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

[Runarbt]

From Hargreaves Lansdown (UK) - emphasis in green big letters is mine. Note the 4/5 mistake/correction. Quite amusing. "This period" is ambiguous to me - I first assumed 24-31 Aug. Now I assume 31-3 September (or whenever you get the new shares). Can't people write clearly? I try. Sometimes I succeed.

"Please accept our apologies our original message stated that "you are effectively only selling a quarter of your entitled holding" when this should have read as a "fifth". This has since been amended below. We apologise again for any inconvenience caused, as this does not meet our usual high standards of written communication.


Tesla Inc has announced that it will carry out a 5 for 1 split of its shares, effective at the open of trading on NASDAQ on 31 August 2020. The split will be completed by giving you a bonus 4 shares in addition to each share you hold at close of business on 28 August, thereby increasing your holding by 5 times.


The price of Tesla Inc shares will adjust to take the split into account as soon as the market opens on 31 August. We expect the share price to be approximately 20% of what it was the day before. This means you’ll have more shares but at a lower price. We don’t expect the overall value of your holding to be affected. The company is conducting the split to reduce the share price to a more accessible level.


It’s expected that the new shares will be issued by 3 September, but this can’t be guaranteed. The new shares will be credited to your portfolio once we’ve been issued with them. Please note that from market open on 31 August, until the shares are credited to you, your holding will show a value of only 20% of its real worth. This will correct itself as soon as the new shares are added to your portfolio. If you sell your shares at any point during this period please bear in mind you are effectively only selling a fifth of your entitled holding and will still get the bonus shares credited shortly after.


We’ll write to you following the stock split to confirm your holding has been updated."

Well, Ameritrade says the opposite:

"If you sell TSLA shares after the record date of Aug. 21 for TSLA but before Aug. 31, you will sell them at the pre-split price. You will not be entitled to the split shares. For example: If on the last business day of trading TSLA, Aug. 28 you sell 100 TSLA shares for a pre-split market price of $1,500 per share you will receive $150,000. You will not receive any split shares.


If you buy TSLA shares after the record dates but before Aug. 31, you will purchase shares at the pre-split price. Following the split, you will receive the additional shares resulting from the stock split. For example: If on Aug. 26 you buy 100 shares (and hold them through the open on Aug. 31) at $1,500 per share, you will pay $150,000. You will receive 400 additional shares after the stock split, and the price will be reduced to the post-split price"

... I guess time will tell.

 

[hobbes]

@Artful Dodger @StealthP3D

I've found out pretty much exactly how naked shorting works behind the scenes. This research paper on the SEC's website goes into a lot of detail:

Failure is an Option: Impediments to Short Selling and Options Prices

I now do see a plausible theory for how the split could be squeezing the naked shorts, although I'm not sure that it is very likely. But I now agree that there is some possibility. I wrote a short blog post outlining my current stance:

Could the TSLA stock split be causing a naked short squeeze?

Thanks for compiling this, extremely helpful. You mention credit for first bringing naked shorting to the TMC community's attention goes to Artful Dodger. This might be true (I didn´t check) with regard to the role of naked shorting going into a stock split - otherwise, there even was a dedicated thread about this as early as 2013:
The Rolling Naked Tesla Short

Maybe there are some helpful resources there, too.

 

[aubreymcfato]

 

[scaesare]

Have you shown her this yet?

Tesla Model 3 Cost of Ownership Slightly Cheaper Than a Camry | Loup Ventures

Good article, thanks.

I wonder why the cost of financing for the Camry is so much out of line (lower) as compared to the other two...

 

[dc_h]

If some of you are correct in that part of this is a run for people to cover these mysterious faux shares before the split, that suggests next week we would see a slow decline in the SP right? (barring other catalysts)

If we go down next week, the implication is that the S&P addition could be a separate catalyst and create another jump up.

 

[ZeApelido]

1 month until Battery Day

 

[obie_fl]

Thanks for the head's up. Now, the difference between the "shareholder or record" and the "beneficial owner" becomes more stark. Quoted from the Tesla IR update:

"In order to join the virtual meeting, you will need the password, which is tsla2020, and a 15-digit secure “control number” unique to you, which you may obtain as follows:

• If you are a “stockholder of record” with shares registered directly in your name with our transfer agent, Computershare Trust Company (a minority of Tesla stockholders), you can find the control number on the Notice of Internet Availability or paper proxy card that was sent to you (please check that it is for the meeting as scheduled for September 22, 2020, NOT as previously scheduled for July 7, 2020).

