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

[Tony73]

Remember that state of headquarters is not the same as state of incorporation. It's actually hard to find companies incorporated there (TX). Largest TX companies I found. Maybe someone can find one here just for curiosity sake.

ExxonMobile - New Jersey
AT&T - Delaware
Dell - Delaware
Valero - Delaware
Texas Instruments - Delaware
Phillips 66 - Delaware

It should be clear from my post that I understand that distinction.

This post actually buttresses my point. State of incorporation is not meaningful as a measure of economic impact. If it was, Delaware would be an economic heavyweight. Most non banking companies incorporated in Delaware have zero to minimal operations there.
Having headquarters and large operations in a state is way more meaningful as a measure of attractiveness to business and by that measure Tx is a winner.

 

[dl003]

I did not mean to imply that.

Had the pricing and range been anywhere close to the original numbers - adjusted for inflation - I’d either be in a CyberBeast right now or eagerly awaiting delivery of one.

You and 2 million other people.

Who wouldnt instantly buy a CT with 500 mile range and is faster than a 911 for $70k? Even in 2019 money.

You dont seem to understand a lot must have gone right, which didnt, for Tesla to be able to stick to the original pricing. The biggest of all: 4680. As of this moment, 4680 was supposed to cut Tesla's $/khw in half.

Remember these slides?

Whats the reality? The reality is that the 4680 program has experienced hiccups after hiccups which then delayed CT ramp. They barely have enough cells to build that many trucks as is. They dont even have cells for all the M3 which resulted in the loss of EV credit.

All these things have happened right before your eyes for 3 years and counting, but somehow you cant draw the connection between them and the many problems Tesla is facing. Your 1st impression is of course "bait and switch". Ok. Carry on.

You have also been alluding to the idea that buying a RIVN or GM truck would make more sense, never mind the fact that they are selling their trucks at a -200% gross margin. Would you like Tesla to do the same? Great trucks for the money they will sell, I guarantee you that.

 

[Knightshade]

Wilson Sonsini is an American multinational law firm specializing in business, securities, venture capital, and intellectual property law.

Delaware's Status as the Favored Corporate Home: Reflections and Considerations

In recent months, a conversation has emerged as to whether Delaware should remain the favored state of incorporation for business entities. Indeed, many of our clients have asked us whether they…

www.wsgr.com

They give their take on the chancellory court. For those who don't want to read this there isn't a simple answer. It's all depending on each companies best interests on whether to remain in Delaware or ever incorporate there to begin with.

My belief without evidence, but a strong suspicion is that friends of Elon are helping to form the new business court in Texas, and one of the bigger differences between this new court and Delaware is a new class of shares with up to 10 times the voting power can be issued post IPO, something Delaware doesn't allow.

Excellent link- thank you for posting it here... I'd recommend everyone read it as it goes into a fair bit of detail on both history and present practice of the court- including pointing out 2 things debunking some recent claims-


First it points out the rules are reviewed/updated annually, so 2023 isn't some weird OMG they reviewed the rules after 200 years thing-- and it points out generally those reviews/updates are for clarity or modernization and typically are apolitical and quite moderate. The rules currently under consideration, it notes, are to increase clarity around M&A and just technical clarifications.

Second-as I already mentioned- it points out the Elon case (without saying Elon-just "significant stockholder") is not a new thing at all, not specific to this judge at all--It's been a Thing under the Entire Fairness doctrine for decades.... and both what the concern for a company with a "significant stockholder" and how to avoid running afoul of the rule have likewise been clear for decades-

As to companies with significant stockholders in particular, they frequently grapple with the framework Delaware law has set forth: transactions resulting in any arguable special benefit to the controller trigger the difficult entire fairness standard of review in stockholder litigation, unless the parties properly condition the transaction on approval by an independent board committee (which must be entirely independent) and minority stockholders

That's not a new framework. It's not "activist". It's known and established law, and the basis for the courts decision in the Elon comp case.



