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

[H Mak]

He only did it to give us something to chat about while the markets are shut

 

[SO16]

https://twitter.com/x/status/1457342967321083910

 

[Knightshade]

Can someone explain how Elon exercising his options will work. Does he end up buying back the shares he has just sold? Will he end up with more of less shares than he has today? Could his buying (exercising) cause a squeeze to counteract tomorrow's sell off?

A lot of folks are misunderstanding this.

It would be mathematically foolish for Elon to sell any old shares at all to deal with the options.

He ends up with far more shares than he began with if he ONLY pays his tax bill (selling new shares).... even if he sells 10% of total holdings he'd still have slightly more shares than he began with. More below.

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.

Nope. He'd actually pay a lot more tax that way.

He owes short term cap gains on all the exercised options when he exercises them.

The difference between strike and current market price (which is damn near 100% of the value since his strike is incredibly low) is his short term gains at time of sale for all the exercised options.

So he owes that tax for exercising- regardless of how he pays for it.

That sets the new basis value of those new exercised shares to the current market value.

If he sells any of THOSE shares immediately he pays zero additional taxes since he already got the bill for those at current value.

If he instead sells old shares he owes another 20% in long term cap gains on those old share sales.

Selling old shares is worse than selling new ones in this case.



We already knew he'd be doing exactly that- he literally said so last month.


The only difference now is he's talking about selling 10% of total shares.... He only needs to sell about 12.4 million shares to cover his tax bill. 10% of all his shares is either ~17 million or ~19.4 million depending if he counts the exercise shares in his total when doing the 10%.

So he'd be selling roughly 40-50% more shares than actually needed to pay the tax bill at 10% of all shares.

And he'd end up, post tax bill, with something in the 5-8 billion cash left over range.... last we knew he only owed something like 550 million against his borrowing vs shares... so he'd still have 4.5-7.5 billion left over if he paid that off.

Assuming he's not building a Scrooge McDuck vault he'd likely already have some plan for that cash that he thinks is a better idea than holding more TSLA stock.

 

[22522]

You do know the people bullying do not believe in private ownership of anything, let alone stock, means of production or differences in retirement condition or healthcare.

If you can find the information for what qualifies as a union shop, no Union employee can own stock in the company. I struggle to see how to disagree that the intention is that workers do not own stock.

 

[dl003]

Imagine Elon is going to sell his stock through MS or GS. Surely these guys are reaching out to their big clients to tell them “You ****ers better not sell anything this morning. This is a nothingburger and we have a big load coming your way at a discount.”

It’s so logical I doubt it’s gonna happen though. We could very well be observing the pinnacle of humankind’s mathematical prowess from the last 30 pages or so of this thread.

 

[22522]

Dog toy marketing end of year price estimate, update.

As you know, the dog toy marketing end of year price estimate was $1600.

Notice: The toy is on the ground!

But the dog is quick, and has better night vision. And sharp teeth, less susceptible to slobber - the canine teeth act as opposable thumbs.

Often, when a dog is marketing the toy, the room is full of people with other agendas (See Pravda).

Dog marketing increases the value and awareness of the dog toy, by momentarily dropping it.

To sum it all up:

• The number of people who will be aware the financial possibilities of TSLA share ownership will go up because of Elon's tweet.
• The benefits of stock ownership to the common human have been buried by the house guests (loudest person in the room - big talker).
• Elon by his tweet has saved capitalism, because capitalism dies in darkness and Pravda is paid for darkness. Elon has made a platform for "common human capitalism."

Dog toy marketing end of year price estimate, update.

It is now a range: $1600 ++

Because of the dog toy drop, a key part of dog toy marketing, as done by dogs.

 

[2daMoon]

It appears to me that Elon finds himself in a position where he will have to do something in order to manage the pending stock options expiration.

