TSLA Market Action: 2018 Investor Roundtable

[Matias]

Especially for us non-US investors, can we even convert our shares to non public?? Or do we have to go through some US institution? Maybe transfer our shares to something like Interactive Traders if that´s possible and then have a better chance?

I’m also wondering, how difficult it will be for EU investors to have stocks if Tesla goes private.

 

[jhm]

I wonder how Elon's CEO package will hold up after taking the company private. Suppose there is no fundamental change, just that the shares are denominated differently. The compensation package was based on market cap. This put Elon's compensation into the direct line of fire with the shorts and other market forces. But going private means the metrics have fundamentally changed. There is not market cap at least not as determined by the market. Yet the final test could be to re-IPO and demonstrate a $650B MC. That could be a very nice end point.

 

[Zhelko Dimic]

Well today was a bad day to be away from information.

Trying to digest it all.

As a peraon who is all in....I am feeling somewhat dejected.

1. Seems all my Leaps above 420 will go to zero?

2. All of my holdings are in a canadian RRSP. Essentially a tax free retirement account until you withdraw the money. Tsla was my 10-15 year retirement plan. So know to keep my shares i would have to sell....take money out of account, get taxed 50 per cent and rebuy my position. Essentially losing half my shares. I do not have funds outisde this account to buy tsla. I hope i am misreading this...and please if someone has advice, i would appreciate it.

First lost out on short term calls after Elons squeeze tweet, and now on long term calls. Cant seem to win.

You can hold anything securitized in self-directed RRSP. I'm quite sure, though not positive this conversion will happen inside of RRSP.
I have TSLA in RRSP, TFSA or my own and my wife, and RESP of my kids, and in the margin accounts of my own, and I doubt I'll have trouble keeping this new investment vehicle in any of them...

 

[RobStark]

I hope his promise to let us small fish stay in when he goes private is able to stand. I'm not an accredited investor. I'm not supposed to be allowed to own private equity. My intent is to allow all of my shares to convert, so let's see what happens.

For me, this isn't the beginning of the end. It's the end of the beginning. Sure would be nice if all of us retail minnows can keep swimming with the whales in the private ocean.

I would feel like more than an shareholder.

Like I am part of the Paypal Mafia.

Expecting Elon to call for the boys weekend at Burning Man.

 

[Lhan]

How is Elon going to structure the private equity for the retail guys? Normally you're supposed to be an "accredited investor" to hold private equity. Guess we'll see what the plan is there.[/QUOTE

This is the kind of moment where you think: damn, Elon's a freakin' super genius.

I was going to tweed Elon about the Short's baiting, but then thought - " he Musk have a plan"

 

[neroden]

This evening market cap was $64.45B on 169.8M shares, $379.57/share. Let's suppose there are still 34.72M shares short. This adds $13.18B to the gross value of shareholders, $77.63B. Converting this to 169.8M private shares works out to $457.19/share.

So simple anti-dilution of forced covering of short positions can boost the share price to $457 per share. Of course the longer shorts wait to cover, the more brutal this anti-dilution math can become. If all these shorts wait until the price hits $420, the anti-dilution price goes up to $506.

I also do not think that these prices above $420 will put the transaction at risk. Mostly the buyers from this point on are either shorts or longs who believe the private shares are worth more than $420. The latter will be inclined to vote for the transaction. Those who are opposed will do well to decide at what price they wish to sell in hopes that desparate shorts will be forced to sell at that price.

Good luck whatever your exit strategy may be.

I think these prices above $420 *do* put the per-se ("go private or get cashed out at $420") deal at risk; people who won't be able to continue on (due to being in 401ks or whatever) could be really mad and frankly I don't think Musk wants to mistreat them, or force them to make open-market sales when they don't want to. It's not just that they could sue, it's that I seriously doubt he's going to find a way to take *every* existing stockholder along with him as he takes the company private, and I think he wants to treat right the ones who are forced out.

However, I also think that it's completely plausible for the buyout price to be raised to $450 or $500 and still be funded by Musk's private equity partners (particularly if a lot of people sign on to keep their equity private). A 10% or 20% increase in a tender offer price is *well within the normal range of possibilities*. So I think the go-private deal would still be highly likely to go through, but hopefully at a higher price than $420.

 

[Zhelko Dimic]

The difference is that the longs know that shorts have no choice but to buy. The shorts can only guess at what the longs are thinking/will do.It makes complete sense for everybody presently long, to not sell anything except at ridiculously high prices. If most folks do that, the shorts will be forced to pay the ridiculously high price. Once it starts climbing as weak longs are taken out in the mid $400's the margins calls with rain down and there can be a fantastic spike. It happened with VW when everybody in the market knew in advance that the shorts had no choice but to buy, the longs acted accordingly. It should go the same here. We know that they must buy so don't sell for anything near $420.

Some of us are weak. I sold 3.01% of my leverage today. The rest of leveraged portion is available for between $430 and $450 for anyone interested in the next 2 days. Or course, I'm not touching 100% core TSLA...

 

[neroden]

My speculation on why Elon rushed out the tweet:
SP closed Monday at $341.99. Hence the $420 offer today is 22.8% above Monday's close.
Prior to the tweet, SP already reached $359.44 due to the Saudi news.
If it closed at $359.44 and Elon announced tomorrow then the offer is only 16.8% above the previous close.
Worse, if Tuesday closed higher, e.g. $365, then the offer would only be 15% above the previous close.
To make the deal look good, Elon needed to announce the plan right away instead of the next day.

Right.

And it frankly isn't a good deal for the stockholders, at least unless there's a lot more clarity about the "stay in as private equity" option. It's badly lowballed. He's trying to take it private *on the cheap*.