Again you can certainly dispute specific aspects of the judgement in terms of how well or how poorly Tesla did the things needed to avoid falling under that rule (ie judgement of how independent the board really is--- or how informed the shareholder vote proxy statement was).... and Teslas lawyers are likely to do so on appeal... (and in at least some respects I think have entirely valid points to raise on such an appeal)


But pretending this is some CRAZY WILD WEST ACIVIST JUDGE IGNORING PAST RULINGS just ain't so, and nobody has provided a shred of evidence for such a claim.


The link also has a quite nice compare/contrast of DE vs TX that's worth reading too... Some good (officers, not just directors have a fiduciary duty in TX for example)...and some bad (Texas business courts will allow jury trials in some cases for example)...and some unknown (the court has basically no prior case law to go on vs generations of it in DE for example)

Well worth reading the whole thing.


All that said- sounds like some folks are getting sick of the topic here, so reminder this exists and might be a better place to take follow-ups:

Elon Compensation Package

I don’t think Elon would leave Tesla if this fails. He would be offered another compensation package. I think he’d also know that asking for compensation for past achievements will be a tall order. I hope it passes but I do have my doubts.

teslamotorsclub.com

 

[sunwarriors]

It should be clear from my post that I understand that distinction.

This post actually buttresses my point. State of incorporation is not meaningful as a measure of economic impact. If it was, Delaware would be an economic heavyweight. Most non banking companies incorporated in Delaware have zero to minimal operations there.
Having headquarters and large operations in a state is way more meaningful as a measure of attractiveness to business and by that measure Tx is a winner.

It wasn't clear to me since it looked like misdirection.

I thought the point of this discussion and why it's relevant in this investment thread was whether incorporating in TX was a slam dunk as a lot of posters here like to tout. People incorporate in DE because the corporate laws there tend to heavily favor corporations themselves vs. TX being a complete unknown with no legal precedent at all. There is little/no case law to cite if any legal cases are brought up. This is brought up a lot by non-biased attorneys for this specific reason and why even some ultra bulls question/wonder if this was done in spite or if they should just have done it in NV with a bit more historical legal context.

This was never, IMO a discussion of whether TX is a big economic driver which we all know factually it is, but that has nothing to do with the vote nor even relevant as it's a total unknown and I, and no one is stupid enough to claim DE has a greater economic impact than TX, (I certainly am not touting that and never did).

Can anyone here even find 1 large company incorporated in TX?


TLDR: I was merely responding to your original comment that TX is an economic powerhouse which it is, but that's not important to the discussion as the state of incorporation is up for a vote and no one was even debating HQ locations. If they are incorporated in TX, they have to now follow TX laws which no one knows how it will end up.

 

[unk45]

Remember that state of headquarters is not the same as state of incorporation. It's actually hard to find companies incorporated there (TX). Largest TX companies I found. Maybe someone can find one here just for curiosity sake.

ExxonMobile - New Jersey
AT&T - Delaware
Dell - Delaware
Valero - Delaware
Texas Instruments - Delaware
Phillips 66 - Delaware

FWIW, ExxonMobil, as successor to Standard Oil of New Jersey, has never moved but that is an accident of history. In 2022 more than 68% of Fortune 500 were incorporated there:

Annual Report Statistics - Division of Corporations - State of Delaware

Recent statistics about the State of Delaware, the Division of Corporations, and businesses large and small that decide to make Delaware their corporate home.

corp.delaware.gov

Historically the Delaware motivations were largely tax based, but the Delaware Chancery Court historical structure (e.g no juries, just individual judges in the first instance) also has played a long role primarily because of a history that stems from Engish Common Law, built into New Jersey law that Delaware copied in 1899:

A Short History of the Court of Chancery - Court of Chancery - Delaware Courts - State of Delaware

A Short History of the Delaware Court of Chancery.

courts.delaware.gov

The present conflicts and uncertainties stem directly from the Delaware Chancery Court attempts to supplant some of their 1899 legal precedent-based practices with the US Federal movement towards less explicitly deference to corporate governance.

