Adam, I respect your thoughts as well. Hopefully, dialogue on this and other issues will help both of us and others as well.
My main reason in selling SCTY is what I perceive the growing threat of their bankruptcy and also because I no longer trust their management. I guess one can ask me to prove that their management is not trustworthy, but on the other hand I could ask for people to prove that SCTY's management is trustworthy. I think for those, like me, who have been following SCTY very closely (ie., listening to all earnings calls, reading all filings, following all interviews), it's fairly evident that SCTY not only didn't forecast their recent problems (ie., lower demand, higher costs, financing issues, etc) but also wasn't forthright (again, this is my opinion). I would suggest folks asking people who have been following SCTY super closely and ask their opinion on SCTY management.
(On another note, I don't like the large arbitrage spread on SCTY vs TSLA. I don't think we have the upper hand on this as individual/small investors. Big banks/funds have had special access to SCTY's books due to financing, and thus they have the advantage in the case of evaluating SCTY's finances. And it's my opinion that banks/lenders are reluctant to lend money to SCTY not because of the pending TSLA merger, because that's actually good for SCTY, but more because of SCTY's many problems, slowing growth, and unsure future. As a result, I do think the large arbitrage spread is not something that I want to play around with... I think it's playing with fire. Sure, you might not get burned this time, but it's very risky.)
Regarding why I would sell SCTY, vote no on the merger, and then continue to hold long TSLA. It's quite simple, holding TSLA isn't a binary thing for me. In other words, I can choose how many shares to hold and at what allocation. Currently, I'm at super-aggressive level. If merger goes through, it brings up risk to TSLA (as I shared prior) and that might make me less enthusiastic about holding TSLA but doesn't make me want to sell all my shares. Perhaps my position moves from super-aggressive to just aggressive (and perhaps I trim my position as a result) or perhaps it moves it to lower level.
If SCTY merger doesn't go through, I see it as a positive for TSLA. I think large investors will be relieved. TSLA won't have exposure to SCTY debt/risks and Tesla can focus on Model 3 execution without being hampered down with trying to restructure and remodel a bad business (again "bad business" is my opinion). So, if SCTY doesn't go through, I think TSLA pops.
Now, if SCTY merger doesn't go through, the next question is what happens to SCTY. I don't know what happens. I only bring up possibilities and probabilities. It's entirely possible that I'm wrong and SCTY does fine as a stand-alone company. In this case, TSLA and Elon's reputation is fine. Now, it's possible that SCTY goes bankrupt as well. Sure, this will hurt Elon's reputation but I don't think it will affect TSLA that deeply. I can see maybe it hits TSLA 5-10%. But investors can see that SCTY failing doesn't have much to do with TSLA failing or succeeding. They are two completely separate companies. In other words, SCTY failing doesn't affect Model 3 demand or sales. Whatever impact SCTY failing has on Elon's reputation, I think, will only be temporary. The guy's already a legend w/Paypal, SpaceX, Tesla, etc. One company (and his smallest) failing won't mean that much to his legacy. He'll be fine and his reputation will be as well. TSLA will also be fine as a result. On another note, many investors are already starting to adjust their expectations on Elon's role at Tesla and don't expect him to be CEO for the long-term. Elon's stated that he's only committed to being CEO until Model 3 reaches full production, and that time is coming close (maybe early 2018?). So realistically, Elon is only committed to being Tesla CEO for another 18 months or so. Sure, he's committed his lifetime to supporting and helping the company, but that can be done in other ways than being CEO. All this to say, that I don't think TSLA is as dependent on Elon's reputation as it was several years ago. TSLA is growing to be a more mature company, and after Model 3 reaches full production, Tesla will be much stronger and mature.
Overall, I'm not too concerned about TSLA taking a small, temporary minor dip due to Elon's "damaged reputation" caused by a SCTY failure, mostly because I don't think it'll damage his reputation much. In terms of market cap, SCTY is already relatively small ($1.75B) and that also will minimize the reputation hit on Elon. His other companies, SpaceX and Tesla, are worth multiple times more. Now if SpaceX were to go bankrupt, that would be another story.
Anyway, I see it in the best interest of TSLA if Tesla were to stay away from SCTY and its debt, business model, bloated structure, and shady (my opinion) management. Let Tesla focus on Model 3 ramp and not try to use it's precious time/focus/resources on trying to save another company.
I also see synergies... but most of all it allows Tesla Energy to get into the solar system market and offer a complete system w/battery storage to residential, commercial and utility. Thus, the synergy argument makes a lot of sense and I agree with it. This was the main reason why I was for the merger when it was first announced.
However, I think it's just perspective. If you trust SCTY's management and how they portray their debt/liabilities... then I can see why you'd like the merger. It's just that I don't trust their management and I think there's a good chance their debt is more toxic than they're letting on. And I don't want Tesla touching that stuff or being exposed to it, especially during a critical time like Model 3 ramp.
