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

[Pezpunk]

I thought there might be a sale, so I went shopping. Just a little pocket change. Picked up another 150 shares at 984.

 

[Mengy]

Let's get something straight Tesla doesn't pay dividends. So what else do I have besides hopeful stock price appreciation? I have gone over all incredibly positive events Berlin, Austin, new cell development, lack of batteries for OEM's, market domination in both Europe and China with the wife. Telsa's debt is ludicrously small expecially compared to other OEMs. It's why she asked the question in the first place. While everything says Tesla is in a GREAT (both long and short term) we are seeing really poor correlation. One day or even a few hours impact. I predicted this last week in a prior post.

What if the stock price stagnates here after Austin and Berlin get fully ramped up? Will you still feel like it's ok or to be expected?

Realize TSLA's PE Ratio was rather high at the beginning of this year compared to most other high value tech stocks in the market. With each quarter Tesla continues to improve it's margins and financials, so while the stock has been flat this year the PE keeps on compressing each quarter, coming down to something more "comfortable" to Wall Street.

So while it might feel like TSLA has stalled out, realize it is winding up to run up higher again. The PE will continue to fall and at some point TSLA will become incredibly attractive to the even the big stuffy short sighted investors, so much they won't be able to resist buying in. There will come a point where the MM's can't hold it down any longer, but until that moment happens the stock will appear to be languishing.

Relax, breathe, we are going in a highly lucrative direction even if it may not outwardly appear so. The stock is going much higher from here, eventually. It will just require some time and patience.

 

[wipster]

Amazing! I am just amazed at how often things go the way Elon wants them to. He is a master of making big things happen!

Yeah he's got something up his sleeve that's for sure. Just hope this doesn't work out like the last 420 secured Twitter post, we all remember that...

 

[betstarship]

Market is being pretty weird. I understand the TSLA crash but why did everything else crash with it?

BTC just ratcheted up

 

[generalenthu]

This is a bit hand-wavy. The large stakeholders in Twitter are index funds who need to sell. They can no longer hold any significant number of shares.

Let's run some numbers:

Elon put together a bid for 43.4 Billion - $54.2 per share for 800.6 million shares. It does have 6.4 billion in Cash, which could offset 5.6 Billion in Debt that needs to be bought out. This is assuming that the term debt / bridge loans are not secured against this cash. (Also cash could need to be repatriated for this and this might become difficult)

The details of the financing are here among other places.



Out of this 21 Billion in cash Elon is committing, his current Twtr shares will account for 4 Billion. Assuming he wants to keep a simple majority in the private entity, he will need to bring in another 6.5 Billion at least (21 billion*50% - 4 billion) to the table. More likely though, he will have to bring in close to 12 or 13 billion.

This cannot be margin loans as they are already accounted for. I am not sure where the rest will come from. I suppose he has some cash left over from some of the sales last year when he raised more cash than he needed to. But I believe he used up most of that for his purchase of Twitter shares.

Feel free to refute this math, or come up with alternate scenarios.

I suppose this is timely as Twitter accepted the bid a few minutes ago. I have been worried how Elon can finance this bid and get majority ownership and make numbers add up.

There is one mistake in my numbers above. The margin debt is actually cash to Elon, which becomes his equity in the venture (And not debt as per my post above). So his total Equity contribution commitment is 16.5 Billion so far (12.5 B Margin debt + 4 Billion shares), with 13 Billion in debt. This adds up to 29.5 Billion, with a further 17 Billion to be raised from Private Equity, etc.

To make the numbers add up to 51%, Elon only needs to only put in another half a billion or so, which seems easy! This is assuming that he will find investors for the remaining 16 Billion and change.

I hope that can happen without much drama. Thanks to those who engaged in the discussion.

 

[UltradoomY]

I suppose this is timely as Twitter accepted the bid a few minutes ago. I have been worried how Elon can finance this bid and get majority ownership and make numbers add up.

There is one mistake in my numbers above. The margin debt is actually cash to Elon, which becomes his equity in the venture (And not debt as per my post above). So his total Equity contribution commitment is 16.5 Billion so far (12.5 B Margin debt + 4 Billion shares), with 13 Billion in debt. This adds up to 29.5 Billion, with a further 17 Billion to be raised from Private Equity, etc.

To make the numbers add up to 51%, Elon only needs to only put in another half a billion or so, which seems easy! This is assuming that he will find investors for the remaining 16 Billion and change.

