Short-Term TSLA Price Movements - 2016

[brian45011]

How does this work

Not exactly the same, but for early ITM option exercises (usually when the underlying shares are just about to go ex- div.) it is reputedly a random event as to who gets assigned. Do you trust Wall Street?

 

[adiggs]

I don't know all of the mechanics of the recall with regard to odd lots. Probably what happens with a big shop like Fidelity is that they substitute some other shares in their inventory for mine. The short seller may not even know that this has happened.

This is the value of the middle man / market maker - Fidelity will take the easy path for you.

As more shares are recalled by lenders (share owners), the ability of market makers like Fidelity to find shares to provide to shorts will get harder. We'll know that's happening when the rates being charged and paid to borrow shares starts going back up, as that's one of the mechanisms available to balance demand for shares to short (a higher interest rates makes it more expense to hold a short position, and pushes some shorts out of the market. It also increases the likelihood that people like you will decide to release their shares back into the market to be borrowed).

 

[Rarity]

This is the value of the middle man / market maker - Fidelity will take the easy path for you.

As more shares are recalled by lenders (share owners), the ability of market makers like Fidelity to find shares to provide to shorts will get harder. We'll know that's happening when the rates being charged and paid to borrow shares starts going back up, as that's one of the mechanisms available to balance demand for shares to short (a higher interest rates makes it more expense to hold a short position, and pushes some shorts out of the market. It also increases the likelihood that people like you will decide to release their shares back into the market to be borrowed).

Indeed. At 5% and 4.875%, I am content to keep my shares out of the lending market for a short time. If the rate increases quite a bit in the next day or two, I may release them for lending.

 

[NicoV]

This is the value of the middle man / market maker - Fidelity will take the easy path for you.

As more shares are recalled by lenders (share owners), the ability of market makers like Fidelity to find shares to provide to shorts will get harder. We'll know that's happening when the rates being charged and paid to borrow shares starts going back up, as that's one of the mechanisms available to balance demand for shares to short (a higher interest rates makes it more expense to hold a short position, and pushes some shorts out of the market. It also increases the likelihood that people like you will decide to release their shares back into the market to be borrowed).

So the weakest short is the one who gets the first margin call because his account is on the edge of not being worth enough to cover the interest expenses + short position.

 

[esk8mw]

Even more interesting. The solarcity filing is about the record date for Tesla shares!



No clue why SolarCity felt the need to disclose this? Paging @esk8mw maybe he knows more.

It's typical to issue a PR solely to announce the record date. This is a bit unusual in that they are basically announcing the announcement of the record date. The posting says that they are doing this simply to answer a common question they are receiving and I have no reason to doubt that claim. Also, I'm sure they want to be certain that institutions et al have ample time to recall shares to vote. The posting might also have a side effect of putting a floor under the SP as I expect short share availability will dry up in short order.

As to the mechanics, note that Tesla filed the 425 (since it relates to the deal) but it shows up in SCTY's filings also because both companies are implicated.

 

[NicoV]

Well; those of us with the merger recall squeeze theory look like we're about to find out in the next 11 days.

In the next 3 days: the first day in the week of the 19th is the 19th. Subtract 3 days to account for settlement and the last day to recall your shares ,in order to be sure you have them by the 19th, is next tuesday.

 

[trentxintong]

Solar City merger record date will be the week of September 19, according to an SEC filing just released on the Solar City website.

what is the difference between a record date and a voting date.

 

[BobSk]

I will make sure my shares are not available for lending.

 

[Turing]

what is the difference between a record date and a voting date.

It seems like owning the shares on the record date gives you the right to vote later on the vote date?

 

[TMSE]

You are absolutely correct, IMO, if you are only interested in the long term.

From a short term perspective, this thread, then it does matter as the SP does affect TM's ability to raise money on the most favorable terms...and they do need money in the short term.

Also, (not directed at you), do not assume all the people who are shorting TM are 'idiots'. Many smart people are long and many are short. Both 'sides' have similar info in front of them and have come to different conclusions about the direction of the SP.

Currently, anyone 'short' is making paper profits and longs are taking paper losses.

Hopefully that changes soon.

Good points. I am interested in short term perspective too on this thread.

Elon, in his recent missive to his employees, mentioned about being close to GAAP profitable for Q3. I am puzzled as to why there is continued selling. Is it because:
A) Some don't believe GAAP profitability can happen? Or
B) even if GAAP profitable for Q3, it doesn't affect their bearish view and so continue to sell or stay on sidelines?