In the present debates there are dramatically different interpretations of the 2021 Delaware Chancery Court revisions. Some see those as inconsequential efforts to harmonize State and Federal law, while others see threat to previous long-standing deference to corporate self-governance and all that implies. Since the document is "38 single-spaced pages" I do not link it. If anybody really wants to

Guidelines for Persons Litigating in the Court of Chancery - Court of Chancery - Delaware Courts - State of Delaware

These guidelines reflect some suggested best practices for moving cases forward to completion in the Delaware Court of Chancery.

courts.delaware.gov

By coincidence, perhaps, the cases involving a certain well-known and controversial person are generating opposing views, exacerbated by personal views of the individual in question.
There really is a fundamental question: Under what jurisdiction is a US based corporation have the more efficacious environment? That question actually goes back to this: Delaware only became dominant after legislative changes in 1897 spawned a new corporate Law in 1899 that provided ease in merger and acquisition processes thus replacing New Jersey which had adopted restrictions. The official description that the 2021 changes were for harmony with Federal law is obviously not quite right, since it includes arbitration proceedings , remote hearings and many other things. In effect these are more than mere procedures.

However, the vote over movement of TSLA is quite obviously not motivated by facts other than two specific Delaware cases, only one of which actually had a decision rendered.

Everything about this is a specific case which has generated much discussion and debate elsewhere. Other decisions are based on whether anywhere else has a preferable history and whether Delaware is or is not discarding it's own history.

Without doubt these two cases have generated far too many emotionally charged nouns and adjectives.

Those have major consequences when choosing whether to accept Board of Directors and shareholder decisions as events to confirm, or whether an individual judge can choose to evaluate those decisions absent objection by a majority or even preponderance of either Board of Directors or Shareholders.

The 1899 law provides an answer and the new 2021 approach with a single judge provides an answer. Those might well be different. In the present environment these can be and sometimes are, political decisions. That is my opinion, but it is not necessarily fact.

If anyone really wants to argue one side or the other just read those 38 pages and think like an attorney. Doing the last is easier if you've at least studied commercial law, or better, practiced commercial law. I've never practiced US corporate law.

 

[nativewolf]

Excellent link- thank you for posting it here... I'd recommend everyone read it as it goes into a fair bit of detail on both history and present practice of the court- including pointing out 2 things debunking some recent claims-


First it points out the rules are reviewed/updated annually, so 2023 isn't some weird OMG they reviewed the rules after 200 years thing-- and it points out generally those reviews/updates are for clarity or modernization and typically are apolitical and quite moderate. The rules currently under consideration, it notes, are to increase clarity around M&A and just technical clarifications.

Second-as I already mentioned- it points out the Elon case (without saying Elon-just "significant stockholder") is not a new thing at all, not specific to this judge at all--It's been a Thing under the Entire Fairness doctrine for decades.... and both what the concern for a company with a "significant stockholder" and how to avoid running afoul of the rule have likewise been clear for decades-



That's not a new framework. It's not "activist". It's known and established law, and the basis for the courts decision in the Elon comp case.



Again you can certainly dispute specific aspects of the judgement in terms of how well or how poorly Tesla did the things needed to avoid falling under that rule (ie judgement of how independent the board really is--- or how informed the shareholder vote proxy statement was).... and Teslas lawyers are likely to do so on appeal... (and in at least some respects I think have entirely valid points to raise on such an appeal)


But pretending this is some CRAZY WILD WEST ACIVIST JUDGE IGNORING PAST RULINGS just ain't so, and nobody has provided a shred of evidence for such a claim.


The link also has a quite nice compare/contrast of DE vs TX that's worth reading too... Some good (officers, not just directors have a fiduciary duty in TX for example)...and some bad (Texas business courts will allow jury trials in some cases for example)...and some unknown (the court has basically no prior case law to go on vs generations of it in DE for example)

Well worth reading the whole thing.


All that said- sounds like some folks are getting sick of the topic here, so reminder this exists and might be a better place to take follow-ups:

Elon Compensation Package

I don’t think Elon would leave Tesla if this fails. He would be offered another compensation package. I think he’d also know that asking for compensation for past achievements will be a tall order. I hope it passes but I do have my doubts.

teslamotorsclub.com

I will add that TX jury cases are VERY plaintiff friendly in some courts. VERY. I am sort of shocked any company would want to move to TX, the TX plaintiff bar is ...strong. Also, i would add TX and IL are the two states where Judges have been notorious. But I have not, thankfully, been in those spaces for many years now and every year further away is a good year.