By doing it this way, with a 4D Chess move, he will:

1) Bring more attention to Tesla via his favorite tool, Twitter. Some percentage of Twitterers who take time to look deeper may be inspired to invest, or, at least gain a more positive opinion of Elon/Tesla. He will have to pay the piper anyway, why not take the opportunity to generate greater awareness in the process?​

​

2) This also may likely result in a manufactured "correction" in the TSLA price. Possibly avoiding any market-driven downturn that could reach further lows than this move might generate were Elon not have made this very public move. Considering the (well deserved) spike of late, forcing a breather to establish the new normal with a momentary flattening in the meteoric SP rise could be a good thing.​

​

3) This will result in a buying opportunity for those HODLers with couch money to spare ( @Sofie ?) to supplement their positions.​

Everyone here should be applauding Elon for taking advantage of this opportunity to make Lemonade from the circumstances which decisions about exercising those earned options have him facing. I don't think there could possibly be a more brilliant way to manage this to create maximum long term benefit for Tesla.

 

[Paracelsus]

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

Great post………..and adding to that there is high likelihood that WS has been planning on having those shares soon available for purchase because their decisions are only rooted in greed and thus they could never conceive of Elon not selling them. MMs believing Elon’s shares are just around the corner could have easily encouraged them to take additional risks in their efforts to cap this gamma squeeze over the past several weeks

“Uncle Leo and other whales buying like crazy to squeeze, no problem, the TSLA replacement shares are just around the corner - ‘short away’”

…………Oooops, suddenly 2% of the anticipated TSLA available float doesn’t exist to cover short positions with…….because a Twitter poll outcome said ‘don’t sell’…..?

Don’t look now but there may not be a single box of Depends Undergarments left on the grocery store shelves in The Hamptons as MMs are held hostage until this is over. If Elon goes Total Boss Beast Mode then there is a possibility that the term Gamma Squeeze is going to be an understatement

Announce a stock split and don’t sell shares and Elon might end up in the same place financially as if he would have sold - while financially gutting those that spent the last decade trying to do him in!

 

[Cattledog]

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.

That would make for an interesting poll and one of those cool moving bar graphs, as the combined values of MSFT, APPL, AMZN and GOOG is a dynamic target. Right now we have (from Yahoo Finance):

MSFT: $2.523 T
AAPL: $2.482 T
GOOG: $1.979 T
AMZN: $1.785 T
TOTAL $8.769T

TSLA: $1.227 T

 

[dm28997]

A lot of folks are misunderstanding this.

It would be mathematically foolish for Elon to sell any old shares at all to deal with the options.

He ends up with far more shares than he began with if he ONLY pays his tax bill (selling new shares).... even if he sells 10% of total holdings he'd still have slightly more shares than he began with. More below.




Nope. He'd actually pay a lot more tax that way.

He owes short term cap gains on all the exercised options when he exercises them.

The difference between strike and current market price (which is damn near 100% of the value since his strike is incredibly low) is his short term gains at time of sale for all the exercised options.

So he owes that tax for exercising- regardless of how he pays for it.

That sets the new basis value of those new exercised shares to the current market value.

If he sells any of THOSE shares immediately he pays zero additional taxes since he already got the bill for those at current value.

If he instead sells old shares he owes another 20% in long term cap gains on those old share sales.

Selling old shares is worse than selling new ones in this case.



We already knew he'd be doing exactly that- he literally said so last month.


The only difference now is he's talking about selling 10% of total shares.... He only needs to sell about 12.4 million shares to cover his tax bill. 10% of all his shares is either ~17 million or ~19.4 million depending if he counts the exercise shares in his total when doing the 10%.

So he'd be selling roughly 40-50% more shares than actually needed to pay the tax bill at 10% of all shares.

And he'd end up, post tax bill, with something in the 5-8 billion cash left over range.... last we knew he only owed something like 550 million against his borrowing vs shares... so he'd still have 4.5-7.5 billion left over if he paid that off.

