Short-Term TSLA Price Movements - 2016

[WarpedOne]

1) Pay As You Go
2) Free Supercharging* (*up to a limit)
3) Free Supercharging Max* (up to a really high limit)

I'd guess it will be 2-tiered, only options 1 and 3.
Free supercharging is what model S already has included in baseprice - prepaid 2k for no limit on charging.
Those who don't want to pay 2k upfront, have the option to pay some 'reasonable' price per kWh (say double home rate) + idle fee if they park at SC sites plugged in with full battery.

 

[ev-enthusiast]

Model X registrations surpassed 150 vehicles in Norway this month.
I expect European deliveries to support TM growth trajectory during Q4.

 

[vgrinshpun]

Perhaps Brian45011's theory of 2018 note holders doing some selling this week might need a second look. We're seeing some really strange happenings with short interest.
* This morning, vgrinshpun reported that shares available to short at Fidelity had dropped more than 100,000 shares from close of market yesterday to 9:47am today. Estimated interest rate was 13%.
* In the tracking short interest thread, Mario noticed that shares available to short jumped up to greater than 100,000 shares at IB and this afternoon, adiggs stated that Fidelity was charging only 6% for TSLA short lending.

So, I've seen all the hallmarks of short selling last week and especially this week on Monday morning and other times, and suddenly we see lots of TSLA short shares available and yet you don't see the run up in SP that would accompany shorts covering.

I see different possible explanations:
* Perhaps brokerages made more short shares available today (but why?)
* Perhaps the drop in SP which involved short selling encouraged 2018 note holders to sell their shares this week (as per Brian45011's post above), and once note holders started selling this was an opportunity for shorts to start exiting their positions while the SP remained low

I'm open for suggestions, but if we understand what's happening to short interest and who is selling shares we can get a better feel for the likely trajectory of TSLA in the near future.

I am thinking that perhaps shares that are sold by the note holders were bought by the party(ies) that immediately made these shares available for lending, which manifested in a sudden availability of shares for shorting starting last week. Essentially each share sold by note holders, resulted in an additional share sold by short sellers.

The question I have about the above is how do we know that note holders actually got shares from Tesla? My understanding is that the principal was paid in cash, while the gains could be paid either in cash or shares, per the Tesla choosing. If Tesla had issued new shares to provide them to the note holders we would've seen the new filing, and since there were none, it seems that there were no new shares issued for this purpose. On another hand it seems that it would not be in Tesla's interest to pay the note holders in cash...

As a clarification regarding the 6% - it is the amount paid by Fidelity Brockerage to those who have shares available for securities lending program, but the interest charged by them to short sellers is 13%.

 

[brian45011]

I'm open for suggestions, but if we understand what's happening to short interest and who is selling shares we can get a better feel for the likely trajectory of TSLA in the near future.

Maybe read the S-4 while you wait.

Tesla Motors - Registration Statement

 

[Gerardf]

Yup, it is up. Just in my mail box..

MERGER PROPOSAL—YOUR VOTE IS VERY IMPORTANT

 

[drinkerofkoolaid]

Is there a rule or general policy for when the vote will take place?

Interesting note: The exchange ratio makes this a no brainier for SolarCity shareholders.

This Exchange Ratio is fixed and will not be adjusted to reflect stock price changes prior to the closing of the Merger. Based on the closing price of Tesla Common Stock on the NASDAQ Global Select Stock Market (“ NASDAQ ”) on June 21, 2016, the last full trading day before the public announcement of Tesla’s proposal to acquire SolarCity, the Exchange Ratio represents approximately $24.16 in value for each share of SolarCity Common Stock.

 

[Johann Koeber]

Over 300 pages to read. Are they serious.

Can someone please give an ouline. What is important?

My English is far from good enough to understand most of this.

 

[drinkerofkoolaid]

I am trying to reconcile this with the following quote from the research article published in Journal of Corporate Finance titled "The Market for Shareholder Voting Rights Around Mergers and Acquisitions: Evidence from Institutional Daily Trading and Voting" (free pdf download). It appears that although state laws do not require disclosure of the record date until the date have passed, the Institutional Investors are notified 20 days in advance according to the SEC rules.

"Firms establish record dates, meeting dates, and the contents of proxies and prospectuses according to the laws of the states in which they are incorporated.(7) State law requires firms to disclose this information, but typically not before record dates have passed.(8) Investors therefore are usually not notified directly by firms of meeting information before record dates. Under SEC Rule 14a-13 firms are required to notify broker and bank recordholders at least 20 business days before record dates (or less if impracticable) of this information,(9) but are not required to notify investors. Stock exchange rules require that firms notify the exchanges of record and meeting dates at least ten days before record dates,(10) but again do not require that firms tell shareholders more generally. Thus firms are not required to notify investors of record dates and the contents of proxies and prospectuses until after record dates. In our sample, we find that definitive proxies and prospectuses, which include final dates and specific merger information, were almost never filed before record dates. Institutional investors, however, typically know record dates in advance, because they subscribe to shareholder voting services that gather record and meeting dates from the NYSE and other sources.(11) In contrast, retail investors usually do not subscribe to such services and therefore do not know record dates in advance."