• If you are a “beneficial owner” and hold shares through a broker, bank or other organization (the vast majority of Tesla stockholders), you will have to register in advance to obtain a control number. Please ask your broker, bank or organization for a “legal proxy” for the 2020 Annual Meeting and submit a copy of it from your e-mail address with “Legal Proxy” in the subject line to [email protected]. If your request is received no later than 2:00 p.m. Pacific Time on September 17, 2020, you will receive a confirmation e-mail with your control number."

It's now clear that most of us are "beneficial owners", and that our brokers are in fact the "shareholders of record" for the stock dividends payable at the end of day on Fri, Aug 28, 2020.

As such, Tesla will issue those dividends to your broker, whom in turn will be responsible for issuing them to you.

Cheers!

I'm way behind on this thread but I find this unusual. I've been buying stocks for 40 years and have always received proxies for the stocks I've owned. I just assumed everyone did but the above implies I'm in the minority as a "stockholder of record". I have my TSLA proxy email with the control number as I do for all my other holdings. Most of my holdings are with Fidelity if that makes a difference. Am I a snowflake or am I just misinterpreting something?

OK rereading the above maybe Fidelity just automatically sends me a proxy and control number through NATIONAL FINANCIAL SERVICES LLC <[email protected]>

 

[dm28997]

To clarify (info from my broker) each OLD share of TSLA will be replaced by 5 NEW shares trading at 1/5 price prior the split.
Aug 31 the new trading will begin.
The way I see this is that shorts must have real shares to get the 5 new ones. Synthetic shares are not real so they must be purchased.
Not investment advice; only my understanding of this mechanism.

 

[UkNorthampton]

Well, Ameritrade says the opposite:

"If you sell TSLA shares after the record date of Aug. 21 for TSLA but before Aug. 31, you will sell them at the pre-split price. You will not be entitled to the split shares. For example: If on the last business day of trading TSLA, Aug. 28 you sell 100 TSLA shares for a pre-split market price of $1,500 per share you will receive $150,000. You will not receive any split shares.


If you buy TSLA shares after the record dates but before Aug. 31, you will purchase shares at the pre-split price. Following the split, you will receive the additional shares resulting from the stock split. For example: If on Aug. 26 you buy 100 shares (and hold them through the open on Aug. 31) at $1,500 per share, you will pay $150,000. You will receive 400 additional shares after the stock split, and the price will be reduced to the post-split price"

... I guess time will tell.

Hmm. don't sell looks like best option!

 

[Singuy]

I'm way behind on this thread but I find this unusual. I've been buying stocks for 40 years and have always received proxies for the stocks I've owned. I just assumed everyone did but the above implies I'm in the minority as a "stockholder of record". I have my TSLA proxy email with the control number as I do for all my other holdings. Most of my holdings are with Fidelity if that makes a difference. Am I a snowflake or am I just misinterpreting something?

OK rereading the above maybe Fidelity just automatically sends me a proxy and control number through NATIONAL FINANCIAL SERVICES LLC <[email protected]>

So much confusion. I can read the headlines on cnbc on Sept 1st already. "Robinhood butchers Tesla stock split, investor lost millions"

 

[Highway2Heel]

A short squeeze from fake shares being bought? If something along those lines happens, we should all get on Zoom and sing “You can be my Hiro, baby!”

I really think all the smart kids on this board are on to something. Fake shares will be exposed in the coming week.

 

[MP3Mike]

I'm way behind on this thread but I find this unusual. I've been buying stocks for 40 years and have always received proxies for the stocks I've owned. I just assumed everyone did but the above implies I'm in the minority as a "stockholder of record". I have my TSLA proxy email with the control number as I do for all my other holdings. Most of my holdings are with Fidelity if that makes a difference. Am I a snowflake or am I just misinterpreting something?

OK rereading the above maybe Fidelity just automatically sends me a proxy and control number through NATIONAL FINANCIAL SERVICES LLC <[email protected]>

Correct, what you received is not a Computershare Trust Company control number and will not get you in to the shareholders virtual meeting. If you want to attend the virtual meeting, with ability to make comments/vote through it, you have to go through the process of getting the 'legal proxy' document to send to Computershare to get one of their control numbers.