I hope that can happen without much drama. Thanks to those who engaged in the discussion.

He just got half a $Billy last week from a Boring Co. funding round......

 

[samppa]

I suppose this is timely as Twitter accepted the bid a few minutes ago. I have been worried how Elon can finance this bid and get majority ownership and make numbers add up.

There is one mistake in my numbers above. The margin debt is actually cash to Elon, which becomes his equity in the venture (And not debt as per my post above). So his total Equity contribution commitment is 16.5 Billion so far (12.5 B Margin debt + 4 Billion shares), with 13 Billion in debt. This adds up to 29.5 Billion, with a further 17 Billion to be raised from Private Equity, etc.

To make the numbers add up to 51%, Elon only needs to only put in another half a billion or so, which seems easy! This is assuming that he will find investors for the remaining 16 Billion and change.

I hope that can happen without much drama. Thanks to those who engaged in the discussion.

Any clue on when the actual purchase will happen?

 

[StealthP3D]

I'm actually prepared to see TSLA go down on a confirmed Twitter acquisition by Elon based on uncertainty around how he finances it (sell TSLA?) and whether it will distract him significantly.

Right. Because people think Twitter will distract him from Tesla. But then they will see how powerful Elon Musk is. How he shapes reality to bend to his will. This works because his will makes sense. And then people will see this and want to own companies under his control. Who doesn't want a CEO that has repeatedly demonstrated power and the ability to succeed?

People who doubt Elon's ability to succeed in the social media industry will be shockingly wrong. He will transform it for the better. People saying disgusting, stupid and false things will still be able to say those things, but they will no longer be promoted as they are currently. And the algorithms will be public and constantly adjusted as bad actors try to game them. Twitter will become a more real place and the good people with interesting and valuable things to say will rise to the top.

I don't want to be overly dramatic, but I think humanity has just been saved! Considering the path we were on, this is a big deal.

 

[mickificki]

https://twitter.com/x/status/1518673324167118851

 

[generalenthu]

He just got half a $Billy last week from a Boring Co. funding round......

I dont think he was selling his stake in The Boring Company. So, that would go to TBC and not him personally.

 

[wipster]

The stock price represents the markets perception of the value of the company. Nothing more, nothing less. History shows us the market is often wrong. Look towards May/June of 2019. The most you could sell a share of TSLA for was around thirty-something dollars. Do you think that represented it's true value to an investor? Many of us recognized this and were willing to wait a couple of years for the market to realize they were wrong. Those that held on are glad they did while those who sold out as soon as it doubled in value don't want to think about it because they didn't know the true value of what they held. Many of us made millions by being patient.



A true investor doesn't think in terms of hours or days. They think in terms of years, sometimes many years. A true investor knows there is no point in trying to predict how the market will value the shares next week. Personally, I am looking for at least one more 10X of my investment in TSLA although I will probably sell 10-20% of it before it gets there and constantly re-appraise along the way. I think 10X will likely happen in less than 8 years and possibly as soon as 4-5 years. Even in my bear case scenario the shares will be worth at least double or triple what they sell for today so I feel it is a very low risk investment.



That's not what I want to happen but if the price is still $1k after both Austin and Berlin are fully ramped I will either be living in some kind of alternative reality or another company(s) will have magically disrupted Tesla. I don't expect either, hence why I'm an investor. I've been investing largely the same way for decades and the profits have been beyond my wildest dreams. I used to be poor, for the last two plus decades I have bought whatever I wanted, lived wherever I wanted, skied all winter and spring, hiked and biked all summer and fall, eaten and drank wherever I wanted, travelled when, where and how I wanted, while being beholden to no one for my livelihood or my timeline. And my accounts keep growing to new all-time highs. I would be a billionaire by now had I worked a reasonable paying job and lived off my salary instead of doing whatever I wanted. Investing is the gift that just keeps on giving but you have to stop thinking in terms of what the market values the company at and look more to where you think the company will be in 2 or 5 more years.

Either you have an investor mindset or you don't. Some people never achieve it, it's all bout how much profit they can take before their investment has matured. Investors make their choices carefully and play the long game unless the reason they invested is no longer valid. And that has nothing to do with the current share price.

Well stated Stealth, my thoughts exactly.

