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

[heltok]

Elon’s decision to sell or not to sell is probably very close to same expected value. Not selling is what he has been doing all the years before, so clearly he did not think that was a terrible decision. He would not offer to sell based on a poll if he thought it was a terrible decision. So imo the probable reason is that he thinks it’s close and that the lulz-factor of letting twitter decide is worth more than the difference between these decision.

Imo we are giving this way to much attention. Some more relevant things today are that 700 random vehicle inspect at factory paid ”recall”, the FSD 10.4 release notes and early feedback and Berlin wrapped cars. Imo we should be discussing those…

 

[OrthoSurg]

Tsla has risen drastically in last few weeks. I am thinking it’ll trade sideways for few months or so, (maybe even a year) in the range of 1200-1500 after the EOY numbers/q1 results. I am tempted to sell some to pay off the mortgage completely and be debt free. The amount of shares sold would be 10% of my tsla hodlings. The mortgage rate is only 2% so I am struggling to see the benefits. Especially since 2 factories are coming online. Is this a stupid idea? I understand tsla will likely go up higher even higher than the all knowing StrongGuys price target in the future. But love the thought of being debt free. My personal Greed index is high and everyone is exuberant about tsla currently. It scares me a bit (in short term). Anyone having similar dilemma?

Now that said, I sold some shares to pay off my M3 and wife’s mercedes 2years ago w tsla gains and I paid for it dearly. This is adding to the “fool me twice” issue as well….

betting TSLA won’t increase more than 2% in the next year is one of the riskiest bet out there

but that is also my assumption so I started selling puts and covered calls 30% from the actual stock price and will do so for the next 6-9 months. Then I will stop selling covered calls because I will be ready for TSLA teach the 2T valuation mark

 

[OrthoSurg]

Sorry for the longer posts, but here’s one example of the potential power of building unprecedented innovative competency:

Apple for decades underperformed in the market. The multi trillion dollar market cap we see today was only made possible by the iPhone, which itself was only made possible by the iPod, which itself was only made possible by the development of a pocket size hard drive. Like Musk, Jobs had vision, in this case an understanding that a pocket size music player would be very valuable, and that in order to achieve it, somebody had to build a pocket size hard drive. But unlike Musk, Jobs had not built that kind of innovation competency, so he instructed his deputies to search the Japanese tech markets to see if one existed. It took a few years until one of his deputies literally stumbled across one that Toshiba had designed, without an obvious immediate use for it so it was hard to find. That chance discovery ultimately led to $2T in shareholder value.

Today, if Musk needed a smaller hard drive than what existed commercially, he would assemble a small team of existing employees who would likely design it in months.

Tesla is not just the next Tesla. It’s the next Apple. Multiple Apples.

How many times have we read about people being shocked that TSLA is worth more than all the 10 most valuable car makers valuations combined?

About as many times as we will hear it is more valuable than MSFT, APPL, AMZN and GOOG valuations combined. It is just a matter of time.

 

[Dreadnought]

Well, it appears this week was a pretty bad week to consider options trading

Same as the prior week and the coming week, it was a bad week for 50% of the traders and a good week for the other half. Suppose your comment was made tongue-in-cheek but quick reminder to all that options are a zero sum game. Every trade has a winning and a losing side.

 

[Todd Burch]

My opinion on all this:

1. Elon’s sale of Tesla stock was inevitable for tax reasons anyway. This doesn’t really change that—it only changes the amount by a small bit and certainly changes the politics.

2. Lots of funds are underweight TSLA. I suspect that the sale of this stock will be arranged with underweight funds to do a bit of a “trade” so that there is very little impact from the sale itself. The time period will probably be spread out a bit.

3. Nobody knows what will happen with the stock short term (we never do, and it’s why options are straight-up gambling) but if it does go down, I suspect it will mostly be from retail holders overreacting, and will only drop for a short period.

I mean come on folks, we’re talking 2%. The sale will probably be spread out over weeks. There’s more than enough buyers IMO.

After tomorrow, if it does drop a bit, when people see the sky isn’t falling, it will recover.

People are just overreacting, as they often do.

This will be but a blip in the rear view mirror within a few months. Go back and watch Rob’s interview with Pierre Ferragu. It will make you feel much better.

 

[mongo]

betting TSLA won’t increase more than 2% in the next year is one of the riskiest bet out there

Sure, but that's not this situation. @Nolimits is weighing outstanding debt at a known rate against potential future gains.
Betting TSLA won't increase more than 2% in the next year is analogous to selling naked Jan 23 1250 calls.
Covered 1250s get you a 25% return on present value without infinite upside risk.

