General Discussion: 2018 Investor Roundtable

[Wooloomooloo]

Holy crap.

Excluding China and India (yes, they have more valuable auto companies), today Tesla became the highest value automotive company in (most of) the world. More than GM, Ford, Fiat/Chrysler, even more than BMW and Daimler:

View attachment 323830

Is that a serious enough car company for you now?

Well you forgot Toyota, VW, Honda...

 

[jkirkwood001]

Whoops, my bad - they had low volumes today and my screener missed Toyota and VW. Honda's smaller.



Thanks for catching my error, @Wooloomooloo.

 

[MP3Mike]

I'm not sure how to vote if/when this comes around. I really like the idea of removing the short manipulation, but the reduced liquidity, and likely slower appreciation rate have me concerned. (Of course maybe they can grow faster when they don't have to deal with keeping the Wall Street jerks happy.)

Also, sadly this is like Elon is going to go bear hunting with a nuclear missile. Sure, he takes out all of the bears, but the uber bulls get wiped out as well...

@TrendTrader007 What are your thoughts on this whole situation?

 

[jkirkwood001]

Tesla is not a car company. It's a technology company that currently doing breakthrough in car and energy field.

Still, cool that it's passing all these traditional auto companies. I believe it will be one of the largest companies of any type within 5-10 years.

 

[Rarity]

The writer who broke the Saudi investment for the Financial Times was interviewed by CNBC. He had a lot of good color around the Saudi investment and said that Tesla's normal bankers were caught off guard by the going private tweet. So it must be somebody like Google with the commitment. My interpretation of all of this is that Musk wants to curate his investors and he doesn't like Saudi involvement. Of course, it's a guess, until confirmed on Twitter.

 

[Foghat]

I'm not sure how to vote if/when this comes around. I really like the idea of removing the short manipulation, but the reduced liquidity, and likely slower appreciation rate have me concerned. (Of course maybe they can grow faster when they don't have to deal with keeping the Wall Street jerks happy.)

Also, sadly this is like Elon is going to go bear hunting with a nuclear missile. Sure, he takes out all of the bears, but the uber bulls get wiped out as well...

@TrendTrader007 What are your thoughts on this whole situation?

I think Elon’s trying to say own stock, don’t trade Tesla stock. Options only create the environment to manipulate a piece of paper, not own a company and its future success.

Own a piece of a company for successfull mission accomplishment not a piece of paper for more paper.

Sometimes we all forget this fundamental about this company and its mission.

I think he’s shaking out those who believe this and those who don’t.

 

[Ovulation]

Funding secured...?

Possible investors; ?

Tencent, Alphabet (Google) , DFJ, Founders Fund, Fidelity Investments, Capricorn Venture Partners, Valore Equity. Oakhouse Partners, Bracket Capital.

Except for Tencent, they are all some of the investors in SpaceX

SpaceX - Funding Rounds | Crunchbase


Tencent currently has 5% stake

If an investors goes over their books and confirms that the margin of the model 3 is what they claim it is and they are cash flow positive in Q3, they will have no problem to buy out the company for 420.

 

[neroden]

Elon is not selling his shares, and it sounds like the board will not sell theirs either.

With a few others, the majority vote is there.

Probably.

Speifically, if the stock price stays low enough, after the shorts are forced out (and they are being forced out). Let's put it this way: not if the stock price goes to $1500. It would probably be deemed illegal for them to take it private at $420 if the market price was miles above that. Funds which aren't allowed to hold private equity would sue.

Otherwise, yeah, the vote is there.

Now it’s up to how many people will sell at $420.

If that number is low, then this is a pretty straight forward deal. Maybe Elon struck a deal with the sovereign fund to have them pick up anyone selling at $420.

...but not if the stock price goes straight over $420 before the vote. Then they'll have to raise the offer. (I think Musk understands this since he specifically mentioned that the offer has to be at a premium.)

It always looks bad to do a tender offer buyout significantly *below* the market price. Amazon was able to buy Whole Foods even though it traded above the buyout price after the offer was made, but it was only a little bit above.

So think about it: how many people would vote to make their stock much less liquid if their first offer for liquidity ($420) was far below the market price? If the market price goes way over $420, those big stockholders are going to think twice about volunteering to lose liquidity.

So I figure the deal goes through unless the price skyrockets first, in which case they will have to raise the offer price.

This is actually a pretty straight forward deal since those that hold the most stock are in Elon’s camp on this.

Bottomline: Elon is making the statement that investing is about putting your money behind a company to succeed, not to see it fail.

I agree whole heartedly, and will be holding for a very long time as a private shareholder.

Onward and upward.

 

[sub]

TT07 has to be crushed, I don’t follow his exact trades but he was posting yesterday and this morning about being heavily in 600-700 strike calls. Ouch.

 

[ChrisA]

Here's my $0.02 on this deal: I think it makes perfect sense.

So long as one might reasonable assume some liquidity at six month intervals and no other strange terms, I'll probably just continue on with my same position. Those of us who choose this route and look back five years from now will probably be very thankful to have had our ownership in this structure. Tesla is a really interesting company intellectually and I love following it for that reason. But it is really hard to not get caught up in short term news, in the spectacle of volatility, and in refuting all the mendacity/obscurantism that seems to go with a large short position. But all that stuff is a distraction and a waste of time. Life is short. Why waste it fighting insincere FUD? None of that controversy is stuff that matters long term.

Once again, Elon has figured out what most others (in this case Tesla shareholders) want before they even know it.

My best guess is that the stock quickly approaches $420 (maybe higher) and the deal gets done in the next month or so. At the end of the day, this proposal just makes sense.

 

[MP3Mike]

Otherwise, yeah, the vote is there.

