A Theory on this Week's Announcement

[Norse]

Haha, I love this!

 

[gaswalla]

Citizen-T: you are an outstanding sleuth. great work on figuring this out. I apologize for asking everyone to lower their expectations, you are totally correct based on the recent announcement.

oh yeah: here's the statement:
"

Tesla Motors Announces Offerings of Common Stock and Convertible Senior Notes

Elon Musk to Lead Common Stock Offering; Tesla Intends to Pay Off Department of Energy Loan With Interest"

 

[Johan]

Citizen-T: Outstanding precognition!

The aggregate gross proceeds of the offerings, including the options granted to the underwriters, and the private placement is expected to be approximately $830 million. Tesla intends to use the net proceeds from the offerings to prepay Tesla's outstanding loan from the United States Department of Energy, pay the cost of convertible note hedge transactions and for general corporate purposes.

 

[Zaxxon]

Citizen-T: Kudos.

 

[Don Shin]

Agreed- that was some *amazing* predicting/prognosticating! :biggrin:

 

[Blurry_Eyed]

+1!

 

[hershey101]

Once again TMC is ahead of the curve. I had bought some May $90 calls before close yesterday expecting to take advantage of the "tuesday" effect as the stock gaped up today. It didn't move as much as I would have liked, and I could have sold today the $90s for 2.5 giving me a 50% profit, but I decided to keep them because of the speculation on this thread. I'm so glad I did, those calls are now in the money, and still have 2 days to expiration, and the IV is through the roof, I think I'll be very happy when the market opens tomorrow morning.

 

[CapitalistOppressor]

I just skimmed the 10-K and could only find 5100 shares being warranted to the DOE @ $7.94, which is a far cry from a gazillion. I must be missing something.

I did also notice that the last quarter of the second 4% they awarded to Elon becomes available after the successful delivery of the 10,000th Model S.

Citizen might be onto something...

edit: Further digging suggests 3,090,111 shares under the DOE warrant (pg. 106 in the 10-K)? This is not my strong suit

I haven't checked the VIN data, but projecting forward from where we were May 1st, the 10,000th should have been delivered.. yesterday. This theory looks better than my thought that he was moving the swap announcement ahead in line.

 

[vfx]

You were so close! Elon's(Tesla) is paying back the loan witha new offering!

 

[mlascano]

Kudos to Citizen-T! Great insight!

 

[Jcmason]

Awesome call!

So, here we are again. Elon postpones the Supercharger announcement to next week and claims there is something else in store for us this week.

View attachment 22004

What could it be? To be honest I have no idea. But, despite the fact that I have a life (really I do!) I spent some time thinking about this, and I came up with a theory. Vet it for me please.

On May 8th, in celebration of knock-out earnings (an event we are all quite familiar with) Elon tweeted:

View attachment 22005

This tweet was mostly met with praise, but one snarky fellow couldn't help but deliver an underhanded dig:

View attachment 22007

To which Elon replied:

View attachment 22008

I noticed this at the time it happened, but didn't think much of it. I certainly didn't think that anything was imminent. After all, while Tesla is in a pretty good spot, they don't have the cash to be knocking off that government loan.

But, then the short squeeze came. Oh man did it come. With it, a ton of short seller money was poured into the share price, inflating it. Making it artificially high I'd argue. There are calls from analysts and investors to do an offering, to capitalize on the spike before it is gone. But on the conference call Elon said there was no plan for an offering, and if he were to do it, it would be as insurance against a hiccup, not to pay down debt.

I don't think this week's announcement is an offering. If they weren't even talking about it a week ago, then the chances of them pulling it together in time to do it this week is very unlikely. There's a lot of paperwork that goes into these things. Still, Elon's twitter conversation kept nagging at me.

Then, when I was out running tonight, a thought hit me---Elon's options! We were all over this weeks ago when the stock was in the 40s. Remember, before the financing announcement? Remember how we were thinking Elon would exercise those options he had just earned by making the company profitable? We thought that he was going to turn around and pay off the loan? But, remember how the math didn't quite work out? Remember how there wasn't quite enough money there to pay it all off?

Well, the stock has doubled since then. I think there is enough money now.

Wouldn't that be great? Right now the stock price is inflated, no doubt. All the shorts that have been all over Tesla from day one are rolling around on the floor in pain. A whole new batch of "smarter" shorts have taken their place (remember there are no shares available for shorting right now) betting that this thing has topped, ready to grab all that money that the last set of shorts lost. Then here comes Elon, and kicks them while they are down.

Not only does he pay off the loan without diluting shareholders---he changes the valuation entirely---perhaps making the current stock price a perfectly justifiable valuation (imagine, a debt free Tesla!). He would have effectively used the shorts own money to eliminate Tesla's debt. Now that is just embarrassing. Finally, that whole new set of shorts that took their place? Yeah, time for them to run for the hills.

It sure makes for a good story. I don't know if this is what is going to happen or not, but man---it would be EPIC.

