Don't tease like that...my heart can't take it!Lol, understandably confused. The (upcoming) Share-Dividend spanks dat naked azz...
Cheers!
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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
Artful Dodger
"Neko no me"
Whoops, wrong Forum! I though I was posting on nickelmotorsclub.com
/S
Cheers!
Paracelsus
Active Member
It would be consistent with Elon's love of irony to have the entire sale of this stock issue completed just prior to todays launch of Starship SN8 (which starts in approximately 1 hour). Starship promises to be the most powerful rocket ever built, and it will complete its prototype test flight just as TSLA launches the SBOTC with the panic that will be induced when people realize that there are no more new shares to be had.
Its a lot easier for Elon to remind himself of all his successes of the past when he can put several on the calendar for the same day
Link to launch (currently saying going live in 50 minutes)
SpaceX
Some large option orders this morning including a straddle trade on Jan 2021 calls and puts purchased with a 640 strike. That order was for 2,000 contracts. A much larger 17,000 contract order was placed for sep 2021 720 calls and jun 2021 660 calls.
Also total option trading is approx 336% above average daily volume this morning with 269k calls purchased versus 110k puts.
Yesterday's price increase on low volume indicated to me that when institutional buying occurs over the next two weeks we should see an increase in volatility and price. Based on this I placed the following trades this morning:
-Jan 2021 625 straddle
purchasing calls and puts at a 625 strike.
-jan 2021 650/1000 call spread
Purchasing 650 call and selling 1000 call
That's a really big one. Half a billion dollar options trade.
I've been taking a break, doing real work for a change, but feel a need to comment. This morning's reaction is free money, if one was paying attention. I was up at 4am to watch the Starship, which is now scheduled for 8am (Pacific).Indeed, this reduces uncertainty (it was obvious Tesla should do a raise, but for how much?)
Yes, and it actually raises TSLA's Mkt Cap by ~1% while setting up Tesla to exit 2020 with $20B cash on hand.
Let me say that again, clearly: Tesla will exit the PANDEMIC year of 2020 with TWICE as much cash as their long-term debt.
Moody's, are you listening?
Cheers!
People talk about the capital raise as "dilution" as if it is a bad thing. Sure there are a few more shares floating around on the market than there were, but the company's assets also just went up by $5B (when complete; these happen at the same time, whether it's today or tomorrow). So the asset value per share is basically unchanged by this transaction. So there are a few possible reasonable reactions.
The knee-jerk reaction is "OMG, 1% dilution... stock price must drop." Horse pucky (quote from *MASH*).
One reasonable reaction is that Tesla didn't need the extra money, and unless they can figure out a good way to put it to use, the ROI on that $5B will be less than the ROI on the assets they already have. So a very slight drop in stock price might be justified.
Another is that the cash strengthens the balance sheet, and will raise Tesla's credit rating, which hardly matters, but is at least justifying a slight rise in stock price. It allows the company to speed up the "reckless" (Jerome's non-native English, he meant "relentless") pace of investing in expansion or acquisition.
Another is that perhaps much of the recent stock price rise is (anticipation of) a short squeeze because of S&P inclusion, and the ~8M shares takes some of the pressure off the squeeze by providing liquidity. But estimates are that between 50 and 150 million shares need to be bought in the next few weeks, this isn't enough to save shorts. Contrarily, some are saying that it actually reduces the likelihood of a post-inclusion drop in stock price. My personal reaction to this is that I don't know how to evaluate it but it seems neutral.
So my expectation in the early hours was that there would be a significant drop at opening, followed by a rise until the first MMD at 9:45 eastern, followed by some more rise and another MMD at a bit after 10:00 (actually it was earlier than I predicted, at exactly 10:00). From here I expect pretty constant drift back up. You have to take my word for it that this is pretty much what I predicted to myself.
I made two trades this morning based on the prediction, both at opening. I had some $690 weeklies, bought last Friday about 3pm eastern, so I set a limit close order for half of them at twice the purchase price. Yesterday they were up 150%, I was confident they would get back up to 100% after the initial shock. That happened about 10 minutes into trading before the first MMD. I did this because the lower price at opening made it harder for them to get in-the-money by Friday. The rest are now "free", I don't care if they expire.
The other trade was to buy some July '21 calls; I chose $760 strike because it made a nice round number for the cash I had available. I had a pre-positioned limit order at $100, and it executed within the first minute at $95.60. ($101.10-$102.60 bid/ask as I type).