According to the above it appears that although there is no requirement to notify investors about the record date, the 10 days notification is required to the Exchanges, and 20 days notification is required for Brokers and Banks.

Based on the above Institutional investors should have 20 days advance notice of the record date, allowing them to complete recall of shares, as/if desired.

Very interesting if accurate. Wouldn't this mean the vote could take place any day?

 

[brian45011]

Is there a rule or general policy for when the vote will take place?

Interesting note: The exchange ratio makes this a no brainier for SolarCity shareholders.

No, but be aware the last trading day that matters is the one three days before the record date. (to allow for settlement/paperwork.)

 

[drinkerofkoolaid]

Over 300 pages to read. Are they serious.

Can someone please give an ouline. What is important?

My English is far from good enough to understand most of this.

In short, the independent group representing Tesla and the independent group representing SolarCity both support the deal and the conversion ratio, and suggest Shareholders support the merger.

 

[vgrinshpun]

I am wondering if filing of S-4 could be coincident with the 20 business day notice given to broker and bank recordholders (?).

On a different note, isn't the go shop provision was suppose to extend to Sept 15? Looks like SolarCity gave up on it early...

 

[brian45011]

Can someone please give an outline. What is important?.

Some preliminary points"

-Shares outstanding will increase by 15 million or by about 10%

-"Tesla and SolarCity both believe that this is an opportune time to combine in order to operate more efficiently and fully integrate our products, while providing customers with an aesthetically beautiful and simple one-stop solar and energy storage experience. The Combined Company is expected to achieve approximately $150 million in cost synergies in the first full year after closing, and save customers money by lowering hardware costs, reducing installation costs, improving the Combined Company’s manufacturing efficiency and reducing its customer acquisition costs. Additionally, the Combined Company will generate cost savings from not having to operate on an arm’s-length basis in affiliate transactions."

-"Under the General Corporation Law of the State of Delaware (the “ DGCL ”), the holders of Tesla Common Stock and the holders of SolarCity Common Stock are not entitled to appraisal rights in connection with the Merger."

-"The obligations of each of Tesla and SolarCity to effect the Merger are subject to the satisfaction or waiver of the following conditions (among other things)

• absence of any law, order, judgment or other legal restraint by a court or other governmental entity that prevents, makes illegal or prohibits the closing of the Merger;


• the SEC having declared effective the registration statement of which this joint proxy statement/prospectus forms a part

 

[Gerardf]

It is not clear to me how I can request the proxy statement to vote, and what I will need as proof from my (Dutch broker), nor for what ownership date. I did not see any fixed date mentioned anyway, but did not read through all 300 pages yet

 

[drinkerofkoolaid]

I am wondering if filing of S-4 could be coincident with the 20 business day notice given to broker and bank recordholders (?).

On a different note, isn't the go shop provision was suppose to extend to Sept 15? Looks like SolarCity gave up on it early...

What makes you say that? I don't see anything that suggests they "gave up". It looks like the independent board representing Tesla tried to lower the conversion ratio, but both parties ultimately agreed the original proposed ratio was fair for both parties.

 

[vgrinshpun]

What makes you say that? I don't see anything that suggests they "gave up". It looks like the independent board representing Tesla tried to lower the conversion ratio, but both parties ultimately agreed the original proposed ratio was fair for both parties.

Doesn't the fact that both parties agreed on the Merger (as of Aug 31) means that go shop provision was terminated early, i.e. before the Sep 15 date set originally?

 

[JBRR]

Assuming no downside if deal doesn't go through and current variables being Scty: 20, tsla: 211, ratio 0.11 there's an arbitrage opportunity if you believe deal will go through 86%+ of the time.

It seems to me that it should go through 95% of the time so market must be pricing in a very big downside to solarcity if deal fails.

 

[pGo]

Doesn't the fact that both parties agreed on a Merger (as of Aug 31) means that go shop provision was terminated early, i.e. before the Sep 15 date set originally?

So do you expect your theory of squeeze to take place anytime now?

 

[vgrinshpun]

Another notable tidbit:


"Approval of the Tesla Merger and Share Issuance Proposal requires (1) the affirmative vote of the holders of a majority of the total votes of shares of Tesla Common Stock cast in person or by proxy at the special meeting to approve the Tesla Share Issuance pursuant to the NASDAQ Stock Market Rules and (2) the affirmative vote of the holders of a majority of the shares of Tesla Common Stock not owned, directly or indirectly, by the directors and named executive officers of SolarCity, including Messrs. Elon Musk, Antonio Gracias and Jeffrey B. Straubel, and certain of their affiliates cast in person or by proxy at the special meeting pursuant to the terms of the Merger Agreement"

 

[vgrinshpun]

So do you expect your theory of squeeze to take place anytime now?

If we are indeed 20 business days before the record date, the theory (hypothesis?) should be either confirmed or not by the happenings in the next four weeks.

 

[vgrinshpun]

The pre-market volume of TSLA is very low, feels like a quiet before the storm.