Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Wicket]

Alright. I threw down some cash on Thursday for a weekly casino play given the events lined up. I think May China numbers will be strong and this doesn’t refute dropping orders but it doesn’t support it either. I suspect the model s release may trigger some reratings since selling out 25k/quarter at 40% margin or whatever these push will affect the models quite a bit. Also there is the opportunity for Elon to info dump on everything going on in the Tesla world, particularly upcoming products, which I think on average is positive.

on the other hand the market is crazy as my AMC short position will testify too, and we likely have some downward pressure from this crypto revolt (but then if they are all invested in coins I’m not sure how much firepower they have).

if we bounce early week I will probably sell the news. I very much look forward to Elon talking about Tesla again. I disagreed with Gary Black and his criticisms initially(about Tesla and BTC) but I’ve moved that direction over time.

edit: but if Logan Paul wins I’m going all in! In a world without reason, shoot the moon!
edit2: one would think that with this event being completely in Tesla’s hands that it would produce good news resistant to media spin, but these short-term calls are hard to make. At least the Friday bounce gave me some cushion (they are 600 strike calls).

 

[NicoV]

Pardon, but wouldn't said shorter actually OWE a short-term, deep-in-the-money call position? In my example, that'd be like having written a $70 call option when the SP is at $600, but never getting paid any premium for writing that (Surprise!) call? Ooh, that'd be juicy on the twitters...

Not sure if I understand what you mean by "short call position" vs just a DITM call... am I close?

Thanks for sharing your experience, Nico. Most helpful.

Cheers!

Yes, that‘s what I meant: the shorter’s portfolio would contain a negative amount of DITM calls. Actually not calls, but a financial instrument that would behave like a call.

 

[Artful Dodger]

Pardon, but wouldn't said shorter actually OWE a short-term, deep-in-the-money call position? In my example, that'd be like having written a $70 call option when the SP is at $600, but never getting paid any premium for writing that (Surprise!) call? Ooh, that'd be juicy on the twitters...

EDIT: (after 1 hr)

To further extend my "12.94% dilution" example for TSLA shares purchased before Aug 03, 2018 we'd have to prorate the size of the equivalent "DITM Call contract" for the number of shares owned by the TSLA shareholder. So the shortseller would be on the hook to purchase about $68.9K worth of shares (based on 600 SP) for every thousand shares they sold short . Ooch!

In this example, for each 1,000 shares owned by the long-term TSLA investor, the short-seller who borrowed those shares and sold them short would owe the equivalent of about a 130 share DITM Call contract to the owner of those 1,000 shares.

Indeed, it may be slightly less than 130 shares if Tesla only counts dilution from shares issued in cap raises and convertible bonds, but specifically excludes dilution from normal stock-based compensation (SBC) to employees, officers and directors of Tesla. This would exclude dilution from Elon's 2018 CEO comp. plan (which was approved in a separate vote by shareholders).

Cheers!

 

[ByeByeJohnny]

To extend this arguement, its also possible that Tesla would price this hypothetical Rights offering for July 2018 shareholders at the same closing share price from that time (ie: the Closing SP for TSLA on Aug 03. 2018 was $69.63 (SP adjusted for the 5:1 split on Aug 31, 2020 ):

But wouldn't this just cause further dilution? How is that fair to anyone who bought shares in August 2018 instead of say June 2018? Also wouldn't the major benefactor of this be Elon? While we might no have much of a problem with this I can see a very major backlash about 'billionaires enriching themselves'. In todays media world there is zero chance that wouldn't happen.

 

[ByeByeJohnny]

Indeed, it may be slightly less than 130 shares if Tesla only counts dilution from shares issued in cap raises and convertible bonds, but specifically excludes dilution from normal stock-based compensation (SBC) to employees, officers and directors of Tesla. This would exclude dilution from Elon's 2018 CEO comp. plan (which was approved in a separate vote by shareholders).

Cheers!

I distinctly remember that when Tesla did those cap raises that a lot of regulars here kept explaining how cap raises did not change the value of the company and therefor did not effect the shareprice. This concept is based on that not being true.

