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

[Artful Dodger]

Are you really running senarios based on a 90% drop?

Yes. Yes, indeed. People here mostly worry about pennies and the brownian motion of the SP. I spend my twenties studying the Deep Battle and what ultimately determines outcomes in War. And this isn't just for some piddly token prize like the European continent, it's for the entire future of the mine'n'burn world economy (and then off-planet)

Buybacks of Elon's awarded shares would cost (Stock_Price - $23.33)

I think Elon is thinking about the 10s of TRILLIONS involved in Tesla, and is playing the deep battle. I hope he uses this opportunity to pull a giant encirclement manoeuvre on hidden short sellers, and wrecks their business model. It may remain legal, but not profitable.

If he doesn't, who will? Elon's good like that. He steps up when he sees others won't.

Cheers to the Longs!

P.S. And Put options contracts sold to buyers who don't own the underlying stock. They're buying the right to sell' shares they don't own? With no accounting of the number of shares that exist?! And only their Broker's word that those shares even exist? What could possibly go wrong? $AMC, $GME Elon has commented about this problematic situation specifically,.

 

[Artful Dodger]

Elon doesn't need to wait until April 2028 to exercise all of his grants. He can do it gradually over time and planned so as not to tank the stock price.

The same could be said for his 2012 CEO stock options which he sold all at once just before they expired in Dec 2022. What's different now?

 

[Buckminster]

Level 2 less ambitious Apple car coming 2028 (was 2026 level 4):
Apple car

 

[Knightshade]

The same could be said for his 2012 CEO stock options which he sold all at once just before they expired in Dec 2022. What's different now?

Elon learned his lesson about how badly his "just dump it on the open market" plan worked out?

Surely you don't doubt Elon can learn from his mistakes, right?

 

[Drumheller]

The same could be said for his 2012 CEO stock options which he sold all at once just before they expired in Dec 2022. What's different now?

I don't know what Elon will do, but I'm stating he isn't required to wait that long. There is an exercise window of time.

 

[SOULPEDL]

Elon doesn't need to wait until April 2028 to exercise all of his grants. He can do it gradually over time and planned so as not to tank the stock price.

... and Exercise these Options as needed in order to regulate/buffer the Stock Price. Is this possible? (Ans: No)

Instead of a pop when the robot dances, gradually release pressure (Exercise some) nice and steady (to throttle it up for a SpaceX analogy). This could be one way to manage employee benefits (get rid of that wave so to speak), but who knows if I'm missing some law or snag with this suggestion.

 

[uscbucsfan]

Elon learned his lesson about how badly his "just dump it on the open market" plan worked out?

Surely you don't doubt Elon can learn from his mistakes, right?

Depends on the day with him. Some days he says things like "I don't care about the SP or it's too high anyway".

 

[EQC_]

...


Given my assessment above, I see 4 possible scenarios how this could play out:

1. Elon sells his shares on the Open Market; SP tanks; Elon and Tesla pay minimum taxes; Retail 'weak-hands' pannick-sell and lose out on future gains (and a likely rapid recovery). Elon owns more TSLA after all this, but that's not cash for his City on Mars, which will require moar SELLING later, ad nauseum. Shortzes are the BIG WINNERS,
2. Elon finds cash to exercise his shares outside selling TSLA (maybe why the 'G' won't fund rural Starlink, and other Musk Industries?) He still benefits from a lower SP though, so I don't seen him 'pumping' the SP until he's finished exercising his stock options. Big Winner: FATHER TIME since this could take until April 2028 to grind out the cash. (I rate this possibility as the least likely of these 3 options), and
3. Elon let's the shortzes swing (see: "Henry Ford" since Aug 2018 | Arttful Dodger on TMC): Elon threatens to take his ball and go home, the SP tanks, Elon exercises his options on the cheap (and pays cash). SHORTZES get nothing, retail HODLers eventually recover ('weak' hands and Options 'gamers' are rekked), and Tesla pays miniumum payroll taxes. I rate this as a phantasy scenario, but we are taking Elon here...
4. Elon and the Tesla Board create some sort of novel 'Shares-for-Votes' swap for his next CEO comp. plan: Elon said what he cares about is having ~25% of Tesla voting shares to guide the future of AGI at Tesla (a dubious thesis IMO). Would Elon be willing to trade some or all of his 2018 shares to get that? It'd be $10s of Billion$ to shareholders if he did, so may be accepted in a shareholders vote. Result is SHORTZES lose their exit plan, but have no real enforcement action which causes them to close their perpetual shorts/phantom shares. And the Game goes on... but hopefuly the Board learns that they created all these problems with the terms of their 2018 CEO comp. and will NEVER DO IT AGAIN!