Same as the prior week and the coming week, it was a bad week for 50% of the traders and a good week for the other half. Suppose your comment was made tongue-in-cheek but quick reminder to all that options are a zero sum game. Every trade has a winning and a losing side.

Since the market cap can change, both sides of an option contract can be a win.
Buy shares at 1000, sell 1200 call for 50.
Stock goes to 1300.
Writer nets $250 a share (1200-100+50)
Buyer nets $50 a share (1300-1200-50)
Neither lost money, just had less gains than possible.

 

[FS_FRA]

Well, it appears this week was a pretty bad week to consider options trading

nope. It’s always a question of how you position your option trades vs. risk… I opened bullish put spreads for next week -900/+700. That’s way OTM, and easily managed (roll down) even at a 20% dump. But do we all seriously think TSLA is going to drop to 950 by Friday?
The premium I earned for that position equates to close to 2.5% return on capital on a monthly basis….good enough for me.

Now, those that got greedy and opened close-to-ATM spreads for next week will probably have to do some position management next week.

 

[Favguy]

Tsla has risen drastically in last few weeks. I am thinking it’ll trade sideways for few months or so, (maybe even a year) in the range of 1200-1500 after the EOY numbers/q1 results. I am tempted to sell some to pay off the mortgage completely and be debt free. The amount of shares sold would be 10% of my tsla hodlings. The mortgage rate is only 2% so I am struggling to see the benefits. Especially since 2 factories are coming online. Is this a stupid idea? I understand tsla will likely go up higher even higher than the all knowing StrongGuys price target in the future. But love the thought of being debt free. My personal Greed index is high and everyone is exuberant about tsla currently. It scares me a bit (in short term). Anyone having similar dilemma?

Now that said, I sold some shares to pay off my M3 and wife’s mercedes 2years ago w tsla gains and I paid for it dearly. This is adding to the “fool me twice” issue as well….

I can relate to your instincts here. We are still running £190k of debt at an aggregate of about 2.25%. I'm constantly having to fight my instincts to repay this debt, despite the fact it equates to under 4% of our TSLA holdings now, so whatever happens, barring Armageddon, it's never going to be an issue and repaying it makes no sense! The programming I was brought up with to pay off all debt as soon as possible under all circumstances appears to be shockingly effective.

 

[Artful Dodger]

1. Elon’s sale of Tesla stock was inevitable for tax reasons anyway. This doesn’t really change that—it only changes the amount by a small bit and certainly changes the politics.

It may be possible in principle to reduce taxes payable by paying the long-term capital gains on existing shares, then NOT needing to sell a portion of any newly vested shares immediately to pay taxes (presumably a short-term capital gain?). Paging @st_lopes opinion.

Elon could likely borrow against his assets to pay these taxes, with his current net worth being North of $338B. Yet, we don't know the details of his margin facility, nor his plans for any proceeds so we're not in a good position to judge.

The politics is a touchy subject. I think Elon still has some hard feelings toward Alameda County and the State of California for his perceived treatment with the 9-wk Fremont shutdown during covfefe. That is likely at least part of the reason he's moved away from California (as he promised)

Elon Musk sells 3 more California homes for $41M after vow to 'own no house'

The billionaire CEO pledged that he would sell "almost all physical possessions" last spring.

www.foxbusiness.com

The current Adminstration's Union pandering and NHTSA overreach are not giving Elon any cozy feelings. Is that enough to affect his calculus, or is it all political theatre which goes nowhere? Again, we likely don't know enough to judge intentions or outcomes. The Senate Parliamentarian and the US Federal Courts have yet to provide an opinion, so I reserve mine as well.

Elon, however, is both a man on a mission and a man in a hurry. So I guess we're gonna see, wot?

 

[The Accountant]

Ths article explains well why Elon has to sell stock in order to exercise his options. He needs 12 billion cash for taxes, i.e. he needs to sell close to 10% of his stock for this.

Thus this is no big deal, he just used this opportunity to further get Biden off his back.

Musk's Expiring Tesla Stock Options Put Elon in Perverse Tax Dilemma

Elon Musk's expiring Tesla stock options have put him in a perverse tax dilemma. This tricky situation is forcing him to either take on debt or sell shares.

www.hffinancial.com

What's the fuss about? . . . We all knew he was selling . . .
. . . .
He told us during his interview with Kara Swisher at CodeCon 2021.