...but not if the stock price goes straight over $420 before the vote.

I'm not sure it is that cut and dried. If the price just surges for a few days while the shorts are shown the door and then comes back down before the vote then it may do just fine. But yeah, if it surges and stays way above $420, then the offer would probably have to be revised.

 

[Ovulation]

I'm not sure it is that cut and dried. If the price just surges for a few days while the shorts are shown the door and then comes back down before the vote then it may do just fine. But yeah, if it surges and stays way above $420, then the offer would probably have to be revised.

Munster thinks 420 will not be enough

 

[Ratanpara]

No matter what happen , this is win win situation for long term Tesla holder, it might cost $0.00 for Tesla to go private or it might not happen, here is likely scenario, I am highly confidence next two quarter will be highly progressive for Tesla, so Tesla May go above $420.00 based on merit, in meantime short seller will have to return borrowed stock to their rightful owner, this process may put stock above $420.00, so If stock goes above $420.00 no one will Hand their stock to big private investors, short sellers will be scared to established new short position below $420.00

 

[AWDtsla]

Probably.

Speifically, if the stock price stays low enough, after the shorts are forced out (and they are being forced out). Let's put it this way: not if the stock price goes to $1500. It would probably be deemed illegal for them to take it private at $420 if the market price was miles above that. Funds which aren't allowed to hold private equity would sue.

Otherwise, yeah, the vote is there.


...but not if the stock price goes straight over $420 before the vote. Then they'll have to raise the offer. (I think Musk understands this since he specifically mentioned that the offer has to be at a premium.)

It always looks bad to do a tender offer buyout significantly *below* the market price. Amazon was able to buy Whole Foods even though it traded above the buyout price after the offer was made, but it was only a little bit above.

So think about it: how many people would vote to make their stock much less liquid if their first offer for liquidity ($420) was far below the market price? If the market price goes way over $420, those big stockholders are going to think twice about volunteering to lose liquidity.

So I figure the deal goes through unless the price skyrockets first, in which case they will have to raise the offer price.

CAFD just did this. They IPO'd at $21 on 6/19/2015, and then announced sale for $12.35 on 2/5/2018, where the stock price immediately crashed from $14.50. Lots of comments about lawsuits, but I haven't seen one actually go through.

 

[hacer]

Scenario: I own Jan 2020 calls strike 700.

Question: If buyout - to take private - came in for $800/share — would I sell the option immediately or take possession of the shares immediately and net the delta (minus cost of of options) or would I risk losing the delta if the privatization occurred prior to me taking action?

Sorry to ask this; Thanks

It is sad to see a Tesla bull who acted in good faith (although somewhat recklessly) having to fantasize that there could be an $800/share tender offer. Your only real hope is a short squeeze. Sad but true.

 

[dmckinstry]

Probably.

Speifically, if the stock price stays low enough, after the shorts are forced out (and they are being forced out). Let's put it this way: not if the stock price goes to $1500. It would probably be deemed illegal for them to take it private at $420 if the market price was miles above that. Funds which aren't allowed to hold private equity would sue.

If the price goes to $1500 because of a short squeeze the price would likely drop back to closer $420 after all the shorts are evicted. Then the share price would probably stabilize somewhere above $400. Just IMHO, since I know nothing.

 

[neroden]

CAFD just did this. They IPO'd at $21 on 6/19/2015, and then announced sale for $12.35 on 2/5/2018, where the stock price immediately crashed from $14.50. Lots of comments about lawsuits, but I haven't seen one actually go through.

Last trades were at 12.42. The deal went through. If the price had gone back up to 14.50, I will say that the deal would not have gone through.

 

[lolcat]

I don't understand the 60 Billion cash requirement to go Public, media seems to be all over this figure

if most shareholders are not planning to sell why do you need 60 Billion to buy them out ?

And can't you Just take funds from the new people buying-in and give that to the people selling ?

I don’t really understand the immediate need to raise 60 Billion funds if anyone can help with this would be awesome !

 

[FirebirdAlpha]

I don't understand the 60 Billion cash requirement to go Public, media seems to be all over this figure

if most shareholders are not planning to sell why do you need 60 Billion to buy them out ?

And can't you Just take funds from the new people buying-in and give that to the people selling ?

I don’t really understand the immediate need to raise 60 Billion funds if anyone can help with this would be awesome !

I'll take a stab.

420/share is 72 billion valuation off just regular shares (higher with dilluted shares).

61% of Tesla is owned by institutions. These instutitons are made up of various funds, which raise money from individuals and other companies.

When they raise money to invest on behalf of their LPs, they detail their investment strategy and permitted investments. For example, a VC fund might tell its LPs that it will only invest in software startups. When they do that, they can't invest in resteraunts or oil stocks.

So when these large institutional funds raise money, they promise liquidity. They tell their investors that they will only invest in public equities so that they can tell their investors that any investor can pull out at any time.

So when Tesla goes private, those funds will be obligated to sell. It's part of the agreement with the people that gave them money to invest on their behalf.

Also, many of Tesla's loans require that they be paid on a change of ownership or corporate structure. And many of the retail investors will probably sell, too.

60B is an estimate based on the 44B to buyout the institutions, some of the retailers, some of the bonds, and provide fresh capital.

 

[UnknownSoldier]

I don't understand the 60 Billion cash requirement to go Public, media seems to be all over this figure

if most shareholders are not planning to sell why do you need 60 Billion to buy them out ?

And can't you Just take funds from the new people buying-in and give that to the people selling ?

I don’t really understand the immediate need to raise 60 Billion funds if anyone can help with this would be awesome !

We have to wait for more details on the structure of the deal and the buyers. All shareholders also have to vote (one last time on this company as a publicly held entity?) on whether to take it private or not.