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

[henchman24]

Well Tesla has been retiring the bond debt with cash which is anit-dilutive, so the 2:1 could be back on the table.

But even if it is telegraphed, all the naked shorting has to be unwound. And if Tesla board approved a high enough number future-wise, it would give Tesla the ability to do multiple splits in the future with no notice.

That will be an interesting part of these financials. How much of those convertible bonds have been retired. Even if 100% was retired, it would still really be too close for comfort on a 2:1 with the outstanding options. I don't expect Tesla to have paid off 100% of the debt in this quarter.

Yeah I expect the share limit to increase 10-20x at a minimum when it is increased. Give some runway for future splits.

Certainly at some point we as shareholders need to be notified of a plan to split and date to vote? Perhaps that announcement is on the agenda. Frankly, even a whiff of a mention of the minute possibility of a split would be nice. Likely send lots of folks scurrying to close their naked short positions before anything "meme-ish" happened.

The rumors will cause some covering, but until there is a vote, I don't think it would be extreme. When the vote was setup, it would practically be the same as announcing a split... just a matter of how much it will split.

Another thing Tesla could do is institute a share buyback that would also reduce the shares outstanding... though likely not enough cash sitting around to make a real dent there. More impactful than that though, would be a dividend. I don't expect any to happen today or this month. Any or all of those would have a strong impact on shorts.

 

[henchman24]

You literally just posted 5 minutes ago that Tesla could then do a stock split at any time to burn the shorts.

Stock splits do not burn shorts it has absolutely no effect on market cap.

Plenty of studies out there on performance of stocks pre and post splits. Splits typically do end up increasing market cap.

 

[StarFoxisDown!]

Another thing Tesla could do is institute a share buyback that would also reduce the shares outstanding... though likely not enough cash sitting around to make a real dent there. More impactful than that though, would be a dividend. I don't expect any to happen today or this month. Any or all of those would have a strong impact on shorts.

I will say, Tesla is way ahead of where I thought they would be when it comes to them realizing their earnings power. Q2 was a huge surprise to me in terms of how far ahead they are in realizing profits. Depending on how smoothly Berlin/Texas ramp and how quickly they get to large production volumes, I could actually see buybacks or dividends in the next couple of years.

Before Q2 earnings or even in Q1 earnings, I would have said "Dividends are off the table for at least 5-7 years". Now 2 years wouldn't shock me.

 

[Gigapress]

Right. Which demonstrates that the unfavorable media coverage of Tesla over the years is less about ad dollar influence and more about the journalism community being in a liberal echo chamber. Almost all of my friends are in that bubble, and they have been critical of Tesla and Musk for years. Instead of cheering Tesla for its environmental impact, they focus on a multi billionaire making cars for the rich. Tesla has not done much on the PR front to change that narrative, but I’m not sure it would matter. The echo chamber is so strong that changing a negative narrative is very hard.

But the better journalists will be influenced by very strong facts. Tesla’s recent good quarter in contrast to reduced sales of ICE cars is a wake up call.

The echo chambers can go on both sides of the US political divide, and mostly seem to be rooted in how much the person's perception of Elon and Tesla differs from the reality.

Off the top of my head, many liberals dislike:
- Billionaires
- Capitalism
- Lack of unions, and Elon's supposed worker mistreatment
- Elon's opinions and beliefs about COVID-19
- That Elon showed up to a Trump business leader advisory committee
- Cars in general, plus Elon's disparaging comments on the state of American mass transit and that The Boring Company threatens the dream that one day America will be filled with trains as far as the eye can see
- The Elon is building a Mars hideout/escape hatch for the super rich after Earth's civilization collapses

On the other hand, many conservatives dislike:
- Anything new and unfamiliar, especially if the Federal Government and national media have been advocating for said new thing
- That Tesla and SpaceX have received substantial government support
- That Elon is not a fan of Trump
- California
- Big Tech
- That Elon has praised China and is building a factory there
- Solar and batteries
- Environmentalism and talk of climate change and ending fossil fuel consumption
- That Elon's companies don't care about sexual orientation of their workers
-That Elon is atheist
-That Elon supports a UBI

There are also people on both sides who love Elon and Tesla. It seems on average to lean a bit left but not by much.

 

[Radish11]

Plenty of studies out there on performance of stocks pre and post splits. Splits typically do end up increasing market cap.

No they don’t. It’s the other way around, thriving successful companies are the ones who split their stock. The stock split did not make them become a thriving successful company, the stock split was caused by them being successful.

 

[JustMe]

Hey ugaiz, TSLA is walking up the stairs

 

[JRP3]

Nobody complained about Shanghai.

Actually some people here questioned the location for those very reasons when it was announced.

 

[Chunky Jr.]

Volume is low. People must be waiting on the sidelines for any info from the shareholder meeting

 

[canoemore]

Volume is low. People must be waiting on the sidelines for any info from the shareholder meeting

The sidelines of this game are pretty crowded. The folks waiting there for the P&D numbers never entered the pitch.

 

[EVMeister]

no it didn’t. The stock price would be at the same place it is today reagrdless of whether Tesla split it. The increase in stock price in the months following the stock split was purely coincidental and was based solely off the fundamentals of the company which are not affected by stock splits.

To sit here and try to claim that a similar reaction will happen every time Tesla were to split its stock again is reckless, misleading and untrue

We can't know for sure either way. But I'd like to see another stock split so we can see what happens this time around.

 

[Skryll]

Actually some people here questioned the location for those very reasons when it was announced.

