FredTMC
Model S VIN #4925
Wow. That's really cool that you had a change to meet them. Pretty simple concept.
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Wow. That's really cool that you had a change to meet them. Pretty simple concept.
There are of course at least two possible explanations: the market either thinks the SCTY merger is less likely than it did last week or the shorts are taking no chances of a run up in stock price of SCTY after Friday's unveiling of gorgeous solar roofs and is sending a false signal designed to protect the current (and very substantial) short positions held by many in SCTY. I vote for the second explanation.
When Tesla announced plans to acquire SCTY on June 21, big SCTY shorts lost millions on that announcement. There's now a large number of shorts with malice in both SCTY and TSLA who believe that if they can hold tight, TSLA and SCTY will remain low. They hope that maybe the SCTY merger will go away or that TSLA will be unable to do an equity raise and will run out of money prior to Model 3 ramp-up if they hold tight and significantly affect the stock price.
For investors, the stock looks sick, but much of what we're seeing is shorts doubling down as more good news comes forth. The stock will continue to look sick until its breakout. Once the SCTY merger goes through, the short positions in SCTY get transferred to TSLA, I believe. Once the logjam price of $214 or $215 is broken at TSLA, the blockade by the shorts falls apart, panic buying ensues, and we see a squeeze as likely. The event I think most likely to bring about such a rise in TSLA is the 4Q ER. Demand is there, production speed is there, and all we need is no surprises and no horrific winter weather in 2nd half of December to delay deliveries.
Can the shorts win in the short-to-mid-term? Yes, if there's a large, unexpected macro event. Otherwise, I think the chess board favors the longs.
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racer26
Active Member
I'm not 100% sure on whether the utility pays SCTY directly, or if the utility pays the customer and the customer pays SCTY, but either way, there is a contract in place, and the terms of the contract are simple and straightforward.
stealthology
Member
What would be the liklihood that Tesla can find a like-minded, deep pocketed investor who believes in his TE vision? (and that it would come soon..)
CALGARYARSENAL
Member
Thanks for the compliment!
At least my prediction was right about the 3% drop following the solar roof product reveal.
Too bad my 10% rise prediction after the record breaking ER was wrong...
Anyway you all heard the wise men up-thread. It is all game over, gloom and doom time is upon us!
You better sell all your TSLA + SCTY shares and run for the hills before Trump takes over the Oval office.
Too bad my 10% rise prediction after the record breaking ER was wrong...
Anyway you all heard the wise men up-thread. It is all game over, gloom and doom time is upon us!
You better sell all your TSLA + SCTY shares and run for the hills before Trump takes over the Oval office.
Yes, the propaganda (Telsa is a cash eating black hole) stuck, so Tesla needs some good numbers in the coming Qs to proof the bears wrong ... in the near term I don't so the SP gaining substantially.
My math says tesla was $30 in 2012,
$200 in 2016, so should be around $1300 in 2020.
Like I mentioned above, comments such as yours don't dissuade strong Longs particularly in the context of recent strong execution and evidence of high demand. Guy Adami is right when he notes that most of us are not incremental sellers anywhere near this price range.
But your humor is harmless enough so please feel free. Many of us could use a good laugh now that seeking alpha has turned silent and there are no new German ev prototypes in the news.
racer26
Active Member
There's a couple things I see dragging on the SP.
Election uncertainty (however unfounded, as I'm fairly convinced the outcome is already a done deal) - if Trump becomes President there will be market pandemonium across the board, especially so for green companies like TSLA and SCTY.
Merger uncertainty (however unfounded, as I'm fairly convinced the outcome is already a done deal)
Both of these get cleared up in the next 3 weeks. After that, I see no really significant events in the immediate future until the end of 4Q16. Then again, Elon could surprise.
Election uncertainty (however unfounded, as I'm fairly convinced the outcome is already a done deal) - if Trump becomes President there will be market pandemonium across the board, especially so for green companies like TSLA and SCTY.
