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In connection with the offering of the notes, Tesla intends to enter into convertible note hedge transactions and warrant transactions which are generally expected to prevent dilution up to 100% over the offering stock price. In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the hedge counterparties or their affiliates expect to enter into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the notes, including with certain investors in the notes.
Please someone explain this part to me?
I expect a strong move upwards tomorrow. I could obviously be wrong. I see no reason at all for this to cause a sharp fall though. This is a fundamentally good move and should get a good reaction.
Yes, we could easily see this effect on what are likely very large short positions taken out in the mid-$80's range. If the stock spikes tomorrow we could see a new squeeze in the following days. Hard to say though. I think the weak shorts are cleared out already, and the stock might not spike enough to break the new ones.
And keep in mind, we still have the SuperCharger announcement and (probably) the swap announcement over the next couple of weeks. I see no reason for the stock to be falling. Again, this is virgin territory, so who knows how things might turn, but all I see is up. If I wasn't fully invested already, I'd consider buying some at $85, and that wasn't the case for me earlier today.
I just now checked with my brokerage TD Ameritrade. TSLA shares are not available for shorting. No, I do not plan to short; I was just seeking information.
is this a gut feeling ?I generally agree with CO. This recent news changes everything. We will never see TSLA go below $80 again. I'm going to put myself out there and make a prediction - we will see $130 this year.
ok thanks guys- I'll consider adding to long position; really having trouble converting to 300% rise due largely from short covering to all that's now valid for long. Even APPL didn't do this and they had easy relative scalability. Short term up I guess -
(but I will say, $11B valuation and reporting a loss next Q sits with me as a market mismatch and I can see why shorts are still hanging around while I carry my core long )
I generally agree with CO. This recent news changes everything. We will never see TSLA go below $80 again. I'm going to put myself out there and make a prediction - we will see $130 this year.
Or in a few weeks, the way things have been moving. Now where did I put those $110 calls...
is this a gut feeling ?
It is not a gut feeling. The data points available to us has changed. TSLA has wiped a major liability off their books and added to their cash position. This changes your fundamental analysis and discounted cashflow results.
PS: in the end everything is directional here. I think this piece of news is majorly positive. The likely outcome is for the stock to go up.
It is not a gut feeling. The data points available to us has changed. TSLA has wiped a major liability off their books and added to their cash position. This changes your fundamental analysis and discounted cashflow results.
PS: in the end everything is directional here. I think this piece of news is majorly positive. The likely outcome is for the stock to go up.
Just be aware, I'm not necessarily expecting a huge move up. I do feel like we established a new floor though, and it wouldn't seem insane for the stock to push up into the $90's. It the same situation as with the last round in September. Tesla sold those at $28, and that gave me confidence in that as the new floor, because we know that the major investment houses will buy the stock at that price. Tesla spent the next 6 months trading between ~$28-$35 and basically never fell under the floor that was created.
That is along the lines of what I am expecting now at $85, but with the current psychology we could see it break much higher, especially if the swap announcement demonstrates an attractive feature for customers, while giving Tesla a potentially lucrative income stream.
And doing this at the expense of the shorts who were concerned about your balance sheet. Well played, Mr. Musk. Well played.
yeah those are excellent points. and that seems to be the consensus (at least the short term effects); And I can agree, although-
$28-$35 was firmly established from long investment and for a long time (very few if any shorts had covered, only added); $85-$90 bears no resemblance - in fact the opposite - largely based on forced buying by those who specifically do not share the tesla vision. The unknown in my mind is how this 'artificial' level will support itself after this issuance- especially if it's purpose is to drive the price to force out the shorts. This puts more pressure on long investors in my view- If Tesla now cannot scale to the valuation (only supported currently by shorts) rapidly (shorts will not be a permanent force at these levels). It's certainly possible, but I see now a higher risk associated with the new floor- I was hoping to carry a lot of position for a long period of time, but I may need to carry a smaller long position now, to avoid the door in the floor. I'm of the persuasion this helps the short term price by adding a medium term risk. Elon sure makes things interesting
yeah those are excellent points. and that seems to be the consensus (at least the short term effects); And I can agree, although-
$28-$35 was firmly established from long investment and for a long time (very few if any shorts had covered, only added); $85-$90 bears no resemblance - in fact the opposite - largely based on forced buying by those who specifically do not share the tesla vision. The unknown in my mind is how this 'artificial' level will support itself after this issuance- especially if it's purpose is to drive the price to force out the shorts. This puts more pressure on long investors in my view- If Tesla now cannot scale to the valuation (only supported currently by shorts) rapidly (shorts will not be a permanent force at these levels). It's certainly possible, but I see now a higher risk associated with the new floor- I was hoping to carry a lot of position for a long period of time, but I may need to carry a smaller long position now, to avoid the door in the floor. I'm of the persuasion this helps the short term price by adding a medium term risk. Elon sure makes things interesting
It's not artificial anymore. Major investment houses just gave an $830m gold plated seal of approval to TSLA@$85. ..... Nothing concrete, but its still a major barrier IMHO.
this is where i disagree -- personally i don't think the purpose of this capital raise is to drive out the shorts -- i think the primary reason is to take advantage of the high current share price to raise capital and increase liquidity with marginal dilution, which is a great thing from a shareholder perspective.
surfside