Also, I don't think I've ever gotten so ridiculed here as when at some point I was upset about us not being able to know, until a later date, how many shares were actually issued in one of the cap raises. I was basicly told not to be stupid by several posters, mostly in slightly nicer words but still.

I get that many want to stick it to the shorters. I do to. Badly. But this seems like a very roundabout way to do it that creates various other potential issues.

Are there any actual benefits, regarding getting to the shorts, compared to a stock split?

 

[Prunesquallor]

…

I think this can't happen right now, since there have been zero Cap Raise offerings since the S&P 500 addition, and therefore the Index funds have experienced zero dilution on their shares.

…

Then why is Elon (theoretically) hinting about it now? Is your scenario that the company would soon do a cap raise, then immediately execute one of these critters?

 

[lascavarian]

EDIT: (after 1 hr)

To further extend my "12.94% dilution" example for TSLA shares purchased before Aug 03, 2018 we'd have to prorate the size of the equivalent "DITM Call contract" for the number of shares owned by the TSLA shareholder. So the shortseller would be on the hook to purchase about $68.9K worth of shares (based on 600 SP) for every thousand shares they sold short . Ooch!

In this example, for each 1,000 shares owned by the long-term TSLA investor, the short-seller who borrowed those shares and sold them short would owe the equivalent of about a 130 share DITM Call contract to the owner of those 1,000 shares.

Indeed, it may be slightly less than 130 shares if Tesla only counts dilution from shares issued in cap raises and convertible bonds, but specifically excludes dilution from normal stock-based compensation (SBC) to employees, officers and directors of Tesla. This would exclude dilution from Elon's 2018 CEO comp. plan (which was approved in a separate vote by shareholders).

Cheers!

I see this interesting CUM speculation and thanks for working up some numbers.

I would also link to an opportunity to have Tesla cash that is about to start ramping up. This cash could fund the build out of millions of StarLink earth stations.

SpaceX covers the launch and satellite operations. Tesla handles earth stations (capital intensive) and terrestrial billing operations (Tesla Network Perhaps). This would unburden SpaceX and provide a reliable cash stream to build out the StarShip fleet in time for 2024 launch window. This might avoid the StarLink IPO needs for a time.

Tesla issues CUM rights at a pre-IPO price for the StarLink offering.

Secondary comment…. StarLink services will be global and include some under served populations poised to greatly benefit from access to the better parts of the internet. This fits with EMs fascination with DOGE which would (possibly) be the right coin for these populations. This is thinking a bit down the road but EM is a problem solver and putting DOGE or something similar as the payment method for such services would be a solution.

 

[Artful Dodger]

Then why is Elon (theoretically) hinting about it now? Is your scenario that the company would soon do a cap raise, then immediately execute one of these critters?

Let me be clear: I believe what can not happen right now is that the large Index funds who bought ~80M shares at the closing cross on Fri, Dec 18 2020 CAN NOT benefit from any Rights offering until their first dilution event takes place (ie: a Cap Raise via stock offering).

I'm NOT saying the Rights offering can't take place right now; indeed I'm saying that now is the ideal time to declare a Rights offering, while SP is still quite low and before any future Cap Raise causes those large Index Funds to become sellers of their Rights (since they are req'd to track the S&P 500 index closely, they can't arbitrarily increase individual stock holdings). This just means they'd likely sell their Rights rather than execute them, pay the taxes, and keep the cash. Not ideal.

My ideal scenario is Tesla does a 2:1 share dividend, then announces the Rights offering for another 10% of shares (largely going to long-term investors). Something for everyone, max's out the authorized shares according to corp. bylaws, and TSLA zooms to the moon.

Combine the Rights offering with rollout of the FSD subscription, maybe a "one more thing" at the Plaid delivery event, and then we've got the makings of a real party. Oh, and Record breaking results in Q2... Bring it, Elon!

(Smokin' shorts)

Cheers!

 

[Prunesquallor]

Let me be clear: I believe what can not happen right now is that the large Index funds who bought ~80M shares at the closing cross on Fri, Dec 18 2020 CAN NOT benefit from any Rights offering until their first dilution event takes place (ie: a Cap Raise via stock offering).