 

[hobbes]

Does anyone have a link for this? Hate to post something I can’t get confirmation of but it’s from our own @avoigt, so I trust it’s accurate.

https://twitter.com/x/status/1518644819438022656

Avis: Tesla bei Avis: Die Avis Autovermietung steuert mit neuesten E-Fahrzeugen in die Zukunft der Mobilität


Sixt (only a screenshot on twitter):

https://twitter.com/x/status/1518311145752481792

EDIT: At Sixt the 3/Y is not yet very prominently placed on the web site as regular rental car from what I can see. But they have a monthly subscription for 3 and Y for around 1000 EUR that they advertise.

 

[Cal1]

Can you ELI5 why an expansion of available shares is necessary for there to be a significant split?

When a company incorporates in a state they specify a number of shares in their corporate charter. That's how a company creates common stock shares. They then go back to the state to get them authorized. The state taxes them on the number authorized so they don't just incorporate with a gazillion shares. They don't have to sell them to the public and we call those companies privately held. You can't buy their shares and they don't need your $.

They will eventually run out of shares as they are sold in primary offerings or given to founding investors.

For instance If they started with say 500 million shares and distributed 400 million. These shares are called outstanding and entitled to any dividends and splits. The coffers of the company would only have 100 million shares left (not affected by splits or dividends).

A 2:1 split result in total shares outstanding to increase to 800 million. This would require the company to come up with an additional 400 million shares for the split. They will use the existing 100 million but are still short 300 million shares. Now we're back to asking the state to authorize more shares. The board of directors decide on splits not shareholders. BUT we do decide when they can create more shares. If you had 50 shares you'd get another 50 shares effectively doubling your share balance to 100. Think of it as trading in your 1 share for 2 new ones.

They could do a fractional split say 3:2. You'd exchange 3 shares for every 2 shares you own. Let's them do a split with a much lower shares. But alas in the example above they would now need to increase the shares outstanding to 6 million requiring distribution of an additional 200 million shares. We'd still need to get authorized another 100 million shares. Typically weak companies without the strong cash position do fractional splits.

 

[Todd Burch]

So is this quick rise in the close due to daytime shorters closing their position because Elon purchased Twitter and didn't sell any TSLA?

 

[Singuy]

So is this quick rise in the close due to daytime shorters closing their position because Elon purchased Twitter and didn't sell any TSLA?

QQQ had a straight line up after a minor crash from the twitter announcement. I believe there's a reversal going on to make sure all the bears last week having their puts expire worthless.

All signs pointed to a weak market after shanghai crashed 5%!. So when all signs pointed in one direction, the opposite will most likely happen to cause the most pain.

 

[Sofie]

It represents unicorns and bridge trolls and the price of tea in China. No. Really.

It’s all just made up and make believe and ever changing. A bunch of crooks and their computers trading back and forth amongst themselves and pickpocketing innocents now and again. Well, except the unicorns. They exist on every other Tuesday and French holidays.

It won’t stagnate. It might pause, take a dive, recover, dive again, swim for shore, but it will go up by the time Austin and Berlin are fully ramped.

Breathe. Patience. Hold.

June?

 

[Prunesquallor]

The TSLAQ rats are deserting Twitter.

https://twitter.com/x/status/1518675552483241984

 

[thesmokingman]

Dan Ives... trading caviar for slices of pizza! Lmao.

 

[Ogre]

People who doubt Elon's ability to succeed in the social media industry will be shockingly wrong. He will transform it for the better. People saying disgusting, stupid and false things will still be able to say those things, but they will no longer be promoted as they are currently. And the algorithms will be public and constantly adjusted as bad actors try to game them. Twitter will become a more real place and the good people with interesting and valuable things to say will rise to the top.

Twitter is a mess and has been for years. Such a valuable company selling for $43B is likely going to be seen as the bargain of the century. Too bad only the biggest investors will be able to go along for this ride.

I am skeptical about his "Free Speech Absolutism", but willing to wait and see what works out. Nuking ad support should change the companies incentives quite a bit.

 

[jbcarioca]

Avis: Tesla bei Avis: Die Avis Autovermietung steuert mit neuesten E-Fahrzeugen in die Zukunft der Mobilität


Sixt (only a screenshot on twitter):

https://twitter.com/x/status/1518311145752481792

EDIT: At Sixt the 3/Y is not yet very prominently placed on the web site as regular rental car from what I can see. But they have a monthly subscription for 3 and Y for around 1000 EUR that they advertise.

As a longtime Sixt loyalist I am thrilled that this is happening! Now waiting for Tesla to arrive in NCE and MXP!! OTOH I wouldn't might driving down from Germany.