...

Cheers to the longs

P.S. I inserted an edit above that Elon could pre-sell some of his existing shares to obtain the cash he needs to pay income taxes. This could be done as part of a 10b5-1 plan (like other Tesla Executives) with just 90 days notice, and be timed so that are stock options are exercised by April 2028. I truly hope the Board is thinking about exit ramps like this, as I await comments from @mongo

New SEC Insider Trading Rules for Executives Trading in Company Stock | steel-eye.com (Mar 31, 2023)

As to your item 2 (Elon finds cash to exercise his shares outside selling TSLA ): I'm still hoping for the longest of long shots: Twitter/X becomes what Elon envisions and re-IPO's. Elon gets a big pay-out, and it's more than enough to buy all the TSLA options directly AND pay all the taxes he might owe.

 

[uscbucsfan]

Level 2 less ambitious Apple car coming 2028 (was 2026 level 4):
Apple car

Apple making a car is as likely as Toyota releasing the 900 mile or whatever solid-state battery.

 

[Christine69420]

But wrecked for how long?

Since you asked - I have no idea how long a wrecked stock would stay down.

I have no idea what Elon will do with his options.

I have no idea if the board will do anything with how the existing options are sold.

I have no idea if Elon and the board will make a new compensation package.

So I just HODL.

I do personally know Tesla employees who sell some of the stock they get to finance their homes. And that a low share price make their homes more expensive or their future pension economy smaller. These particular people understand that the macros are mostly to blame for this. They still hope there won't be a repetition of the shock sale.

 

[Artful Dodger]

As to your item 2 (Elon finds cash to exercise his shares outside selling TSLA ): I'm still hoping for the longest of long shots: Twitter/X becomes what Elon envisions and re-IPO's. Elon gets a big pay-out, and it's more than enough to buy all the TSLA options directly AND pay all the taxes he might owe.

I agree: that's hoping for a long-shot. Let's use numbers and formula from @mongo $23.33 Excercise Price, Taxes (is it still 53% of the capital gains, or did you revise that estimate), and 304M shares.

So, it costs Elon $7.1B in cash to Tesla to excercise the stock options. Then let's assume the SP goes down substantially due to selling shares required to pay taxs: If the avg SP is $123, he has to sell about $15B in shares to pay the income taxes. If the avg SP on exercise is $300, then his taxes owed rise to about $44B. So you see he rapidly uses up external cash.

If you think Elon could get ~$22B from a X.com IPO then that'd be just enough to cover his taxes for the 2018 plan @ $123/sh. But then Tesla still owes their addtional payroll taxes (which I don't know how to estimate) @mongo

But would he? That's not a good swap from where I sit. The only one getting paid are the Gummit (Elon just gets paper, and loses some X -- I don't think he goes for that).

 

[Drumheller]

... and Exercise these Options as needed in order to regulate/buffer the Stock Price. Is this possible?

Instead of a pop when the robot dances, gradually release pressure (Exercise some) nice and steady (to throttle it up for a SpaceX analogy). This could be one way to manage employee benefits (get rid of that wave so to speak), but who knows if I'm missing some law or snag with this suggestion.

Elon, and all publicly traded corporations' officers, have windows where they are permitted to sell / buy and quiet periods where they cannot. It would be frowned upon, and potential legal action, if Elon used his sells to intentionally control stock price movement. Most officers will make a plan to sell so much as set intervals and document that ahead of time. I am not an expert on this and could be incorrect when specifically looking at Elon's situation.

 

[Artful Dodger]

I do personally know Tesla employees who sell some of the stock they get to finance their homes. And that a low share price make their homes more expensive or their future pension economy smaller. These particular people understand that the macros are mostly to blame for this. They still hope there won't be a repetition of the shock sale.

Tesla seems to be moving away from stock-based compensation as of Q3. I wonder if this is in preparation to a move to a more direct form of compensation? Would help minimize dilution too, and prep us for the time when stock buybacks become possible.