Interestingly, to me this looks like Elon style 4D chess. Look china, you got this awesome technology factory that helps you reach your goals, but it is threatened by rising sea levels so you better do something about global warming across all your emissions to keep it.

 

[henchman24]

I will say, Tesla is way ahead of where I thought they would be when it comes to them realizing their earnings power. Q2 was a huge surprise to me in terms of how far ahead they are in realizing profits. Depending on how smoothly Berlin/Texas ramp and how quickly they get to large production volumes, I could actually see buybacks or dividends in the next couple of years.

Before Q2 earnings or even in Q1 earnings, I would have said "Dividends are off the table for at least 5-7 years". Now 2 years wouldn't shock me.

At some point, the cash mountain will have to be dealt with. If there isn't 4+ more GFs in the pipeline, shareholders might start demanding something done with the cash in 2023.

No they don’t. It’s the other way around, thriving successful companies are the ones who split their stock. The stock split did not make them become a thriving successful company, the stock split was caused by them being successful.

Plenty of successful companies don't split. I agree that fundamentally it shouldn't matter, but market psychology shows it does. To the tune of 8-12%.

 

[Buckminster]

-That Elon is atheist

Pretty sure the coder of this simulation counts as a god. Elon pretty much worships Carmack that only managed to stitch a few pixels together:

Imagine what Elon would think of this dude:

 

[jerry33]

We can't know for sure either way. But I'd like to see another stock split so we can see what happens this time around.

The only time it shouldn't work is if there is a very low level of naked shorting so few virtual shares have to be accounted for.

 

[StarFoxisDown!]

Lol, I nominate Dan Ives/Wedbush, with an honorable mention going to Adam Jonas/MorganStanley (only because he hired a new team of Analysts).

Cheers!

Well see the key word I said was "genuinely". I think analysts like Dan Ives and especially Adam Jonas know what they're doing when they ignore certain things about Tesla's advantage or downplay things

Gene I genuinely think doesn't understand parts of Tesla and it's advantages but he believes where Tesla will be down the road.

It's like.....he sees the forest through the trees........but damn does he ever get lost in those trees along the way

 

[Gigapress]

Pretty sure the coder of this simulation counts as a god. Elon pretty much worships Carmack that only managed to stitch a few pixels together:
View attachment 718795
Imagine what Elon would think of this dude:
View attachment 718796

I recall an old obscure interview from like 2008 when Elon was asked "Do you think science and religion can coexist?" and he simply replied "No."

In my opinion, as an investor that's exactly the answer I'm looking for in the CEO of a company because it indicates:

1) Unwillingness to give a political non-answer
2) Drawing the line that empiricism is more important than faith, emotions and tradition when deciding what's true

Both of these traits are critical for someone leading extreme innovation. I hope this does not offend or upset anyone here who is religious but this is actually a foundational element of my investment thesis so I think it's worth sharing.

 

[StarFoxisDown!]

At some point, the cash mountain will have to be dealt with. If there isn't 4+ more GFs in the pipeline, shareholders might start demanding something done with the cash in 2023.

Yup, I was at somewhere around 2024 or 2025 when they'd have to start doing something with the pile of cash. Now, depending on Berlin/Texas and of course FSD, it could be end of 2022 or mid 2023

Btw I think stock buyback is much more likely. I don't think Elon cares about dividends, at least anytime soon, but I do think he wouldn't mind taking more TSLA shares out of Wall St's hands considering his and the boards distaste for Wall St.

Just look at how much debt they've retired in the first half of this year. I think we're down to like 7.5 billion in debt now. They could wipe another 2-3 billion off over the next 1-2 quarters. Then they could install a 1 billion per quarter share buyback and their cash position would still be growing rapidly

 

[pewpewpew]

Agreed, I have been surprised by NPR's negative reporting on Tesla to date. Kai Rysdall in particular has been disappointing in this regard and has routinely questioned Tesla stock valuation, safety, culture, poked at Elon, etc. Doubt NPR is being intentionally malicious, probably just falling victim to outside FUD due to their lack ofsubject matter expertise. For example, reporting questioning the overall greenness of EVs due to batteries. There is probably a little of the all billionaires are evil liberal bent at play too. Even is this billionaire is trying to save the planet. Disappointing...

Kai Rysdall used to regularly have Linette Lopez on to talk markets. No doubt she's colored his judgement of Tesla behind the scenes. Doesn't take much to trash a company in the press.

 

[Mengy]

No they don’t. It’s the other way around, thriving successful companies are the ones who split their stock. The stock split did not make them become a thriving successful company, the stock split was caused by them being successful.

Technically a split does not affect the fundamentals. However, with regards to naked shorting and the tricks MM's use to hold a stock down long term a split can most certainly unwind a spring which has been sprung too tightly, as they'd need to account for all of those naked shorts.

This happened last time TSLA split as the shorts needed to cover, so the stock went up, and it would very likely happen again, thus raising the share price despite the fact it technically shouldn't.

Understand? Because I hate to see people make embarrassing statements multiple times on a subject.

 

[Pezpunk]

no it didn’t. The stock price would be at the same place it is today reagrdless of whether Tesla split it. The increase in stock price in the months following the stock split was purely coincidental and was based solely off the fundamentals of the company which are not affected by stock splits.

To sit here and try to claim that a similar reaction will happen every time Tesla were to split its stock again is reckless, misleading and untrue

you're dead wrong about this, for specific reasons that were discussed and witnessed in depth on this thread at the time, and have been discussed at length since. you're lacking important information and as a result making yourself look foolish.