Wow, what a totally awesome call, Citizen-T! You're the man. Your logic was right on the money. I'm almost as amazed at your reading of the tea leaves as I am that Elon and team were able to pull this off so fast and manage it so well.

 

[CapitalistOppressor]

Citizen-T: you are an outstanding sleuth. great work on figuring this out. I apologize for asking everyone to lower their expectations, you are totally correct based on the recent announcement.

oh yeah: here's the statement:
"

Tesla Motors Announces Offerings of Common Stock and Convertible Senior Notes

Elon Musk to Lead Common Stock Offering; Tesla Intends to Pay Off Department of Energy Loan With Interest"

Holy Moly!

- - - Updated - - -

Just wow. Great job CT. I logged in to try and figure out what was driving the after hours spike and the first thread I checked had the answer before it happened, lol.

 

[jeff_adams]

So here's a question I have. Could Elon be setting up bidding war for a large chunk of Tesla? We know Tesla is red hot right now, so maybe it's s good time to pit Apple against Google (or some one else).

 

[ShortSlaver]

So here's a question I have. Could Elon be setting up bidding war for a large chunk of Tesla? We know Tesla is red hot right now, so maybe it's s good time to pit Apple against Google (or some one else).

Yeah, I think so. After relieving themselves of the loan they're free to sell as Elon and others aren't required keep certain share thresholds. In addition they just doubled their cash on-hand potentially. So, it's definitely a sellers market in terms of their position.

I don't see Google going for it as much as Apple. Apple has loads more cash than Google and is desperate for a splash.

 

[jomo25]

Citizen-T: you are an outstanding sleuth. great work on figuring this out. I apologize for asking everyone to lower their expectations, you are totally correct based on the recent announcement.

oh yeah: here's the statement:
"

Tesla Motors Announces Offerings of Common Stock and Convertible Senior Notes

Elon Musk to Lead Common Stock Offering; Tesla Intends to Pay Off Department of Energy Loan With Interest"

Citizen-T nailed it.

 

[CapitalistOppressor]

Yeah, I think so. After relieving themselves of the loan they're free to sell as Elon and others aren't required keep certain share thresholds. In addition they just doubled their cash on-hand potentially. So, it's definitely a sellers market in terms of their position.

I don't see Google going for it as much as Apple. Apple has loads more cash than Google and is desperate for a splash.

I am always skeptical of these kind of moonshot guesses. But Elon *does* specialize in moon shots after all.

Still, taking DOE off of the books means the Feds wouldn't object. But my understanding is that Elon also has legal agreements with various investment entities that also require him to be the CEO. However, I gotta imagine those guys would jump at a major investment, or takeover by Apple.

Sill, I wouldn't give this more than a 5% chance of happening, just on general principles. But it freak the major automakers out in a huge way if it happened. And its exactly the kind of thing Apple needs. Call it 20%.

If I keep writing I'll keep convincing myself, so its time to stop now :frown:

 

[Soflason]

CT... wow, well done! Good call, this has the stock moving big time...

 

[ShortSlaver]

I am always skeptical of these kind of moonshot guesses. But Elon *does* specialize in moon shots after all.

Still, taking DOE off of the books means the Feds wouldn't object. But my understanding is that Elon also has legal agreements with various investment entities that also require him to be the CEO. However, I gotta imagine those guys would jump at a major investment, or takeover by Apple.

Sill, I wouldn't give this more than a 5% chance of happening, just on general principles. But it freak the major automakers out in a huge way if it happened. And its exactly the kind of thing Apple needs. Call it 20%.

If I keep writing I'll keep convincing myself, so its time to stop now :frown:

It's just too perfect. Apple has more CASH than the top USA automakers market cap combined. They have been a little too quiet lately and they very recently hired John Morrell (a top robotics guy, set to lead Yale's Center for Innovation but now at Apple) not too long ago. Imagine what Apple could do for UI and computer/network integrations and more importantly, super charging stations. Tesla has great ideas for these stations but Apple could actually finance the gap fill on them.

With Apple in the game things start happening a lot more sooner than later for Tesla too.

But you're right, you can write all day about it and keep convincing yourself.

 

[bhuwan]

APPL doesn't have the $$$ to buy TSLA - all of their money is tied up overseas and they aren't bringing it to the US to avoid taxes. (Cook has repeatedly asked for a Corporate Tax Holiday)

Moreover, they issued a bond to pay the dividends.

So no, APPL isn't going to buy TSLA.

Just my opinion anyways

 

[deonb]

APPL doesn't have the $$$ to buy TSLA - all of their money is tied up overseas and they aren't bringing it to the US to avoid taxes. (Cook has repeatedly asked for a Corporate Tax Holiday)

Moreover, they issued a bond to pay the dividends.

So no, APPL isn't going to buy TSLA.

Just my opinion anyways

APPL can always get another loan to buy TSLA. Maybe secured by the DOE .