 

[mongo]

Yes. Yes, indeed. People here mostly worry about pennies and the brownian motion of the SP. I spend my twenties studying the Deep Battle and what ultimately determines outcomes in War. And this isn't just for some piddly token prize like the European continent, it's for the entire future of the mine'n'burn world economy (and then off-planet)

If you really have expectations of a 90% drop, why hold? Especially since you are non-option-favorable.

Spoiler: not advice

People who own the stock sometimes buy puts, just in case. Worried about a 50% or more drop in the next two years? Limit it to 25% (SP of 150) worst case for a 10% present value hit, or sell calls at 380 (+81%) to pay for the puts.

P.S. And Put options contracts sold to buyers who don't own the underlying stock. They're buying the right to sell' shares they don't own? With no accounting of the number of shares that exist?! And only their Broker's word that those shares even exist? What could possibly go wrong? $AMC, $GME Elon has commented about this problematic situation specifically,.

Sure, because if the stock tanks the option is worth more than the shares would be so it would be sold instead of executed.

 

[TesLeif]

As to your item 2 (Elon finds cash to exercise his shares outside selling TSLA ): I'm still hoping for the longest of long shots: Twitter/X becomes what Elon envisions and re-IPO's. Elon gets a big pay-out, and it's more than enough to buy all the TSLA options directly AND pay all the taxes he might owe.

In addition to money from X, there's Starlink IPO and sale of private SpaceX shares... X is still in a big hole though.

Going back to the big post by @Artful Dodger, I've been worrying a bit for a while about how it is in Elon's interest to keep the share price low: cheaper to buy new shares/regain his shares lost when buying Twitter (to get his voting/control higher), cheaper to exercise his options (lower taxes, fewer shares to sell to pay for taxes to pay for the shares), lower taxes for Tesla, fewer employees retiring early due to share price mooning, employees generally more motivated to make the share price moon, etc. I just keep adding shares... getting tired of the dips though!

 

[Drumheller]

Tesla seems to be moving away from stock-based compensation as of Q3. I wonder if this is in preparation to a move to a more direct form of compensation? Would help minimize dilution too, and prep us for the time when stock buybacks become possible.

I wonder if moving away from stock-based compensation is a combination of employee feedback (stock trading sideways for long periods of time is not helping them) and the large number of employees now making it a substantial dilution.

 

[mongo]

But then Tesla still owes their addtional payroll taxes (which I don't know how to estimate) @mongo

Tesla Payroll Tax is (share price - execution price)*shares*1.45%
(Social Security is capped noise)
1 Billion per $227 of stock price over 23.33

 

[Artful Dodger]

If you really have expectations of a 90% drop, why hold? Especially since you are non-option-favorable.

Ahaha, I don't expect it to just go down 90%. I also expect it to rebound 2,000% above current levels, but first we have to get past this gate. And I do NOT trust my self to time the Market! Too much disinformation; lack of timely information...

Further (and more fundamentally), I'm here to see Tesla succeed with The Mission. I'd gladly trade all my shares to make that come true. But the reality is you have to beat the fossil fools, which oppose the Mission. And you do that in the Market.

Ironically, the call themselves "Energy Companies" but mostly sell and distribute atoms... do any of their engineers know that electricity is fundamentally more efficient, and more abundant? Probably. Their Boards of Directors? Definately not!

 

[mongo]

Going back to the big post by @Artful Dodger, I've been worrying a bit for a while about how it is in Elon's interest to keep the share price low: cheaper to buy new shares/regain his shares lost when buying Twitter (to get his voting/control higher), cheaper to exercise his options (lower taxes, fewer shares to sell to pay for taxes to pay for the shares), lower taxes for Tesla, fewer employees retiring early due to share price mooning, employees generally more motivated to make the share price moon, etc. I just keep adding shares... getting tired of the dips though!

A low execution price only reduces Elon's tax in dollars. Long term it hurts him as a percentage of the original award. The number of shares needed to sell to execute also increases with lower stock price (less gain per share).
Tesla would benefit from lower payroll taxes.

 

[cliff harris]

I'm probably not the first person to realize this, and late buy...
During the twitter purchase and elon stock sale, there was much unhappiness here (justified) that was due to it being apparent that Elon was happy to reduce his interest in Tesla to buy a social media company.
The fact that he is now openly saying he wants more Tesla stock might be an extremely good sign. He sees the future of Tesla as bigger and more interesting than that of X.
This is a good thing.
I don't think elon will sell any more TSLA. He may even sell some spacex if he needs cash. He may also start buying TSLA. It could happen at any time.