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

[jhm]

Does anyone know what comes after stupid rich?

Stupid taxes?

 

[Mike Smith]

Now that Tesla has done a stock split, it's likely they'll do another in the future. TSLA will now always have a small 'split premium' which will increase with the SP as another split becomes more and more likely.

 

[Mich]

so does this mean S&P500 not before September?

 

[dl003]

"If an investor is short a stock on the record date, they are not entitled to the dividend.3 In fact, the investor is instead responsible for paying the dividend owed to the lender of the shorted stock that they borrowed. Investors short a stock if they expect it to decline in value."

So what? A forced covering of epic proportion? Hm.... I bet it's Hiro's idea.

 

[kengchang]

Man this is gonna cause a squeeze IMO.
Who has ITM Calls, what you guys going to do? In order to get the 4 extra dividend shares, I think best option is to exercise.
I have some Deep ITM in 900's, I need to decide what to do ..

You won't be impacted, chill out

 

[Curt Renz]

This can't be a "dividend" right? If Tesla issues me a dividend then wouldn't it be a taxable event like cash dividends?
Multiply by 5.

Investopedia: What Is a Stock Dividend?.

Excerpt: Stock dividends are not taxed until the shares granted are sold by their owner.

 

[elasalle]

Can you please explain?
What happens to OTM calls, LEAPs?

To start with value of everything get's divided by 5. Then market forces, IV etc will factor prices from there.
For each option (Call/Put) - previously you controlled 100 shares.
With the split, you now control 500 shares, i.e. 5 Options.

If you want the dividend you need to own the stock, not the option.

 

[Unpilot]

This sounds highly unfavorable for shorter as opposed to neutral. Does this not mean we should be squeezing shorts massively before the split?

Sounds to me like smeigal and chanos just got burned.

 

[vikings123]

Split helps S&P accumulate incognito

Is this true?

 

[Chunky Jr.]

Excerpt: Stock dividends are not taxed until the shares granted are sold by their owner.

does that imply there is a cost basis equal the price at the time of the grant? or is it the price paid for the original share divided by 5? I would assume the latter. The "dividend" language is kind of unusual.

 

[woodisgood]

so does this mean S&P500 not before September?

Hard to say.

Could be in coordination with S&P or could be an independent move.

Could have been done in response to finding out S&P was going to delay.

Lots of different scenarios one could ponder and I’m sure will be discussed in the coming days.

 

[dw4ngg]

FTFY:

I wonder if they debated doing a 10-1 split, but decided to do 5-1 now with the idea of doing another 5-1 in the next year or so

His math is right, yours is wrong
2 5:1 splits is actually a 25:1 split

 

[elasalle]

You won't be impacted, chill out

OK reread, and the wording is misleading.
"Each stockholder of record on August 21, 2020 will receive a dividend of four additional shares of common stock for each then-held share, to be distributed after close of trading on August 28, 2020. Trading will begin on a stock split-adjusted basis on August 31, 2020"

How is it a dividend if the price of my initial share was divided by 5.

Initially, I read it as split + 4 additional shares.

 

[vikings123]

Say a person had a 10/16 $3500 call....what happens there?

I’m pretty sure you get 5 calls for the same expiry and 700 strike.

 

[Criscmt]

To start with value of everything get's divided by 5. Then market forces, IV etc will factor prices from there.
For each option (Call/Put) - previously you controlled 100 shares.
With the split, you now control 500 shares, i.e. 5 Options.

If you want the dividend you need to own the stock, not the option.

This seems to have no negative effect on Options, right?
Your option now controls 500 shares as against 100 earlier. And the change in the share price continues to reflect on the Option price.
In other words, if the SP tomorrow goes up (as it is not AH), the OTM options, LEAPs also go up in price?

And I would think, the Option prices go up by a similar multiple/leverage they have been at.

 

[Todd Burch]

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?

Say you own 25 shares at $100/ share.

After a 5:1 split, you now own 125 shares at $20/share.

If you were to sell all your TSLA right before or after the split, you’d take home the same amount of money ($2500) but people who want to own some stock and don’t want to go the fractional route can now buy shares at a cheaper price.

At Sam’s Club you’re forced to buy the 100 pound bag of cookies for $100.

What’s that? You don’t want to spend $100 on cookies? Ok, we’ll split them into 5 pound bags at $5 a bag.

You’re more likely to buy some cookies, but they are still $1/pound, and you still end up overweight.

(Edit: an exceptional value for cookies, I might add).

 

[elasalle]

Is this true?

S&P accumulation only after it is added. But with larger number of shares, buying a small fraction, it is easier to go unnoticed.

 

[smorgasbord]

In Tesla's case, a split helps the company in issuing shares to potential future employees, as part of SBC (Stock-Based Compensation). Basically, it increases the number of shares, so instead of getting 20 shares after 1 year or 3 years, you get 100 shares in the same time period.

It just sounds better.

I don't understand the excitement:
1) We're still well under $1500
2) S&P may now have a good excuse to wait until after Sep 1 to add Tesla to the S&P 500.

 

[Todd Burch]

Does anyone know whatwho comes after stupid rich?

Bernie!

 

[Gwgan]

Unclear about the “in the form of a dividend” part. A Dividend comes as cash from profit or as equity from company shares. In a split the holder’s shares are divided to make more. So what is really happening here?
Stock Dividend vs Stock Split | Top 6 Best Differences (with Infographics) Is one website I found with some explanation but not the answer I seek.