“I have a bunch of options that are expiring early next year so that huge block of options will sell in Q4 — I’ll have to or they’ll expire. And my top marginal tax rate is 53%.”

Notice he said "sell in Q4" not "exercise in Q4" These 26m options represent about 10% of his total shares/options.

 

[Singuy]

About the stock price, it will be pretty shocking if we see large downside movement. MM's best strategy is to have Tsla bull flag from here and bleed out all the option contracts. Expect consolidation and price movements in small ranges going forward until the next major catalyst.

 

[StateoftheArt]

May we live in interesting times!

Does Elon selling a good chunk of stonks change anything?
Yes and No.

Yes:
Elon is soul spirit animal of Tesla.
From now on, there will always be the nagging thought of "Maybe Elon is over Tesla?". Maybe he got tired of working 100+ hours a week, dealing with Tesla drama. Maybe he will quit as CEO as well. Maybe, maybe ... maybe.
These considerations have always been known, but recently everything (FSD, dojo, bot) and so on has pointed far into the future. There was the hope, that with all this, Elon could keep being engaged and interested in Tesla.
Selling off stonks begs the question: Is this the beginning of Elon divesting from Tesla - both economically and re. his time and focus?

No:
As others have pointed out: This may well be a political move.
And one that Tesla HODL'ers should support inasmuch as we are invested in Tesla because we share Elons general outlook on the world and the future.

Maybe Elon did some first principles thinking, and have identified a new threath to humanity: Corosive ideology, dragging us down, instead of lifting us up.
What if that ideology over time will develop or devolve into a "Earth First" movement, effectually banning space exploration?
What if that ideology over time will stymie humanity and we devolve into barbarism?
Regard Elons remarks about the fragility of civilization and the light of consciousness.
Maybe the window for changing the outcome of the future is starting to close, and the light of consciousness is flickering. Maybe that flame needs re-kindling.

What if it is not global warming or evil AIs or meteors or pandemics that will spell the end for humanity, but instead of excellence and innovation we will become obsessed with equality at all costs - even if the end result might well be a Harrison Bergeron-scenario.

Elon is an engineer - and all problems are engineering problems.
How to change the future? Change peoples minds. How to do that? Education!

We know that Elon's ventures start out as what for other people would be a rather lame joke - consider Boring.
I think that Elon is very serious about T.I.T.S.
In fact, I would not be surprised if TITS is only the first in a chain of new education initiatives.

TLDR;
In order to save the world Elon has no choice but to engineer giant TITS all over America!

May we live in interesting times!

Does Elon selling a good chunk of stonks change anything?
Yes and No.

Yes:
Elon is soul spirit animal of Tesla.
From now on, there will always be the nagging thought of "Maybe Elon is over Tesla?". Maybe he got tired of working 100+ hours a week, dealing with Tesla drama. Maybe he will quit as CEO as well. Maybe, maybe ... maybe.
These considerations have always been known, but recently everything (FSD, dojo, bot) and so on has pointed far into the future. There was the hope, that with all this, Elon could keep being engaged and interested in Tesla.
Selling off stonks begs the question: Is this the beginning of Elon divesting from Tesla - both economically and re. his time and focus?

No:
As others have pointed out: This may well be a political move.
And one that Tesla HODL'ers should support inasmuch as we are invested in Tesla because we share Elons general outlook on the world and the future.

Maybe Elon did some first principles thinking, and have identified a new threath to humanity: Corosive ideology, dragging us down, instead of lifting us up.
What if that ideology over time will develop or devolve into a "Earth First" movement, effectually banning space exploration?
What if that ideology over time will stymie humanity and we devolve into barbarism?
Regard Elons remarks about the fragility of civilization and the light of consciousness.
Maybe the window for changing the outcome of the future is starting to close, and the light of consciousness is flickering. Maybe that flame needs re-kindling.

What if it is not global warming or evil AIs or meteors or pandemics that will spell the end for humanity, but instead of excellence and innovation we will become obsessed with equality at all costs - even if the end result might well be a Harrison Bergeron-scenario.

Elon is an engineer - and all problems are engineering problems.
How to change the future? Change peoples minds. How to do that? Education!

We know that Elon's ventures start out as what for other people would be a rather lame joke - consider Boring.
I think that Elon is very serious about T.I.T.S.
In fact, I would not be surprised if TITS is only the first in a chain of new education initiatives.

