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

[schonelucht]

OK, suppose you're at Tesla making the deal, offering cash, and the owner of the trucking company wants shares. He wants shares so bad he's willing to accept a substantially lower purchase price as long as it's in shares, not cash. (Because for him the tax break of deferring his capital gain on the corporate assets is worth it.)

Please explain me exactly how this tax break works.

 

[MP3Mike]

Please explain me exactly how this tax break works.

If I understand correctly I don't think it is a tax break, it is a deferral. Essentially they traded their trucks and trailers for Tesla stock. So they don't have to pay tax on the profit they made doing that until they sell the stock. Which allows them to time the sale for when it is to their advantage.

 

[haid]

I'll hazard a guess... If you buy shares on the open market, your purchase time is set at that moment. But if you barter for shares, it might look like the stock is a long term capital gain from the purchase time for the carrier/trucks.

I don't know if such things are possible/legal. Its just a guess

I suppose, more to the point, the trucking company wouldn't have to declare a profit (and pay taxes) until it sells the shares.

 

[neroden]

Owner of the company is not involved in the filing. It's the company that is selling assets and it is the company that is getting shares.

This would be the easiest tax avoidance scheme in the world. Tell me more.

I was thinking of the classic tax free acquisition.

Tax-Free Acquisitions

Perhaps surprisingly, this can be used even if you don't technically sell stock in your company, but rather "substantially all" the assets of your company (I've seen it done repeatedly. The link goes into some detail on the rules). Note, it doesn't have to be literally all the assets, just "substantially" all -- over 80% is good enough.

This one looks like a "C" reorganization to me. Might be a forward triangular merger though.

 

[TradingInvest]

Is your point that "trucking != shipping", or are you trying to make some other point?

Within the U.S. the two are pretty much synonymous, as most car shipping Tesla does on the west coast is point to point hauling using car carriers. There's no truck yards, train stations or ports involved. I guess the truck drivers went to work for Tesla too.

So what's the difference?

This is my speculation:

First step, buy traditional trucks and trailers so they don't have to run around to fight for shipping capacity near quarter end.

Second step, gradually replace diesel semis with Tesla semis. Ship their own cars out, then do shipping for other companies when the semis come back.

Third step, turn into a larger shipping business. Shipping market is close to 1 trillion dollars, Tesla Semi has a huge competitive advantage.

 

[MarcusMaximus]

If I understand correctly I don't think it is a tax break, it is a deferral. Essentially they traded their trucks and trailers for Tesla stock. So they don't have to pay tax on the profit they made doing that until they sell the stock. Which allows them to time the sale for when it is to their advantage.

Presumably also at the long term capital gains rate(though I have no idea how this works for a company vs a private person).

Not entirely sure it’d actually work that way, though. I know my reserved stock with the company I work for is taxed as income when it vests, with capital gains charged on any gain/loss since that vesting.

 

[TheTalkingMule]

How on Earth are we up today? All this uncertainty and weirdness should have us testing $270. Someone must have been quite supportive over the last week.

 

[haid]

Third step, turn into a larger shipping business. Shipping market is close to 1 trillion dollars, Tesla Semi has a huge competitive advantage.

How about no. Let others deal with endless logistics details. If it is not shipping for Tesla, why bother. There are plenty of problems to work on.

 

[Fact Checking]

Please explain me exactly how this tax break works.

I was thinking of the classic tax free acquisition.

Tax-Free Acquisitions

Perhaps surprisingly, this can be used even if you don't technically sell stock in your company, but rather the assets of your company (I don't have a citation for this but I've seen it done -- the link goes into some detail on the rules).

This one looks like a "C" reorganization to me.

BTW., if that's indeed what happened, then I guess this small 50k shares acquisition might have convinced many more shorts to short Tesla earlier today, as it perfectly matches their "Tesla doesn't have enough cash!" narrative.

I.e. by agreeing to this transaction Tesla was shorting the shorts.

 

[KarenRei]

How on Earth are we up today? All this uncertainty and weirdness should have us testing $270. Someone must have been quite supportive over the last week.

* CATL news
* Positive macros
* TSLA tanked on the news that Tesla was closing stores to reduce prices; it makes sense that it'd rise on news that Tesla was partially reversing (minus some discount for the uncertainty created therein)
* Stewie's "whistleblower" turned out to be a nothingburger (to anyone who was paying attention to it)
* Trucking company purchase suggestive that Tesla plans to have strong domestic deliveries in March, and proves that they're not prohibited from selling stock.
* Maybe some other factors, like the Canadian numbers, although these things seem to pass under most peoples' radars.
* Buying in advance of the Model Y launch.