Assuming he's not building a Scrooge McDuck vault he'd likely already have some plan for that cash that he thinks is a better idea than holding more TSLA stock.

Interesting speculations. Not being a CPA I wonder if it is possible to donate to some charity to offset the tax bill. Less money going to the unions and fossil fuel interests; that way helping to actually offset Climate Disruption. A CARBON TAX is what would really help but it seems the gov. doesn't really want to stop burning fossil fuels. Elon does and the FUD they use against him is abhorrent. The disruption is coming. Like Sandy said they might just have paradigm paralysis similar to the PC and internet disruptions. I am actually enjoying this as real progress might be painful but the results might just prevent homo sapiens from going extinct. We are already see the start of mass extinctions with other mammals and insects.

 

[bkp_duke]

Per our CPA, it absolutely is.

You donate the shares, you DON'T cash them out. You then get the full tax write-off value of the shares at the time of donation, but don't pay any capital gains tax because you didn't "realize the gain" and cash them out.

You can then use this donation to offset taxes against those gains that you do realize (i.e. the shares he does cash out).

Just one more way papa Elon can stick it to the gov.

 

[goinfraftw]

Personally - I've been busy with a house purchase and partial sale (the rest of it is in all the way) of TSLA once it reached $1T+ (alongside DAF stuff)...

Thoughts - The rapidity, alongside the advent of climate change disasters and general societal tensions worldwide, shouldn't be understated with Tesla's ramp up in share price in only 2 years, IMO. I don't like it and, if this was an any other company scenario, the share price would have grown more linearly alongside revenue growth over the years between 2015-present. It isn't and that has a lot of network effects attached to how utterly insane this spring-loaded action has been.

...it's like it's almost like its being overbought in order to impede Tesla's progress and have everyone there retire before the mission is completed. The cleany energy ecosystem isn't even built yet (even if its been de-risked by the infrastructure bill). My 2 cents.

 

[Singuy]

Per our CPA, it absolutely is.

You donate the shares, you DON'T cash them out. You then get the full tax write-off value of the shares at the time of donation, but don't pay any capital gains tax because you didn't "realize the gain" and cash them out.

You can then use this donation to offset taxes against those gains that you do realize (i.e. the shares he does cash out).

Just one more way papa Elon can stick it to the gov.

In this environment, Elon decided to send a message that he is not purposely tax dodging. So perhaps impossible to do what you said with getting maximum punishment from the court of public opinion. But I do agree with you that it's the best possible outcome for his tax dilemma.

 

[SunCatcher]

Great post………..and adding to that there is high likelihood that WS has been planning on having those shares soon available for purchase because their decisions are only rooted in greed and thus they could never conceive of Elon not selling them. MMs believing Elon’s shares are just around the corner could have easily encouraged them to take additional risks in their efforts to cap this gamma squeeze over the past several weeks

“Uncle Leo and other whales buying like crazy to squeeze, no problem, the TSLA replacement shares are just around the corner - ‘short away’”

…………Oooops, suddenly 2% of TSLA doesn’t exist to cover short positions with…….because a Twitter poll outcome said ‘don’t sell’…..?

Don’t look now but there may not be a single box of Depends Undergarments left on the grocery store shelves in The Hamptons as MMs are held hostage until this is over. If Elon goes Total Boss Beast Mode then there is a possibility that the term Gamma Squeeze is going to be an understatement

Announce a stock split and don’t sell shares and Elon might end up in the same place financially as if he would have sold - while financially gutting those that spent the last decade trying to do him in!

Interesting possibility, but I can't imagine that Elon would, almost out of spite, allow that much capital to burn up and be wasted right in front of everyone's eyes. Isn't that the effect that would come out of what you describe? I don't see Elon as a Wall Street Bets kind of guy. Something needs to be done with those options that are about to expire, or they'll go to waste, isn't that right?