 

[NOLA_Mike]

what is the difference between a record date and a voting date.

You must be the share owner of "record" on the record date in order to be eligible to vote on the voting date.

 

[drinkerofkoolaid]

No. In order to vote you must own the shares three trading days before the record date. The voting date will likely be about a month later to allow voters to evaluate the proposal and to cover paperwork/notice time-frames.

SCTY's expectation is "subject to the normal SEC review and comment process of our Form S-4 registration statement, "

I'm not sure if your post answers my question. I think someone on here mentioned notice is sometimes given to investment firms in advance and it's possible notice could be given the same day the vote takes place. The language in the filing makes it sound like the vote will take place the same day notice is given.

 

[esk8mw]

So, given all the discussion of potential profitability, etc. I did some more crude modeling to try and get an idea for breakeven points. I tweaked the model a bunch as I always do, so the data below probably conflicts with anything I've previously posted on this topic. Here's what I came up with:

- Non-GAAP profitability is around 23,500 cars
- Free Cash Flow positive (note: NOT cf from core operations) is around 24,750 cars
-GAAP profitability is around 27,350 cars

Model assumes 475MM non-GAAP opex and 425MM capex, as well as 22.1% gross margin. I know opex and capex were guided higher but it seems like Elon is trying to push everything into Q4 so I have adjusted accordingly. I initially assumed 494MM and 585MM, respectively.

Standard disclaimer: My model is extremely crude and I'm not an expert. It was horribly wrong in Q2. Don't invest based on any of this.

 

[TrendTrader007]

I created a new thread
TSLA # of shares and % portfolio
Out of sheer curiosity

 

[brian45011]

I'm not sure if your post answers my question. I think someone on here mentioned notice is sometimes given to investment firms in advance and it's possible notice could be given the same day the vote takes place. The language in the filing makes it sound like the vote will take place the same day notice is given.

Ok. We can revisit the "same day" prediction in a month to 6 weeks.

 

[vgrinshpun]

Wow. That's a really unusual method for Tesla to put this information out there? Where's the hurry? Did they or SolarCity do something wrong in answering the questions from 'certain Tesla investors' and they now need to get this out as soon as possible?

I think it is unusual because normally, as I posted before, this information is not required to be disclosed to retail investors, just to banks and brokerages.

My take is that Tesla received inquiries on this subject, and decided to release this info not just to banks and brokerages, but to all investors.

The after-market trading is really subdued, with very low volume 9.5K shares so far.

Next couple of weeks will be very interesting.

 

[CALGARYARSENAL]

All of these sell side analysts will be buying hand over fist once they talk it down enough. Friends, family and clients missed the boat so they sell fear. Working so far. Sad.

 

[MitchJi]

So, given all the discussion of potential profitability, etc. I did some more crude modeling to try and get an idea for breakeven points. I tweaked the model a bunch as I always do, so the data below probably conflicts with anything I've previously posted on this topic. Here's what I came up with:

- Non-GAAP profitability is around 23,500 cars
- Free Cash Flow positive (note: NOT cf from core operations) is around 24,750 cars
-GAAP profitability is around 27,350 cars


Model assumes 475MM non-GAAP opex and 425MM capex, as well as 22.1% gross margin. I know opex and capex were guided higher but it seems like Elon is trying to push everything into Q4 so I have adjusted accordingly. I initially assumed 494MM and 585MM, respectively.

Standard disclaimer: My model is extremely crude and I'm not an expert. It was horribly wrong in Q2. Don't invest based on any of this.

Thanks! Even if this is in a ballpark it's huge!

 

[vgrinshpun]

For those interested, here is the reference to the rules regarding the record date notification.

 

[Ulmo]

For those interested, here is the reference to the rules regarding the record date notification.

In other words, institutional investors were notified sometime before or on August 29, 2016 - September 3, 2016, & +10 days for the exchanges (August 29, 2016 +10 = today).

I don't know how they count days, so I got the range from: For August 29, 2016, there would be a full 20 days between then and September 19, 2016. For September 3, 2016, that would refer to a time of day within the day of the 3rd (I'll call this value X) and a time of day >=X within the day of the 23rd (last business day of week of 19th). Since I like easy numbers, I prefer the latter, but I bet it's some mixture between that and the former.