 

[Nocturnal]

This is my speculation:

First step, buy traditional trucks and trailers so they don't have to run around to fight for shipping capacity near quarter end.

Second step, gradually replace diesel semis with Tesla semis. Ship their own cars out, then do shipping for other companies when the semis come back.

Third step, turn into a larger shipping business. Shipping market is close to 1 trillion dollars, Tesla Semi has a huge competitive advantage.

That isn't their core competency. They are vertically integrating their own shipping and giving themselves a built in test platform for the semi. Kinda like having your own employees test out FSD.

 

[j6Lpi429@3j]

This is how I like to see my stock, on a slow, inexorable upward climb without drama. Lets hope elons lost his phone.

 

[Fact Checking]

* CATL news
* Positive macros
* TSLA tanked on the news that Tesla was closing stores to reduce prices; it makes sense that it'd rise on news that Tesla was partially reversing (minus some discount for the uncertainty created therein)
* Stewie's "whistleblower" turned out to be a nothingburger (to anyone who was paying attention to it)
* Trucking company purchase suggestive that Tesla plans to have strong domestic deliveries in March, and proves that they're not prohibited from selling stock.
* Maybe some other factors, like the Canadian numbers, although these things seem to pass under most peoples' radars.
* Buying in advance of the Model Y launch.

In particular one macro news today was very positive: U.S. consumer spending was up +0.2% this month, much higher than the expected drop of -0.1%.

This removes most concerns that the Trump Shutdown or the Trump Tariffs triggered a short term U.S. recession.

Auto and consumer electronics sales are very sensitive to recessions - and Tesla is both.

 

[Fobble]

How on Earth are we up today? All this uncertainty and weirdness should have us testing $270. Someone must have been quite supportive over the last week.

That's how it works when the stock was priced with utmost imperfection mid last week.

 

[UncaNed]

How about no. Let others deal with endless logistics details. If it is not shipping for Tesla, why bother. There are plenty of problems to work on.

If they actually make $200,000 more per truck per year - or anything like that, then I say let Tesla diversify away! And all the while they're refining the Semi truck before they release it to all the other businesses that haven't already reserved for a slam dunk, road tested product that no competitor could ever hope to touch.

 

[lklundin]

This is total nonsense. How many ships was it left for China and Europe, 16? 3k on each average, you're already close to 50k

But can we assume the average shipment to be more than 2k ?

I believe @KarenRei wrote 30k Q1 deliveries outside of North America as a lower and thus fairly certain bound.

 

[UncaNed]

This is how I like to see my stock, on a slow, inexorable upward climb without drama. Lets hope elons lost his phone.

If the SP increase averaged a mere 20 cents a day - that's a whopping $50 per share per year. I could live on that.

 

[Anstandswauwau]

Look, they listened to their (loudest) customers. And now everyone gets to pay 3% more for so a handful have the ability to test drive before purchase.

Your remark is based on the assumption that future Tesla customers (fishing in the ICE market) behave the same as previous ones (EV enthusiasts).

I strongly disagree:

1. Most ICE owners won't switch to EV without a test drive. Period. Not offering ordinary test drives is an incredibly stupid idea and affects more potential buyers than you may think.
   
   
2. The 1000mi / 7 days test offering is seen as a farce by most people – at least in Europe. Do you have any idea how much work it is to sort out all the required paperwork (state, insurance, etc.) to receive a freakin number plate? Beside the fact that this can take up to a week and cost $250-300?! Who the hell is willing to do that for a car they probably won't even keep?
   
   
3. People should test drive the top-of-the-line cars as an incentive to upgrade.

Couldn't care less for people paying 3% more for a $40k+ car, I'm sorry.

 

[Cherry Wine]

Don't want to sound like I'm beating a dead horse, but all of this could be undone by a negative reaction to a scheduled hearing in the SEC motion. In the meantime, I'm enjoying the fact that the put spreads I sold two weeks ago and have had to roll once are starting to lose their value.

Edit: Also, another $28M of block trades in money going out of TSLA today per WSJ money flow indicator. I believe that was roughly the case on Friday as well, though I didn't mention it at the time. So, some larger holders are still moving their money out despite the recent upward trend.

 

[EVNow]

Probably also helped by the fact that this is not actually true?

But that has never stopped them !