I'm NOT saying the Rights offering can't take place right now; indeed I'm saying that now is the ideal time to declare a Rights offering, while SP is still quite low and before any future Cap Raise causes those large Index Funds to become sellers of their Rights (since they are req'd to track the S&P 500 index closely, they can't arbitrarily increase individual stock holdings). This just means they'd likely sell their Rights rather than execute them, pay the taxes, and keep the cash. Not ideal.

My ideal scenario is Tesla does a 2:1 share dividend, then announces the Rights offering for another 10% of shares (largely going to long-term investors). Something for everyone, max's out the authorized shares according to corp. bylaws, and TSLA zooms to the moon.

Combine the Rights offering with rollout of the FSD subscription, maybe a "one more thing" at the Plaid delivery event, and then we've got the makings of a real party. Oh, and Record breaking results in Q2... Bring it, Elon!

(Smokin' shorts)

Cheers!

So, the only prep us poor schmoes need to do is have enough dry powder handy to buy/execute these dirt cheap "rights shares” and they get turned into common shares?

edit: It sound like from @NicoV 's experience, these "rights shares" don't need to be bought, just "executed". Even better.

 

[Pezpunk]

Somebody in the real Anonymous has done some sophisticated hacks. Would anyone with the intelligence to do that actually believe the BS about Elon's emerald mines? I doubt it. No one really knows, but I'd say the probability of a false flag operation is 94.3%.

a proficiency with computers doesn't really correlate to generalized critical thinking skills, nor necessarily mean they're well informed. The video is there because whoever runs that account wants it there. Anonymous are generally a bunch of edgelord dingdongs with moderate hacking skills and good self-promotion skills. Either way, they're not worth worrying about.

 

[CorneliusXX]

But wouldn't this just cause further dilution? How is that fair to anyone who bought shares in August 2018 instead of say June 2018? Also wouldn't the major benefactor of this be Elon? While we might no have much of a problem with this I can see a very major backlash about 'billionaires enriching themselves'. In todays media world there is zero chance that wouldn't happen.

I think this is the biggest sticking point to the theory. I can't imagine it would be possible/legal to favour certain ordinary shareholders over others just because of the time they have held the stock. It would effectively create two classes of shareholder.

A rights issue to all shareholders would be perfectly fine though.

 

[MABMAB]

Rumors and crap and inappropriate innuendo round here kind of opposite spectrum of what fudsters accused of.

 

[NicoV]

edit: It sound like from @NicoV 's experience, these "rights shares" don't need to be bought, just "executed". Even better.

To be clear: you get the right to buy shares at a special low price, you’d still have to pay that low price. So you need cash.

 

[Nolimits]

To be clear: you get the right to buy shares at a special low price, you’d still have to pay that low price. So you need cash.

So it’s only after announced and won’t affect existing shares?

 

[traxila]

This is a nice idea to kick around, but I see absolutely no indication that anything of the sort is being entertained by Tesla.

Having said that, I would gladly purchase any shares thrown my way at discounted prices!

Believe I have a share or two that would qualify as long term .

How about that Plaid Day?! Heard it is coming up some time soon.

 

[Thekiwi]

What advantage is there of creating more share dilution as a response to previous share dilution? A rights issue restricted to long term holders would likely lead to a share price decrease, which would benefit shorts, not hurt them.

 

[ZeApelido]

This is a nice idea to kick around, but I see absolutely no indication that anything of the sort is being entertained by Tesla.

I guess you must be really confident Elon love's CumRocket crypto.

 

[Lessmog]

So Anonymous is confused with itself?

https://twitter.com/x/status/1401265020554539010

https://twitter.com/x/status/1401231247058296839

Wow much. That's an implicit Who's Who of Anonymous.

 

[corduroy]

Plus the stupid “CUMRocket to the moon” tweet.

https://twitter.com/x/status/1401096409428934659

So that didn't mean "it takes sweat and hard work to build rockets that go to the moon"?

 

[Unpilot]

So that didn't mean "it takes sweat and hard work to build rockets that go to the moon"?

I thought it ment " water on rocket turns into a banana"