Sitting on the Sidelines

[Sancho]

I have no doubt that shorts are responsible for some of the downward pressure on the stock since Musk’s “announcement” , but they couldn’t possibly succeed if enough new money saw the opportunity to make a quick 20% return.

I can understand why a majority of investors are sitting on the sidelines. They’ve been reading an endless parade of negative press about the transaction, and they distrust Elon based on years of bad press and other biases.

But this isn’t an election where a majority wins. Only a handful of wealthy people are needed to flood the market with buy orders.

Does anyone have an explanation as to why so unbelievably few of the trillions of dollars of investable capital have come off the sidelines to take advantage of this unique opportunity?

The only explanation I have is that perhaps in the modern era nearly all large wealth is now “professionally” managed, and these professionals are all in an echo chamber, and overly cautious by nature. But I have trouble believing there aren’t enough outliers to come in and scoop up this opportunity.

 

[Unpilot]

I think your last sentence makes the most sense.
Trying to "untangle" money from the professionals probably takes some time and effort.

 

[TheTalkingMule]

Does anyone have an explanation as to why so unbelievably few of the trillions of dollars of investable capital have come off the sidelines to take advantage of this unique opportunity?

I would imagine they understand this is just Elon purging the shorts. That won't fully take place until Nov-Mar when the major bond issue converts over to stock and the shorts drown, it's only August and there's still a decent amount of profitability uncertainty. Plus they're all sailfishing off the back of their yachts until Labor Day. Why should they rush to take advantage of something they know has a 90% chance of not happening?

All this drama is for the media and us little guys, not the uber-wealthy.

 

[neroden]

The really big buyers want to buy cheap. They'll be slipping in purchases of 400,000 shares per day (less than 5% of the daily volume), spread out across the day, to try not to pull the stock price up too much.

Did you notice any obvious upward movement as the Saudis acquired 3 to 5% of the stock? No, you didn't, because they did it this way.

That said, there is far too much money in the hands of "professionals" who are in the echo chamber. The merger arb funds rarely read past the headlines and so aren't going in in a big way.

 

[Brentt]

There are a lot of people who are long Tesla and hold the majority of shares. On the other hand, the large majority of short shares are held by a small number of people. As long as the shorts don't panic and stick together they can still move the stock.

 

[Sancho]

The really big buyers want to buy cheap. They'll be slipping in purchases of 400,000 shares per day (less than 5% of the daily volume), spread out across the day, to try not to pull the stock price up too much.

Did you notice any obvious upward movement as the Saudis acquired 3 to 5% of the stock? No, you didn't, because they did it this way. .

The Saudi buying method works when it's just one buyer with no particular deadline. But in this case there should be thousands of well heeled buyers, all trying at the same time to take advantage of a 20% upside gift. And the gift offer may expire at any moment with just one more tweet from Elon, or an SEC filing, or some other disclosure.

C'mon Russian oligarchs. Chinese mega bankers. All you .01 percenters out there. Do you really think Elon is lying here? Turn off CNBC and start thinking for yourselves!