 

[FEERSUMENDJIN]

Do you have any examples of other decisions by the judge that would be considered activist?

Because usually I see people use that name for a judge when they don't like one specific decision, having 0 idea whatsoever about any other case they ever decided.... But there's rare instances where that's not true and they can actually support the claim with legit sourced info.... and I'm curious which one it is for you?


(none of which should be read as my agreeing with this specific decision BTW- just that historically DEs courts have been exceedingly fair and rational, and I'm not personally aware of any other cases from this specific judge that read otherwise to label them anything other than someone who, in this specific case, took a reading of the law many - myself included - disagree with).

Her connections with the Biden camp are well documented, she was the twitter judge, and the actual text of her decision was zero law, and 100% "rich boy bad " rhetoric. I think she was having a glass of wine with Elizabeth Warren when she wrote it.

 

[cliff harris]

I haven't seen this story mentioned here before?

Tesla pushes suppliers to produce parts outside of China and Taiwan

Move comes amid rising geopolitical tensions and competition from Chinese rivals

asia.nikkei.com

Basically Tesla hedging its bets and telling its component manufacturers formally to work on providing a supply chain that is independent of Taiwan and China, in case there are geopolitical wobbles (or even war).
I doubt anyone will shoot at anyone anytime soon, but the upcoming US election could mean a stronger trade war with China, and I bet there are a ton of Chinese components even in a Tesla assembled in Texas?

 

[nativewolf]

Her connections with the Biden camp are well documented, she was the twitter judge, and the actual text of her decision was zero law, and 100% "rich boy bad " rhetoric. I think she was having a glass of wine with Elizabeth Warren when she wrote it.

I am taking that you didn't actually read it, nor do you work in law, nor do you have a law degree, nor have you ever had a dispute in the Delaware chancery.

 

[M|S|M MYP]

Thanks. I do recall him posting that like a week earlier, I wonder he deleted it back then and then reposted it now. Maybe previously he wanted to make sure that it's a verified source first so deleted it, and then reposted it after verifying the source? I don't know.

Thanks again for providing the link to the tweet! This is obviously very important short term news, and is definitely something here that many investors might want to account for.

https://twitter.com/x/status/1794727930205237294

As always, take everything with a grain of salt.

 

[AZRI11]

I will add that TX jury cases are VERY plaintiff friendly in some courts. VERY. I am sort of shocked any company would want to move to TX, the TX plaintiff bar is ...strong. Also, i would add TX and IL are the two states where Judges have been notorious. But I have not, thankfully, been in those spaces for many years now and every year further away is a good year.

Texas new business court has new rules.

TJB | SC | News | Supreme Court approves preliminary rules for new Texas Business Court and 15th Court of Appeals

www.txcourts.gov

 

[SPadival]

(probably because it’s for the cybertruck)

https://twitter.com/x/status/1794775055702139379

 

[MC3OZ]

You dont seem to understand a lot must have gone right, which didnt, for Tesla to be able to stick to the original pricing. The biggest of all: 4680. As of this moment, 4680 was supposed to cut Tesla's $/khw in half.

Perhaps what was really wrong with the 4680 program was the initial timeline and sketchy details of what would be achieved when, But they have fallen a long way short of production volume targets that were stated.

At one time Drew walked back expectations stating that many of the Battery Day targets where on a 2026 timeline. I think Drew is talking about technologies here not production volumes.

IMO a 2026 timeline, and explicit statements to that effect, would have ben more realistic.

But if we accept the 2026 timeline, it is hard to explain the CT reveal pricing. Had they hit their 4680 production volume targets, they might have unlocked more savings, which may have made the CT pricing realistic.

The likely lesson is don't reveal products years into the future, and especially not with optimistic prices.

No real damage has been done, except to credibility, it is better to under promise and over deliver.

 

[dl003]

Perhaps what was really wrong with the 4680 program was the initial timeline and sketchy details of what would be achieved when, But they have fallen a long way short of production volume targets that were stated.

At one time Drew walked back expectations stating that many of the Battery Day targets where on a 2026 timeline. I think Drew is talking about technologies here not production volumes.

