Short-Term TSLA Price Movements - 2016

[theschnell]

Limit order means you are 1000% going to be front run. Your order will be on level 2 for all to see.

If it's not a huge order, who cares that everyone can see it? The advantage of a limit order is that HFT can't eat your lunch.

Obviously if your an institutional size investor a limit order would kill you, but for individuals?

Not trying to be disagreeable. Trying to learn.

 

[Bgarret]

Another way to look at the entire transaction from Elon's point of view - he grossed $1.14 Billion on the options (5.5 million shares x 208/share) paid $576 million in taxes (2.77 Million shares x 208) and of the remaining "profit", he gave away 44% to charity.

Solid.

 

[theschnell]

Another way to look at the entire transaction from Elon's point of view - he grossed $1.14 Billion on the options (5.5 million shares x 208/share) paid $576 million in taxes (2.77 Million shares x 208) and of the remaining "profit", he gave away 44% to charity.

Solid.

That is cool, but it should be noted those are tax withholdings. He will be receiving a very large tax refund, because donations of appreciated stock are counted at FMV rather than cost basis. One of the biggest tax loopholes I am aware of.

 

[anticitizen13.7]

Well, as of this moment, it's made a full recovery. I guess my dreams of picking up shares for 200~ is now out the window.

I wonder what caused that temporary dip. Algobots stumbling?

 

[mmd]

So, today's volume was 4,979,191 shares. Does that mean, these new shares (nearly 10 million) are not sold yet?

Can anyone knowledgeable please answer this question? Are these new shares sold separately, or not sold yet?

 

[Curt Renz]

Heck, I got front run today afterhours. 3 times and with market orders. And I am not even a big player.

With TD Ameritrade I am not allowed to place a market order for after hours trading. I must state a limit. Are the rules different at your brokerage?

 

[Curt Renz]

I wonder what caused that temporary dip. Algobots stumbling?

It must be one programmed by Ronnie Moas. He must have sold short at $198.01 one minute after the market close.

 

[The Blue Owl]

I wonder what caused that temporary dip. Algobots stumbling?

"Tesla raises $2B to stay afloat while Elon Musk sells his shares to stay rich! SELL!!! What's that you say, he increased his holdings? Oh."

 

[ggr]

That is cool, but it should be noted those are tax withholdings. He will be receiving a very large tax refund, because donations of appreciated stock are counted at FMV rather than cost basis. One of the biggest tax loopholes I am aware of.

I agree that it is a great tax advantage, but I wouldn't call it a loophole. It was very consciously put into the tax code.

 

[Causalien]

With TD Ameritrade I am not allowed to place a market order for after hours trading. I must state a limit. Are the rules different at your brokerage?

Ah you are right. The market orders got converted to limit orders at the bid and ask. No wonder I got front run.

 

[Causalien]

If it's not a huge order, who cares that everyone can see it? The advantage of a limit order is that HFT can't eat your lunch.

Obviously if your an institutional size investor a limit order would kill you, but for individuals?

Not trying to be disagreeable. Trying to learn.

It matters cause thry constantly move the bid ask further away the moment you places and replaces the order. So in a thin market, you never get executed unless you pay their atrocious price.

Day to day on a hot stock like tesla, it doesn't matter. Try a thinly traded stock with less than 100k shares per day if you want to experience it. More likely than not, this will frustrate the hell out of you.

 

[MitchJi]

For Elon: About $250 Million to charity and a net gain of 1.5 million shares by my account.

5.5 million shares via options exercised - 2.77 million shares sold for taxes - 1.2 million shares to charity = a net gain of 1.5 million shares.

Correct me if I'm wrong, but for dilution, only the 6.8 million shares are dilutive. Elon is selling already issued shares he owns and getting shares already accounted for in executive compensation. About a 5% dilution for $2.5 Billion cash cushion that should all be available for ramp as S & X & Energy should make Tesla cash flow positive going forward and some investment in Model III (Painting, Stamping) already complete and paid forward.

I think this is net positive.

I agree, but I think it's a very strong net positive IF (huge if) this is the only raise the market expects through the M3 launch.

 

[MikeC]

So is Elon essentially selling his newly-converted shares and giving the balance of the amount of money gained (minus taxes, charitable donations, etc.) directly back to the company? This would actually counteract some of the share dilution of the 1.4B shares sold, wouldn't it?

As opposed to if he exercised the shares and kept them, or sold them and put the money in the bank - instead of essentially giving it for free back to Tesla.

 

[MitchJi]

My guess is, the cap raise is already a done deal and it is probably raised at around $207 to $210.

Kind of a love and hate relationship with GS. On one hand, they have power, so we can see them protecting their investment. On the other, GS is known as the squid. Don't sleep with them too much. At least, they are the stabler of all the investment firms you can raise money with.