Merger uncertainty (however unfounded, as I'm fairly convinced the outcome is already a done deal)
Both of these get cleared up in the next 3 weeks. After that, I see no really significant events in the immediate future until the end of 4Q16. Then again, Elon could surprise.
Someone posted a link explaining why the "arbitrage situation" shouldn't have a big influence on the merger arrangement because once the merger was announced the firm handling the merger initiates a hedging strategy that basically protects against market volatility. If the merger is approved, the share price will reflect the agreed upon price and possibly go a bit higher before settling for the day.
This probably explains why the premium to lend out shares was and still is very high. The firm handling the merger probably does everything possible to maintain a delta neutral position that reflects the agreed upon price.
Anyone know the right term for the thing I'm referring to? Someone posted a good link a few weeks ago.
Note: The only event that would cause the merger agreement to be void would be if Tesla falls to $170. I don't think the firm managing the merger, or Elon would allow that to happen. I also wouldn't be surprised if Elon increases his position in SolarCity and/or Tesla in the next few weeks to make it clear that he stands behind the logic for the merger. He was forced to sell some stock a while back due to options that vested that he had to pay taxes on.
Side note: There is a class of funds called. " Merger Arbitrage funds". Maybe types of funds are causing some of this volatility?
This probably explains why the premium to lend out shares was and still is very high. The firm handling the merger probably does everything possible to maintain a delta neutral position that reflects the agreed upon price.
Anyone know the right term for the thing I'm referring to? Someone posted a good link a few weeks ago.
Note: The only event that would cause the merger agreement to be void would be if Tesla falls to $170. I don't think the firm managing the merger, or Elon would allow that to happen. I also wouldn't be surprised if Elon increases his position in SolarCity and/or Tesla in the next few weeks to make it clear that he stands behind the logic for the merger. He was forced to sell some stock a while back due to options that vested that he had to pay taxes on.
Side note: There is a class of funds called. " Merger Arbitrage funds". Maybe types of funds are causing some of this volatility?
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Hahah.. good! What I was doing this morning was counting how many more days until TSLA prices gets as attractive as it was early this year (Feb/Mar $140-150). Although probably we will never reach that price point again.. After all, this is a Short Term price movement, and I want to talk about price movement, not the company strategy.
Didn't they find Panasonic?
After all, they are investing billions in the Gigafactory.
Was it ever disclosed what the financial arrangement is? I am not sure that they are investing that just to be a long term supplier.
racer26
Active Member
Being an all-stock merger, there is no agreed upon price. There is an agreed upon ratio: 0.11TSLA per 1SCTY. That is unchanged, and no amount of the markets moving around will change that (save the escape clause if TSLA should fall below 170).
In an all-stock merger like this, once the merger is a done deal, and before the tickers dissolve into one, they should trade in lockstep at exactly the merger ratio, as the High frequency traders out there will milk any gap for a few pennies in a matter of seconds.
Ever since the merger was announced, SCTY has traded at a 5-30% discount to the merger ratio - indicating that the market thinks there is approximately that much chance that the merger does not succeed.
Jonathan Hewitt
Active Member
Wow, SCTY down 4.5% now with TSLA "only" down 1.4%. Could investors be derisking ahead of the financial release tomorrow? Investors might see a larger possible negative result for SCTY stock if if the numbers are bad than TSLA stock? I'm hunting for explanations other than shorts piling in but it very well could be shorts piling in.
Tesla has a $300+M hedge for Yen. Could play a part in this tidbit.
Are you paying these new anonymous posters for compliments now? ;-)
Elections, looming interest rate rise, tech stocks slowing down and low oil prices don't help.
Also, where 75% people thought Tesla may produce 500k cars in 2020 only 50% think they will in 2018. Why invest in Tesla now when in short few months things (merger, SolarCity Buffalo plant, Gigafactory battery production, M3 production line, Powerwall 2.0, Q4 ER, AP 2.0 roll-out) will become much more clear.
Who actually moves this stock?
Do you believe that the institutional investors who hold 66% of the shares and Elon who owns a chunk (25%? is that right?) believe this?
Or do you believe that the retail investors who read some article are the ones that move that stock?
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