 

[3'sterly]

Great theater!
(the BOTler did it)
So the poll end in about 3 hours, but without a Twitter account etc, I don’t have a clue to the percentages.
You folks are my eyes and ears into the dark side. How’s it shaping up?

 

[MikeC]

Great theater!
(the BOTler did it)
So the poll end in about 3 hours, but without a Twitter account etc, I don’t have a clue to the percentages.
You folks are my eyes and ears into the dark side. How’s it shaping up?

57 yes
43 no

3.2M votes

 

[woodisgood]

Great theater!
(the BOTler did it)
So the poll end in about 3 hours, but without a Twitter account etc, I don’t have a clue to the percentages.
You folks are my eyes and ears into the dark side. How’s it shaping up?

CNN is able to project that Yes will win, 57 to 43.

 

[kbM3]

A lot of folks are misunderstanding this.

It would be mathematically foolish for Elon to sell any old shares at all to deal with the options.

He ends up with far more shares than he began with if he ONLY pays his tax bill (selling new shares).... even if he sells 10% of total holdings he'd still have slightly more shares than he began with. More below.




Nope. He'd actually pay a lot more tax that way.

He owes short term cap gains on all the exercised options when he exercises them.

The difference between strike and current market price (which is damn near 100% of the value since his strike is incredibly low) is his short term gains at time of sale for all the exercised options.

So he owes that tax for exercising- regardless of how he pays for it.

That sets the new basis value of those new exercised shares to the current market value.

If he sells any of THOSE shares immediately he pays zero additional taxes since he already got the bill for those at current value.

If he instead sells old shares he owes another 20% in long term cap gains on those old share sales.

Selling old shares is worse than selling new ones in this case.



We already knew he'd be doing exactly that- he literally said so last month.


The only difference now is he's talking about selling 10% of total shares.... He only needs to sell about 12.4 million shares to cover his tax bill. 10% of all his shares is either ~17 million or ~19.4 million depending if he counts the exercise shares in his total when doing the 10%.

So he'd be selling roughly 40-50% more shares than actually needed to pay the tax bill at 10% of all shares.

And he'd end up, post tax bill, with something in the 5-8 billion cash left over range.... last we knew he only owed something like 550 million against his borrowing vs shares... so he'd still have 4.5-7.5 billion left over if he paid that off.

Assuming he's not building a Scrooge McDuck vault he'd likely already have some plan for that cash that he thinks is a better idea than holding more TSLA stock.

Agree with one small nit pick.

Elon also will have to pay the Investment tax of 3.8% which applies to income over $200,000 for singles, on top of 20% capital gains tax.

 

[Sofie]

It appears to me that Elon finds himself in a position where he will have to do something in order to manage the pending stock options expiration.

By doing it this way, with a 4D Chess move, he will:

1) Bring more attention to Tesla via his favorite tool, Twitter. Some percentage of Twitterers who take time to look deeper may be inspired to invest, or, at least gain a more positive opinion of Elon/Tesla. He will have to pay the piper anyway, why not take the opportunity to generate greater awareness in the process?​

​

2) This also may likely result in a manufactured "correction" in the TSLA price. Possibly avoiding any market-driven downturn that could reach further lows than this move might generate were Elon not have made this very public move. Considering the (well deserved) spike of late, forcing a breather to establish the new normal with a momentary flattening in the meteoric SP rise could be a good thing.​

​

3) This will result in a buying opportunity for those HODLers with couch money to spare ( @Sofie ?) to supplement their positions.​

Everyone here should be applauding Elon for taking advantage of this opportunity to make Lemonade from the circumstances which decisions about exercising those earned options have him facing. I don't think there could possibly be a more brilliant way to manage this to create maximum long term benefit for Tesla.

Yep. I’ll see what I can do

 

[kbM3]

With everyone speculating what Elon would do with the cash, I believe the greatest possibility is that he will invest more in one of his present companies other than Tesla, or start a new one.