So, for those of you who have the foresight to get your money ready. You should probably put your vacation on pause and get ready to trade. Unfortunately for me this happened one month too early. I only have 10% of my dry powder ready.

How are you,trading this and why?

Thank You!

 

[theschnell]

I agree that it is a great tax advantage, but I wouldn't call it a loophole. It was very consciously put into the tax code.

I agree it was consciously put in, but from a tax theory standpoint, it makes no sense that you get a deduction without ever claiming the income. But there is much about the tax code that makes no sense. Like AMT. All so complicated so as to hide special benefits or special costs to specific groups of people and make the tax code feel unfair to everyone.

 

[maoing]

I agree, but I think it's a very strong net positive IF (huge if) this is the only raise the market expects through the M3 launch.

Unfortunately 1.4B is not possible for entire M3 ramp up. The big funding gap for full GF ($4B minimum) still remains, it's north of $3B.

 

[dandurston]

So is Elon essentially selling his newly-converted shares and giving the balance of the amount of money gained (minus taxes, charitable donations, etc.) directly back to the company? This would actually counteract some of the share dilution of the 1.4B shares sold, wouldn't it?

As opposed to if he exercised the shares and kept them, or sold them and put the money in the bank - instead of essentially giving it for free back to Tesla.

As far as I can tell Tesla is doing three things and none of them involve Elon giving free money to Tesla.

1) Tesla is issuing 1.4 - 1.7 Billion worth of new stock for $204/share (~6.8 to 8 million shares depending on if the underwriters want in on it.)

2) Elon is exercising options he got a long time ago to buy 5.5 million shares for dirt cheap ($30 million or ~$6/share). With this Elon owns more of Tesla, while the Tesla gets almost nothing.

3) Because Elon just got a billion dollars worth of shares for $30 million, he has a huge capitol gain that he now owes 52% tax on (e.g. half a billion in tax). So he's turning around and selling half of those shares he just got to raise money for his tax bill. As part of this he is donating 1.2 million shares to charity for a big tax write off.

So in total the public is buying about $2 billion worth of stock from Elon and Tesla. Of that $1.4 billion goes to Tesla and $600 million goes to the government via Elon. Tesla is only getting the $1.4 - 1.7 from the stock they're selling, plus a measly ~$30 million from Elon.

Tesla is worried about the optics of Elon selling shares because they don't want it to look like Elon is cashing out of the company, so they are emphasizing that he is increasing his ownership position. This is technically true but also misleading because his ownership is increasing but he's not pouring in more money like it sounds (except for that paltry $30 million). He's just getting a bunch of shares for close to free. Elon is exercising these options now so there's just a single public offering rather than separately trying to dump a few million shares later on to cover his tax bill. This is probably the best way to play it.

 

[Causalien]

How are you,trading this and why?

Thank You!

I didn't. Cancelled my order when it won't fill. But I was using half to buy stock and was going to sell $250 strike.
Tomorrow morning, I will check the IV first before I go ahead with options, most likely, I will sell puts. But if premarket is anywhere near the $204 fib level, I will go for stock again. Since I only have 10% of my dry powder in my trading account. I will only do strategies with 2 trades.

 

[Fallenone]

As far as I can tell Tesla is doing three things and none of them involve Elon giving free money to Tesla.

1) Tesla is issuing 1.4 - 1.7 Billion worth of new stock for $204/share (~6.8 to 8 million shares depending on if the underwriters want in on it.)

2) Elon is exercising his options to buy 5.5 million shares for dirt cheap (~$30 million, yeah like $6/share).

3) Because Elon just got a billion dollars worth of shares for $30 million, he has a huge capitol gain that he now owes 52% tax on (e.g. half a billion in tax). So he's turning around and selling half of those 5.5 million shares to the public to raise ~$600 million to pay his tax bill. As part of this he is donating 1.2 million shares to charity for a big tax write off.

So the public is buying about $2 billion worth of stock from Elon and Tesla. Of that $1.4 billion goes to Tesla and $600 million goes to the government. Tesla is only getting the $1.4 - 1.7 from the stock they're selling, plus a measly ~$30 million from Elon. Tesla is spinning to make it look like Elon is really buying into the company ("increasing his position") which is technically true but he's not really pouring in much money, just exercising options.

Shouldn't long term cap tax rate be like 35%? 50% is too much isn't it?

 

[techmaven]

Unfortunately 1.4B is not possible for entire M3 ramp up. The big funding gap for full GF ($4B minimum) still remains, it's north of $3B.

Tesla's portion is only ~$2 billion total, so the gap there is about $1.6 billion. If that was the only item to fund, then between cash on hand, deposits, and ABL, that's easy. Likely this funding is for getting through 2017 capex.

Basically, it's the ramp for the 2nd phase of the Gigafactory ($350-400 million) + factory upgrades ($800 million) + service centers, initial parts, etc.