PS: third coordinated attack at 10:15. These guys are so predictable.
As @mongo pointed out, it doesn't have to be all in one day. Considering Tesla really doesn't need this cash, I wouldn't be surprised if Zach was a bit more conservative this time around.
I wonder if they were able to sell pre-market. If so, it could be that Tesla ordered the sale of some shares during pre-market and first 10-15 minutes (indicated by high volume), but that Zach is waiting to give the go ahead to sell the rest. He might wait until the stock price is $650 or $700 to do so. No biggie if they don't get to sell all $5B.
Iirc, it was done over the course of a few days.
~~~NO more discussion of QuantumScape in this thread~~~
Cap raise was filed on Sept 1 and completed on Sept 4, share price of $448.77, so one can guess more exact timing via the stock price chart.
https://ir.tesla.com/_flysystem/s3/sec/000119312520236678/d21598d8k-gen_0.pdf
https://ir.tesla.com/_flysystem/s3/sec/000156459020042696/tsla-8k_20200904-gen_0.pdf
https://ir.tesla.com/_flysystem/s3/sec/000156459020047486/tsla-10q_20200930-gen.pdf
On the 8k it says the date of Sep 8, saying the process completed on Sep 4. So if they do finish this one quick, it appears we may not found out the exact details until later in the week or the week after. Correct?
I have a few thoughts on the capital raise. Dropping them in one place.
Item 1:
Clearly this <1% dilution is small potatoes and the excess supply of around 8 million shares is easy for the market to absorb especially given the circumstances. I do think the second order impacts - Weak hands / Short term traders who don't want to see their quick gains evaporate, some reticence on speculative option buying and the muted delta hedging need from the breather here, together add up to more than the impact from excess supply. This dynamic will be in play perhaps until Tesla says the offering has been filled.
While the second order impacts do temper the price moves this week, this also reduces the supply available for S&P and S&P Benchmark funds. So these second order impacts should unwind fully in a couple of weeks time. I also think this will be more supportive of the post inclusion prices, with fewer speculative shares floating around. So keep calm and carry on.
Item 2:
I now look at my shares, and see that each of those shares is backed by ~$5 more in cash. Or $10 if you include the cash from previous raise. I am less exposed to the Tesla execution magic than before with more more if it in rainy day fund. In other words, I now own less of Tesla due to dilution and to the extent it's a safer bet, I'd like own marginally more.
While personally this doesn't mean I am buying today, I will be selling slightly less than planned into the S&P addition. Again personal circumstances vary, and as other posters noted above, it's a very individual decision.
Item 3:
When will the credit rating agencies wake up and upgrade Tesla to investment grade? Are they asleep at the wheel again? I am flabbergasted!
Item 1:
Clearly this <1% dilution is small potatoes and the excess supply of around 8 million shares is easy for the market to absorb especially given the circumstances. I do think the second order impacts - Weak hands / Short term traders who don't want to see their quick gains evaporate, some reticence on speculative option buying and the muted delta hedging need from the breather here, together add up to more than the impact from excess supply. This dynamic will be in play perhaps until Tesla says the offering has been filled.
While the second order impacts do temper the price moves this week, this also reduces the supply available for S&P and S&P Benchmark funds. So these second order impacts should unwind fully in a couple of weeks time. I also think this will be more supportive of the post inclusion prices, with fewer speculative shares floating around. So keep calm and carry on.
Item 2:
I now look at my shares, and see that each of those shares is backed by ~$5 more in cash. Or $10 if you include the cash from previous raise. I am less exposed to the Tesla execution magic than before with more more if it in rainy day fund. In other words, I now own less of Tesla due to dilution and to the extent it's a safer bet, I'd like own marginally more.
While personally this doesn't mean I am buying today, I will be selling slightly less than planned into the S&P addition. Again personal circumstances vary, and as other posters noted above, it's a very individual decision.
Item 3:
When will the credit rating agencies wake up and upgrade Tesla to investment grade? Are they asleep at the wheel again? I am flabbergasted!
Signature line changed. Haven’t room to add more of the hypocrites, but all are encouraged to spread the “quip” as a way of using logic to fight against the naysayers.
Let me introduce this to you to cure you of your ignorance of Elon's concerns of inequality:
Elon Musk backs presidential candidate Andrew Yang, who advocates giving Americans $1,000 a month
Elon endorsed Andrew Yang, the only candidate that really had a sensible plan for greatly reducing inequality.