 

[Nuclear Fusion]

For the 4 previous AAPL splits, average for the 10 days post-split is -5.61%. I wonder if the same will happen to TSLA if S&P inclusion is still not announced prior to 10 days after the split (Sept 10). What to Expect After an Apple Stock Split

Thanks dude. Very ominous. I think the 75% post split fall for Apple after 3 months must have been around the time of the Dotcom bubble??

 

[elasalle]

Pondering on taking action around Aug 29th- Sept 2nd. (esp. if we see a big rise next week).
1. Sell (some)
2. Sell some Sept 22 3800's CC's going for like 450$ +
3. + Could just sell enough shares to be $0 principal investment across all portfolios.

If I do(option 2) against 1 of 3 portfolios , my principal investment on Tesla will be $0, and still up another couple of Mils, if we hit 3800s.

Good chances of a pull back post Split, esp if this is due to Naked Shorts being "caught with their hands out of the cookie jar(no shares)". Need to think through if S&P, Battery Day expectations can out weigh the post split downward pull. ( a short interval b/w the two - post split vs S&P, battery Day looks possible, and that would be the time to get back in.)

(Let the disagrees begin , I know we are never supposed to sell )

 

[ZsoZso]

Looking forward to Model S Plaid.

Oh, don't worry Porsche will have an answer to that too*, just like they did to the original Model S.

Spoiler: *

In about 2028, just as they were 8 years late (2012-2020) to respond to the original Model S.
What will the Tesla flagship performance be in 2028? Well, use your imagination...

 

[Artful Dodger]

It’s expected that the new shares will be issued by 3 September, but this can’t be guaranteed. The new shares will be credited to your portfolio once we’ve been issued with them.

Lol, your Broker is clearly lying. The dividend shares are all going to be issued to brokers before the stsart of trading on Aug 31. Tesla employs an Australian company, Computershare Limited (ASX: CPU) to do so.

There is no flexibility, or ambiguity. This is already 1 week's lead time built into the dividend rollout to allow all appropriate accounting, just as every other Stock Dividend that occurs routinely for a myriad of other companies.

Your Broker's words ring of being desperate naked shorters. Look to see what they did the last time a not heavily shorted stock declared a stock dividend. I bet there was no amphorous delay for those.

My advice? Don't sell, let your Broker swing. It's gonna cost them big $$ to buy their way out of the hole they've dug themselves. Just be aware they'l try to wring some of that out of their "beneficiary owners" of TSLA.

Cheers!

 

[Prunesquallor]

@Artful Dodger @StealthP3D

I've found out pretty much exactly how naked shorting works behind the scenes. This research paper on the SEC's website goes into a lot of detail:

Failure is an Option: Impediments to Short Selling and Options Prices

I now do see a plausible theory for how the split could be squeezing the naked shorts, although I'm not sure that it is very likely. But I now agree that there is some possibility. I wrote a short blog post outlining my current stance:

Could the TSLA stock split be causing a naked short squeeze?

I must admit I find orbital mechanics and hypersonic flight dynamics easier to understand than financial instruments. So a simplistic question: if the old splitterino* put a damper on naked shorting and precipitated share purchases and SP rise, what happens afterwords? Do those shares get sold to recoup the expense of buying them (SP crashes) and naked shorting recommences?

*© @Lycanthrope

 

[Artful Dodger]

I've been buying stocks for 40 years and have always received proxies for the stocks I've owned.

...and did you have the same U.S. Broker during that time? Not a very diverse sample set on which to base a conclusion.

 

[jerry33]

I must admit I find orbital mechanics and hypersonic flight dynamics easier to understand than financial instruments. So a simplistic question: if the old splitterino put a damper on naked shorting and precipitated share purchases and SP rise, what happens afterwords? Do those shares get sold to recoup the expense of buying them (SP crashes) and naked shorting recommences?

(My understanding.) It's almost assured that naked (and non-naked) shorting will commence by those who are still financially able to afford it. How much the stock will go down in the short term is anyone's guess. If S&P inclusion happens the volatility should be reduced (again by how much is anyone's guess).

 

[jerry33]

...and did you have the same U.S. Broker during that time? Not a very diverse sample set on which to base a conclusion.

From TDAmeritrade I received a couple of emails:

TESLA, INC. has issued proxy materials for its ‌2020‌ ‌Annual Meeting‌ of shareholders.

Meeting Date: ‌September 22, 2020‌

Record Date: ‌July 31, 2020‌

CUSIP Number: ‌###

Control Number: ‌###

And a link to enter the voting instructions and view shareholder materials. I'm assuming that since I could vote, I these numbers are valid.