IMO a 2026 timeline, and explicit statements to that effect, would have ben more realistic.

But if we accept the 2026 timeline, it is hard to explain the CT reveal pricing. Had they hit their 4680 production volume targets, they might have unlocked more savings, which may have made the CT pricing realistic.

The likely lesson is don't reveal products years into the future, and especially not with optimistic prices.

No real damage has been done, except to credibility, it is better to under promise and over deliver.

thats a lesson Elon will never learn, so I guess we all have to put on special glasses while viewing these reveals. But to be honest, I couldnt be the only one in 2019 who wondered how he thought he could sell the truck that cheaply, could I? I mean, the math just didnt add up but somehow people just took it as a given.

 

[⚡️ELECTROMAN⚡️]

I was definitely skeptical. How could you not be?

 

[TSLAX]

OK, My brother got his cybertruck today. He said the delivery center was cray cray.......in Irvine. People were lining up for picking up their Teslas.

 

[Knightshade]

Her connections with the Biden camp are well documented,

Citation required.

she was the twitter judge

A case which was settled before any verdict was handed down... so not sure how that's relevant?

, and the actual text of her decision was zero law

Great way to inform everyone you didn't read it.

It's almost 200 pages long, and contains 939 footnotes-- a large % of which are direct citations of legal precedents from other court cases.


Again you can make a fair argument on why you disagree with her interpretation and application of the law here (Tesla will certainly do so on appeal I imagine)--- but pretending there was none is grossly untrue.

 

[Buckminster]

https://twitter.com/x/status/1794982024958161299

Just $1Bn of the 6Bn flowing to Tesla Dojo would be huge

 

[SunCatcher]

thats a lesson Elon will never learn, so I guess we all have to put on special glasses while viewing these reveals. But to be honest, I couldnt be the only one in 2019 who wondered how he thought he could sell the truck that cheaply, could I? I mean, the math just didnt add up but somehow people just took it as a given.

I was bordering on skeptical then. I'm a confirmed skeptic now. As are many of us here, I'm sure. Sometimes I wonder if all those promises/reveals/announcements weren't what contributed to the stock price skyrocket ascent a few years back. And then its tumble downwards in the time that followed, when it became apparent that it's going to take a lot longer to reach the goals that were revealed. I'm not savvy to the metrics and tranches that were met for reaching Elon's big pay package, but I do wonder if they're still reached with today's TSLA stock price and company performance. (I did however still vote for him getting it. A deal's a deal.)

I don't think many believe as much now, and going forward, without proof of pudding. And Elon and Co. probably know this, and that's why we now have seen that projections and declarations have been held back until closer to the time. Let's not overlook the fact that we do now have Cybertrucks on the road, and production is ramping nicely. In time higher range will be achieved, and lower prices will follow. "Elontime" is now a very well known term. "2 weeks" is now met with a chuckle before anything else. I have to say; I'm still glad to be here, and do look forward to seeing what's to come, if I live long enough. What a time to be alive.

 

[MD70]

I was bordering on skeptical then. I'm a confirmed skeptic now. As are many of us here, I'm sure. Sometimes I wonder if all those promises/reveals/announcements weren't what contributed to the stock price skyrocket ascent a few years back. And then its tumble downwards in the time that followed, when it became apparent that it's going to take a lot longer to reach the goals that were revealed. I'm not savvy to the metrics and tranches that were met for reaching Elon's big pay package, but I do wonder if they're still reached with today's TSLA stock price and company performance. (I did however still vote for him getting it. A deal's a deal.)

I don't think many believe as much now, and going forward, without proof of pudding. And Elon and Co. probably know this, and that's why we now have seen that projections and declarations have been held back until closer to the time. Let's not overlook the fact that we do now have Cybertrucks on the road, and production is ramping nicely. In time higher range will be achieved, and lower prices will follow. "Elontime" is now a very well known term. "2 weeks" is now met with a chuckle before anything else. I have to say; I'm still glad to be here, and do look forward to seeing what's to come, if I live long enough. What a time to be alive.

This why I am sceptical on the FSD timelines given. My lesson from the 4680 and semi sagas is to see what is actually happening and not put too much weight on what’s been said.