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

[Unpilot]

Damn I am going to need to clone myself so I can not have to take bathroom breaks and can just stare at the stock price all day.

And no I don't take computer into bathroom....that's for smeigal.

 

[chiller]

So guess we are back to the $2xx - $3xx range again...

 

[Nuclear Fusion]

I don't know about all you millionaires, but I'll now be buying a bunch of LEAPs on the split if SP stays flat or goes down. Probably a LOT of people in the same boat. That should make the MM at least have something else to worry about and hedge.

Of course the stock price will crash. Tesla isn’t worth a trillion $......yet

 

[Krugerrand]

Does anyone know what comes after stupid rich?

 

[Ameliorate]

I'm saying that if you want to buy say a 2022 June leap at 20% above current market price, it would now cost 1/5th as much. Leaps are much more affordable now - a leap like that would have cost 10s of thousands of dollars before. This could be a bit of a negative for the SP since it will allow more people to buy leaps instead of shares on margin.

Not really what I meant unfortunately, I already hold (mostly) LEAPS. It would be tragic if tomorrow they're worth 20% of today's value.
Anywho, Stock splits and options - Option Trading FAQ is suggesting "In general, adjustments are made for options whenever there is a stock dividend, stock distribution or stock split." I was just wanting clarification on the "stock dividend" part.

 

[Bet TSLA]

Please stop with the stupid questions and angst. A stock split means nothing. It is defined to leave everything as it is. Everything will be either multiplied by five or divided by five to leave all things involving value the same. A share will represent only 1/5 as much of the company as it used to, and it will be worth 1/5 as much. All options will be adjusted appropriately. Nice for people with little money to invest, but such investments don't amount to much in any case.

About the only effect I can see it might have is that if all stockholders have to engage in some moderate paperwork (by way of their brokers) then it could leave shorts in a tricky position. I have no idea what that might be. Worth considering, but probably meaningless.

 

[MP3Mike]

If an investor is short a dividend-paying stock on record date are they entitled to the dividend?

Wait, really? So does that mean that a short seller has to buy 4 shares on the open market and deliver them to the lender? They don't get the benefit of the dividend stock split, right? I guess it doesn't really matter if the stock price drops by 80%

But what are the tax consequences of a stock dividend vs a normal split? They shouldn't be any different I suppose...

 

[Mich]

From ir.tesla.com:
"Each stockholder of record on August 21, 2020 will receive a dividend of four additional shares of common stock"...
is this a normal.l stock split? "dividend" sounds different. this is very important for Out of the money calls and tax related issues.

 

[Nocturnal]

damn... I am going to sell on news. A split? how does this help SP 500 inclusion?
and... a 5:1 split seems not enough... 1400/5 = 280 still feels too high to many people.

In that case I usually recommend some nachos and putting some cartoons on.

So short burn of the century?

That is interesting actually. A regular dividend goes to the actual owner of the stock, and this is a dividend so...

 

[printf42]

Still haven’t see definitive answer about the “dividend” wording, what does it mean to the options?
Will I just get more contracts with lower strike? Or it would get complicated as in forcing me to exercise so to get the benefits?
Anyone have been through the same process with similar wording before?

 

[ZsoZso]

Stock split 5:1, OK that means all those laggard bear analyst will not need to adjust their target prices...

 

[FireMedic]

Forgive the noob question...Is there any impact from a stock dividend split as it pertains to shorts and puts?

 

[Beltsbear]

So guess we are back to the $2xx - $3xx range again...

We get to go to 420 again too.

 

[wipster]

Hallelujah!!!

 

[FireMedic]

I’m trying to figure out how this would’ve caused such a substantial price spike...vs a price drop from blasting q2 earnings expectations. Color me confused.

 

[TheGrimSweeper]

Can someone explain in basic terms what this means to long term share holders.

For example I currently own 25 shares of TSLA.

What happens after 21st / 28th?

 

[Runarbt]

Please stop with the stupid questions and angst. A stock split means nothing. It is defined to leave everything as it is. Everything will be either multiplied by five or divided by five to leave all things involving value the same. A share will represent only 1/5 as much of the company as it used to, and it will be worth 1/5 as much. All options will be adjusted appropriately. Nice for people with little money to invest, but such investments don't amount to much in any case.

About the only effect I can see it might have is that if all stockholders have to engage in some moderate paperwork then it could leave shorts in a tricky position. I have no idea what that mighty be. Worth considering, but probably meaningless.

Well, wouldnt all shorts have to cover? As a short position in effect sell a share twice.. but only one owner will get the extra shares?

 

[Nocturnal]

This can't be a "dividend" right? If Tesla issues me a dividend then wouldn't it be a taxable event like cash dividends?

Can someone explain in basic terms what this means to long term share holders.

For example I currently own 25 shares of TSLA.

What happens after 21st / 28th?

Multiply by 5.

 

[jhm]

Well, boys and gals, it look's like we can camp out at $370 again! I'll bring a pot of beans. Yee haw!

 

[Cherry Wine]

I'm saying that if you want to buy say a 2022 June leap at 20% above current market price, it would now cost 1/5th as much. Leaps are much more affordable now - a leap like that would have cost 10s of thousands of dollars before. This could be a bit of a negative for the SP since it will allow more people to buy leaps instead of shares on margin.

MMs gotta delta hedge those LEAPS though.