Elon can often come across as crass on issues relating to empathy for individuals but I think it comes from a drive to ultimately save humanity from destruction. Folks that follow Elon closely may realize this but a good number just see the crassness and assume the worst.
The irony is that some portion of his wealth directly relates to his drive to save humanity, in that TSLA benefits from its mission and the mission of Elon's other endeavors (SpaceX, Neuralink, etc.). I believe Elon doesn't give a single hoot about personal wealth but knows he must accumulate vast amounts to be able to undertake the challenges ahead.
We need more Elons in the world, but we still need "normal" people with personal empathy as well. I'm one of those normal people, but I try to understand where Elon's more robotic thinking comes in (e.g. maximum efficiency in achieving multi-planetary humanity, even if it means some individuals could die from something like COVID).
This is more directed at the spat between Bernie and Elon. I get that it's tough to see someone posting memes about a candidate you may support, but Bernie is not some third rail that should be untouchable. I think his ideas come from a place of genuine goodness, but some of them are outmoded or even absurd.
A Universal Basic Income also takes away all stigma: everyone gets it so no one is ashamed to get it or mad at missing out. It also makes the idea (once people realize it CAN work) very appealing across party lines. It's both small government (letting the people decide how they want to use the money) and big government (using the power of government to distribute wealth to those in need).
I'm a progressive. I believe in the power of government to do good. But we need to work within the constraints of our system with smart ideas like those from Andrew Yang and we can't be afraid to disagree when politicians put forth bad ideas, even if they are from a place of good intention.
- Wealth taxes: tried and failed in other countries. A VAT is a much better idea.
- Forgiving student debt: would alienate tons of people who don't go to college, already paid their debts, went to a more reasonable cheaper school, worked their way through college, etc. There are better ways to assist with the student debt burden than a jackpot forgiveness scheme that plays well with this limited demographic.
- Federal jobs guarantee: Doing what? For whom? Where? What if you don't like your boss? Etc. etc. etc., this idea has all sorts of problems.
A Universal Basic Income also takes away all stigma: everyone gets it so no one is ashamed to get it or mad at missing out. It also makes the idea (once people realize it CAN work) very appealing across party lines. It's both small government (letting the people decide how they want to use the money) and big government (using the power of government to distribute wealth to those in need).
I'm a progressive. I believe in the power of government to do good. But we need to work within the constraints of our system with smart ideas like those from Andrew Yang and we can't be afraid to disagree when politicians put forth bad ideas, even if they are from a place of good intention.
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I don't know how Tesla's comp structure works, but that would be highly unusual for a public Bay Area tech company these days. Most offer RSUs rather than options (I don't know anyone with options who isn't working for a startup), and the RSUs usually vest in blocks every 6 months.
This also creates a retention problem both for new and older employees (and I've run into this problem myself). When the SP appreciates rapidly, you get a situation where longer-term employees get a smaller number of new RSUs granted at each annual review (because the value of unvested RSUs is typically capped by the salary band). That results in an "RSU cliff", where an longer-term employee will need an enormous grant at one particular review, or experience a huge drop in compensation.
That interacts badly with the way companies hire and retain employees: Companies will make a bigger offer than your current comp. So if you're facing an RSU cliff, you better jump ship before the cliff, or your negotiating advantage is kaput!
That is very likely a diagonal with long 660 and short 720 legs. With very little net exposure. Probably negotiated, and just cleared over the exchange. about a $7 million trade. Not too big.
Edit: Also a net credit trade, though you'd need to have the margin capacity.
Dude. I don't know about Starship but I've stopped everything and been watching the SP for 3 weeks straight.
SunCatcher
Member
60 Minutes Australian interview, regarding very high costs of electricity, and its impact on those with lower incomes;
"There are Australians today wondering if they can even turn on their lights. Wondering if, well, should we go without some food. That's just not something you would ever expect."
Elon Musk; "I did not expect that." Tears up, visibly moved. "We will work harder... We will work harder."
"He'd better show some empathy"? Please. This man is working harder to help humanity than anyone else on the planet, bar none. And it takes enormous capital and determination to pull off an effort on this scale, and with such massive resistance. By all indications, he may end up being one of those individuals who actually works himself to death. What more do you want?
"His lack of concern for a ginormous problem"?
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