TLDR;
In order to save the world Elon has no choice but to engineer giant TITS all over America!

Bingo, Elon is and has been red pilled. Time for the awakening. “There are those who see, those who see when they are shown and those who don’t see” —Da Vinci

Thank. God. for. Elon. Musk.

 

[mongo]

Regarding insider trading from an uninformed rando:

The key issue is trading for personal gain based on insider knowledge. Typically, this is avoided by setting up a 10b5-1 trading plan far ahead of time (an affirmative defense).
Rule 10b5-1
https://www.ecfr.gov/current/title-17/chapter-II/part-240/subpart-A#240.10b5-1
However, we know this is not required as shown by the 20 million in new shares Elon purchased round about the time of the SEC penalty against Tesla.
SEC FORM 4

Spoiler: side note

56,915 shares presplit, 284,565 post. $346 million present value

Unless it can be shown that Elon sold now due to non-public information, he can sell shares.

Tesla has no specific restrictions:

Stock Transactions

Hedging, Short Sales and Rule 10b5-1 Trading Plans

Tesla has an insider trading policy that prohibits all of our directors, officers and employees from, among other things, engaging in short sales, hedging or similar transactions designed to decrease the risks associated with holding Tesla securities. This prohibition encompasses transactions in publicly-traded options, such as puts and calls, and other derivative securities with respect to Tesla securities, but not transactions designed to facilitate portfolio diversification, such as broad-based index options, futures or baskets.

In addition, two of Tesla’s current executive officers and two directors have entered into Rule 10b5-1 trading plans that are effective as of the date of this filing.

 

[InDaClub]

What's the fuss about? . . . We all knew he was selling . . .
. . . .
He told us during his interview with Kara Swisher at CodeCon 2021.

“I have a bunch of options that are expiring early next year so that huge block of options will sell in Q4 — I’ll have to or they’ll expire. And my top marginal tax rate is 53%.”

Notice he said "sell in Q4" not "exercise in Q4" These 26m options represent about 10% of his total shares/options.

I have no problem with Elon selling 10% of his total shares. What I find most surprising, as a Tesla investor, is Elon's tweet "I will abide by the results of this poll, whichever way it goes", as if a Twitter vote is some source of truth. Twitter can be a source of useful information, but it is also a source of (crypto) scams and people who want Tesla to fail.

 

[Unpilot]

I can not find a soul that can out chess elon. And everyone that voted can't even play 3-d checkers. never mind 3-D chess.
I feel as though if I voted I would be stupider for it.

Is that possible...

 

[mongo]

Total boss move: Twitter votes no, Elon lets options expire. Governments lose out on more money than Elon would have gained.

 

[nativewolf]

What's the fuss about? . . . We all knew he was selling . . .
. . . .
He told us during his interview with Kara Swisher at CodeCon 2021.

“I have a bunch of options that are expiring early next year so that huge block of options will sell in Q4 — I’ll have to or they’ll expire. And my top marginal tax rate is 53%.”

Notice he said "sell in Q4" not "exercise in Q4" These 26m options represent about 10% of his total shares/options.

Yep, that's what I remembered so I didn't know what the twitter thing was about but then I don't have a twitter account or use facebook or any gram/snap/pop/tok so I'm pretty hopeless in that regards. I just knew he was going to have to have some cash and that he didn't really seem all interested in material goods so what does that leave you? Vacations to Mars.

 

[SmokyPeat]

I have no problem with Elon selling 10% of his total shares. What I find most surprising, as a Tesla investor, is Elon's tweet "I will abide by the results of this poll, whichever way it goes", as if a Twitter vote is some source of truth. Twitter can be a source of useful information, but it is also a source of (crypto) scams and people who want Tesla to fail.

It would take much more than scammers voting on a twitter poll to bring down Tesla at this point. There's plenty of Tesla FUD out there already- I see no reason why we should be contributing to those efforts.

 

[Stretch2727]

I went to check the result of the poll and see Elon is being political. He changed "abide".

 

[Singuy]

I have no problem with Elon selling 10% of his total shares. What I find most surprising, as a Tesla investor, is Elon's tweet "I will abide by the results of this poll, whichever way it goes", as if a Twitter vote is some source of truth. Twitter can be a source of useful information, but it is also a source of (crypto) scams and people who want Tesla to fail.

Well Elon is making a point that "if you think we billionaires are trying to tax dodge, I will let you guys decide what I should do because I don't actually give a F".