't get into the pennies on the dollar range until you reach strike prices in the 500 and up range.

If there is no squeeze - the shorts will be out the cost of the call option plus the cost to cover their short position. Not a doomsday scenario for the shorts, but collectively, they'll still be out almost $12 Billion.

If there is no deal and the stock stays elevated - yeah, this is probably the worst case scenario for longs, with the shorts getting a chance to profit. Not likely, as we'll know from TMC's collective wisdom whether or not shareholders will support the deal.

If the SEC finds an issue - I don't see this happening, since there was no selective disclosure, and we did get the Saudi Arabia $2 Billion investment that we don't really know the details on that same day.

All in all, yes the shorts have an out, but all they'll get is the chance to have fixed losses, with very little gain.

Not if they expire worthless. You can execute the call options or let them expire. Its a right to purchase not a mandate to purchase.

The shorts dont own call options. They borrow the stock and sell it at todays price and hope to buy it back to replace the loaned shares at a lower price. That price is now capped at 420. If they borrow at 380, their downside risk is 40$ per share + interest for borrowing the stock. They can then buy long dated calls to protect against a squeeze that wont happen because the price is capped at 420 by institutions that need to sell upwards of 60M shares. Shorts could take out 35M and there still be 25M to keep the stock price bellow 421. But lets go into fantasy world and say a squeeze is possible. Because Elon nuked the long dated calls and they are worth nearly nothing now, shorts can buy them for pennys on the dollar and use them as squeeze insurance. The added benefit to them is if the deal falls through, the long calls can still give them profits as the prices return to pre 420 cap levels. They have burn protection if the stock price spikes and they win if the Elon is in trouble with the SEC with their short position. Basically, Elon handed shorts a Win, Win, Win while completely screwing the people with long dated calls. Also screws anyone who cannot convert to private equity and limits them to gains of just 8% over the prior years high. This is a bad deal for a lot of people including long time supporters. 420 is to damn low.

 

[neroden]

Can a trust with a million in assets invest in a private company?

I think a trust might need 5 million. An individual with a million can invest in a private company. Look up the "accredited investor" definition.

 

[neroden]

From the table above, SpaceX rose from a $420M valuation in 2008 to $28B in 2018.

And share price rose from $3.88 per share to $169 per share over the same period -- a 43.5X return in 10 years. One of the best investments around over that time period.

I am very excited by the prospect of Tesla going private. Eliminating short-seller FUD and all the distractions from the public market's hyperfocus on short-term results should provide a better environment for Tesla to thrive through the extreme growth period on the horizon.

So, if Tesla actually properly goes "private", it would have to have fewer than 2000 stockholders.

I'm not OK with that.

If Tesla remains "public" in the sense of having to file SEC reports, but delists from the stock market and eliminates trading (only having liquidity like SpaceX), *that* I am totally OK with. This is also a *lot* easier to accomplish.

 

[mongo]

They can then buy long dated calls to protect against a squeeze that wont happen because the price is capped at 420 by institutions that need to sell upwards of 60M shares.

The shares held by non-going-private institutions will automatically pay out at 420, they don't need to sell at all. They can also sell them to shorts for more than 420.

 

[keydiver]

A question for those of you more investing-savvy than I am (yes, I'm a newb):
I want to put a sell order at $600 for 50 of my shares, just in case there is a squeeze while I am out of the country until September. What confuses me is the terminology on the Ally page here:

Is "LIMIT" the option I want to select? Sorry for such a newby question, but Tesla is my only investment.

 

[mongo]

A question for those of you more investing-savvy than I am (yes, I'm a newb):
I want to put a sell order at $600 for 50 of my shares, just in case there is a squeeze while I am out of the country until September. What confuses me is the terminology on the Ally page here:

Is "LIMIT" the option I want to select? Sorry for such a newby question, but Tesla is my only investment.

Yes a sell limit order, GTC (good till canceled)

 

[Reciprocity]

The shares held by non-going-private institutions will automatically pay out at 420, they don't need to sell at all. They can also sell them to shorts for more than 420.

Yes, they can just sit and sell at 420 after the deal is done. But what happens if the price spikes to 450 before the deals is done. They have a duty to sell for more then the 420 they will get in a week. Its silly to think they wont sell at a higher price. This selling pressure will cap the price of the stock, they will start selling above 420 and stop bellow 420, this will cap the stock at 420. Because there are way more institutional shares that MUST sell because they are in funds then shorts, there will be no squeeze. Its pretty simple really if you look at it objectively.

Now I could be wrong that institutions will sell above 420, maybe they will hold on and lose that money and settle for 420 a week later. My guess is that they will have a standing set of orders at some amount above 420 and will stop selling as it gets down to 420. Everytime it spikes up, it will run into the massive selling pressure because they are 2:1 vs the number of shares short.

 

[AWDtsla]

Yes, they can just sit and sell at 420 after the deal is done. But what happens if the price spikes to 450 before the deals is done. They have a duty to sell for more then the 420 they will get in a week.

It can go to 1000, and they can still sell at 420. I'm sure there will be a shareholder lawsuit, there pretty much always is. Efficient markets theory means that it can't stay at 1000 for long, or that the market is valuing the newly created private shares at 1000, despite the buyout price being 420.

 

[mongo]

Yes, they can just sit and sell at 420 after the deal is done. But what happens if the price spikes to 450 before the deals is done. They have a duty to sell for more then the 420 they will get in a week. Its silly to think they wont sell at a higher price. This selling pressure will cap the price of the stock, they will start selling above 420 and stop bellow 420, this will cap the stock at 420. Because there are way more institutional shares that MUST sell because they are in funds then shorts, there will be no squeeze. Its pretty simple really if you look at it objectively.

Now I could be wrong that institutions will sell above 420, maybe they will hold on and lose that money and settle for 420 a week later. My guess is that they will have a standing set of orders at some amount above 420 and will stop selling as it gets down to 420. Everytime it spikes up, it will run into the massive selling pressure because they are 2:1 vs the number of shares short.

Right, so in that case, 420 is the floor and the fund ask price is the cap?

It can go to 1000, and they can still sell at 420. I'm sure there will be a shareholder lawsuit, there pretty much always is. Efficient markets theory means that it can't stay at 1000 for long, or that the market is valuing the newly create

Would efficient market theory apply in this case when shorts must buy, but everyone else knows the stock is valued at 420? No longs will be picking it up much above 420.