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Dan Detweiler
Active Member
If it's trading at $500 I'm selling...deal or no deal. I wish I could stay in through privatization but I need the money for my downpayment on my 3. I know I will be missing out on huge, huge gains but I went in with the thought of growing my downpayment and it will have done that in spades.
Dan
The problem with the thesis of these high worth individuals is that the majority of their wealth isn't liquid. Big banks must be involved in some way or another, for the simple fact that they would have to approve the massive loan that they'll be extending them based on their stocks. Secondly, the structure is not going to be straightforward if the goal really is to allow retail shareholders to remain shareholders and still ditch a majority of the negative consequences that come with being public. That's another part where high finance and legal must be involved. (True regardless if it is is a cabal of high net worth rollers or something else entirely like a sovereign wealth fund) So there is a lot of scope for the usual underwriters, investment banks and others to get involved. Guaranteed they are all sniffing each other out on who is best positioned to get the deal.
But you would sell before the privatization for $500, not during it for $420. Right?
I think there is something here we are not privy to. Elon said to expect the “short burn of the century” which I don’t think was a 30-40% hit.
The thing is, Elon is a wild genius. Shorts hope this means he is delusional, but these are the guys saying Tesla is doomed for 15 years. Being consistently wrong for 60 quarters in a row has galvanized them.
The other option is, Elon turned his considerable ingenuity towards burning the shorts, and has something cooked up behind the scenes that will break the backs of shorts silly enough to stay in the trap while he tells them it is about to close on them. Clearly the shorts have become a personal vendetta issue for him.
127% of float was long at the privatization announcement, and 27% was short. If he can structure the deal in such a way that close to 100% of float (out of 127%) can convert to private shares before the shorts cover from that pool, then your 100x cover to close becomes a reality.
I imagine he has a lot of gears turning and levers being pulled behind the scenes to make sure when the music stops there are fewer chairs than there are players.
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The Special Board of Independent Directors will give finale approval if the buyout share price is fair.
I interpreted "good morning" tweet as "wake up", as in, a wake up call to all the shorts and other haters as to where Tesla valuation actually is.
Now something I don't understand here: if shorts are forced to cover somewhere between close to all time high and $420, how is this already not a short burn? Most of them are in at way below that. People are talking about this as if it's some kind of a gift to shorts. It's a sizable loss plain and simple, yet people here are talking as if it's kind of "not good enough" and they want a squeeze. Shorts were short because they wanted profit, and they are getting something quite different and no chance of recourse. Sure a further squeeze that happen but if TSLA never drops below 360 before the deal is finalized, that's bad enough isn't it???
Now something I don't understand here: if shorts are forced to cover somewhere between close to all time high and $420, how is this already not a short burn? Most of them are in at way below that. People are talking about this as if it's some kind of a gift to shorts. It's a sizable loss plain and simple, yet people here are talking as if it's kind of "not good enough" and they want a squeeze. Shorts were short because they wanted profit, and they are getting something quite different and no chance of recourse. Sure a further squeeze that happen but if TSLA never drops below 360 before the deal is finalized, that's bad enough isn't it???
Fact Checking
Well-Known Member
Couldn't the shareholder vote alone be such an event?
Voting shares cannot be lent out - and AFAIK the shares are recalled a couple of weeks before the shareholder voting.
I suspect a large part of the short interest comes from institutional longs who are borrowing their shares for a small fee. Many of those institutional investors would be required by their bylaws to vote during such an event.
This is one of the most important corporate decisions of Tesla since it's 2010 IPO, by a large margin. What is the percentage of shareholders who'd want to vote? If it's above 100% of the float then the short squeeze triggers automatically: the recalled borrowed shares cannot be borrowed from other sources and cannot be bought on the market from the rest of the float either.
Volkswagen 2008 short squeeze, take 2, with an ... order of magnitude more severe trap that won't be over in a few short days...
Am I missing anything?
Fact Checking
Well-Known Member
BTW., does this mean that those 27% of shorts diluted Tesla's market cap by about 27% over the years?
I.e. can we make a back-calculation from that, and assume that if these 27% shorts are forced to cover, that it would effectively reduce the number of outstanding shareholders (every short share covered means a long share is purchased and there's one share less effective owner), i.e. shorts covering would increase the value of Tesla similar to a massive share-repurchase transaction, with anti-dilutive effects that permanently rise the stock price?
I believe most people so far assumed that a short squeeze would be temporary (quick spike up, then down) - but could the rise in share price be actually permanent due to the anti-dilution effect?
Totally agree. When Musk tweeted about a massive short burn in a specific short time span, I thought he’d made a big mistake, because he couldn’t control short reaction to whatever positive development he knew was coming (5k production, China, etc).
But now we know he wasn’t thinking business development, he was thinking financial development: something that he can completely control. He can set the terms. He can raise the price whenever he wants. He sets the timing.
It really doesn’t take a genius to destroy the shorts in this unprecedented situation: a massive short interest against a company with fabulous prospects and extremely passionate supporters.
I assume shorts by instinct hunker down when threatened. They don’t sell at the first whiff of trouble. They shout louder and even double down. The smarter ones are going to get out or hedge very soon, but really, how many are that smart to have made a large short trade on Tesla in the first place?
Mike Smith
Active Member
Down to 366 in Germany. CNBC is running multiple articles claiming Tesla is most likely lying and will face SEC investigation. Based on nothing - just assuming Musk lied.
If the squeeze was triggered by the share recall a couple weeks before the vote, the squeeze would push the share price well above $420 and kill the deal.
(Note - no reason Elon couldn’t do this knowing the vote would fail, but the shorts would get slaughtered in the process. They would short again hoping to make back their loss on the way down. Elon announces another privatization vote at $450. Perhaps Elon invented a foolproof way to repeatedly burn shorts, at least until the SEC closes the loophole.)
It seems that way. But that in itself would be enough to push the stock above $420 and kill the deal.
Musk will go to jail no doubt about it. You cannot just tweet "Funding Secured" and then disappear like that.
mmd
Active Member
The SEC will like to invite Elon for a long chat if he engineers a short squeeze. IMHO, it will do you good to read a bit on regulation SHO and the role of market makers before making up speculative stories.
Key Points About Regulation SHO
In other real business news. Solar roof seems dead. No capacity constraint at Panasonic. it's okay to talk about the uderlying business, right? Or must we stick to the talking point given to us via Elon? Apparently Elon's aesthetic standard is too high. LOL, does he want the roof tiles to be shaped like I-phones too?
I think it's a safe bet to add the $41M annual penalty cost for Tesla in the near future for missing its employment targets at Buffalo Gigafactory.
Tesla's production problems extend to its solar roof business, too
The vote could still be for taking Tesla private, even if the SP is over 420, as long as >50% of shareholders have no intention of selling at 420 but will stay on board as Tesla goes private.
How things seem like they will be structured is unusual, and not all the usual rules apply.
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Sorry, hopelessly behind here, like 700 msgs, so apologies if this has been addressed.
I called Helpdesk at Nordnet Stockholm yesterday. The guy said I was only the second person to ask, and he thought it would be possible to own foreign private stock in a normal depot account (but not the tax shielded type since it's not traded). But of course it's still unclear what kind of asset the private Tesla (TSLAP?) will be, if this even happens at all.
I guess we are also waiting for word on details like voting, formal offer etc.
Right now I lean towards selling maybe half for cash in order to not be liquidity limited for an uncertain, long period and let the remainder be apported by "The Elon Special Ludicrous Assets Property"
or whatever. Ok, now back to my backlog ...
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