 

[Lhan]

So, who is going to be buying more tomorrow. Longs that want to get in below $420 so they can get private shares or shorts that want to get out before $420 or above. lots of buying pressure but where is the selling pressure?........Interesting times.

I'm getting 13 more to make it an even 600.

 

[oneday]

My question from before might have been lost in the pace of this thread.

Is anything stopping these investors (funding secured) from accumulating shares now that this has been announced? Insider trading laws?

It seems smart that they would NOW. Similar to Porsche and VW.

 

[EinSV]

My question from before might have been lost in the pace of this thread.

Is anything stopping these investors (funding secured) from accumulating shares now that this has been announced? Insider trading laws?

It seems smart that they would NOW. Similar to Porsche and VW.

It would not be in their interest to drive up the share price by buying in the open market if they wanted to do a deal at $420/share. The final price could be higher than $420.

 

[oneday]

It would not be in their interest to drive up the share price by buying in the open market if they wanted to do a deal at $420/share. The final price could be higher than $420.

Yeah, I should have said while the share price is under $420. But nonetheless I get your drift and that makes sense.

 

[UnknownSoldier]

I would feel like more than an shareholder.

Like I am part of the Paypal Mafia.

Expecting Elon to call for the boys weekend at Burning Man.

Maybe we can have an annual party like Warren Buffett has for the Berkshire shareholders? I dunno

 

[Sancho]

Right.

And it frankly isn't a good deal for the stockholders, at least unless there's a lot more clarity about the "stay in as private equity" option. It's badly lowballed. He's trying to take it private *on the cheap*.

While there is still a lot to learn about how a shareholder "stays in" after Tesla goes private, it's not at all like trying to take a company private "on the cheap." He clearly indicated that his stake will not go up. All that he is really doing is providing buyers for anyone who wants to sell at $420.

If the market price goes above $420, he may well find buyers willing to buy at an even higher price. Presumably, he could keep raising the offer price until it hits a price where there aren't enough buyers to accommodate all the sellers. I bet that price is somewhere around $600, and it could be higher.

 

[generalenthu]

I think this will get a lot funkier before settling down.

So far, Tesla was not up for sale. It was not in play. When Tim cook approached, Elon said it's not for sale and he backed off. Now that the company is up for a deal, the dynamic changes. Tesla's board will have to entertain all comers from Apple, Google, sovereign funds who might want to take control, etc. The board is obligated to act in the best interest of shareholders.

If Apple offers 500, and a majority go with it, (somewhat unlikely), Elon will end up swapping his stock for AAPL, which would suck for him and his compensation plan. Honestly, I feel this was a mistake to put TSLA in play.

 

[jhm]

I think these prices above $420 *do* put the per-se ("go private or get cashed out at $420") deal at risk; people who won't be able to continue on (due to being in 401ks or whatever) could be really mad and frankly I don't think Musk wants to mistreat them, or force them to make open-market sales when they don't want to. It's not just that they could sue, it's that I seriously doubt he's going to find a way to take *every* existing stockholder along with him as he takes the company private, and I think he wants to treat right the ones who are forced out.

However, I also think that it's completely plausible for the buyout price to be raised to $450 or $500 and still be funded by Musk's private equity partners (particularly if a lot of people sign on to keep their equity private). A 10% or 20% increase in a tender offer price is *well within the normal range of possibilities*. So I think the go-private deal would still be highly likely to go through, but hopefully at a higher price than $420.

So perhaps the difficulty is if the stock price remains below $450. If the stock price goes up to say $500 then those who need to cash out will fetch a good price on the open market. It seems this would obviate the need to raise the offer price.

The other way to look at these anti-dilution prices is that this is price at which longs suffer no loss of aggregate value as the supply of shares shrink to cover shorts. So it is approximately a fair price for Tesla after eliminating shorts through going private. So basically I am arguing that a fair price for private Tesla shares is about $457. If the market agrees, those who need to cash out will find willing buyers near or above that price all the way to the end the public issue. So no one gets forced to sell at $420. (Granted $457 after taxes might not be so much.)

 

[neroden]

I think this will get a lot funkier before settling down.

So far, Tesla was not up for sale. It was not in play. When Tim cook approached, Elon said it's not for sale and he backed off.

Citation for this story?

Now that the company is up for a deal, the dynamic changes. Tesla's board will have to entertain all comers from Apple, Google, sovereign funds who might want to take control, etc. The board is obligated to act in the best interest of shareholders.

If Apple offers 500, and a majority go with it, (somewhat unlikely), Elon will end up swapping his stock for AAPL, which would suck for him and his compensation plan. Honestly, I feel this was a mistake to put TSLA in play.

I agree. He just opened up a bidding war, potentially. We know the Google boys see value in Tesla. We don't know who else might make an alternative bid.

 

[generalenthu]

Citation for this story?



I agree. He just opened up a bidding war, potentially. We know the Google boys see value in Tesla. We don't know who else might make an alternative bid.

ELON MUSK: 'We Had Conversations With Apple'

 

[sdtslafan]

Not happy with this abrupt change.

$420 is NOT enticing at all. If Elon and Tesla actually deliver profits in q3 and q4, which Elon was highly confident about just 6 days ago, we could easily be at $500-600. That's the way to get rid of shorts, execute rather than play games.

$420 IS LOW LOW LOW

If this goes through, either I get a measly $420 or I go with the private option where I have very little liquidity and less clarity about my investment than would be required for a public company.

On the other hand, at least I'll be done with the never ending soap opera.

Still very unhappy though. We were finally getting on track...

 

[sdtslafan]

Should be 50 percent premium at a minimum

Elon knows that