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

[Artful Dodger]

After-action Report: Wed, Aug 12, 2020: (Full-Day's Trading)

Headline: "TSLA Roars After Stock Split Announcement"

Traded: $33,275,565,260.86 ($33.28 B)
Volume: 21,930,412
VWAP: $1,517.33

Closing SP / VWAP: 102.51%
(TSLA closed ABOVE today's Avg SP)
Mkt Cap: TSLA / TM = $289.748B / $192.389B = 150.61%​

TSLA 1-mth Moving Avg Market Cap: $278.62
TSLA 6-mth Moving Avg Market Cap: $170.53
Nota Bene: Elon's CEO comp. plan 2nd tranche vested July 24, 2020

'Short' Report:

FINRA Volume / Total NASDAQ Vol = 50.2% (50th Percentile rank FINRA Reporting)
FINRA Short/Total Volume = 45.3% (47th Percentile rank Shorting)
FINRA Short Exempt Volume was 1.40% of Short Volume (52nd Percentile Rank)​

Comment: "But not all MMs have capitulated, it seems"

View all Lodger's After-Action Reports

Cheers!

 

[woodisgood]

First there was Timmy and now Binky? How many mathematically-challenged juvenile investors must we keep track of?!

 

[StealthP3D]

I don't care on a personal level about the disagrees but I am a little concerned for anyone that legitimately DOES disagree.

That word "dividend" has been featured in every stock split I've been a part of. Admittedly that's been a few years but it's just not that exotic. It is NORMAL.

It's been done a million times and it is not complicated and it does not have pork stuffed in it like a bill in the senate

This is a straightforward and normal stock split.
Stock splits are generally bullish for reasons that are largely but not strictly psychological.
Nothing weird is gonna happen.
Short squeeze likely anyway.

You can shout this from the rooftops but people gonna believe what they wanna believe. It's a stock split. If it looks like a duck, walks like a duck and talks like a duck - it's a duck. Even Elmer Fudd knows this.

 

[StealthP3D]

OK, I've been trying to ignore all this taxation stuff, but doesn't it really come down to:

1) For each share you own, you're getting 4 new shares at 0.20 * $X each
2) Each existing share is worth only 0.20 * $X, so it's lost value.

In other words, anything you might have "gained" on the new shares is balanced by the "loss" in value of the existing share.

How can that not be a wash?

Exactly!

 

[Steve m]

It's a good thing VW has 5,000+ software engineers to figure this one out:

View attachment 575554

Mythical man month....

 

[StealthP3D]

The Belgian Tax system does not care about you as an investor losing value. (No write-offs possible) They do however tax dividends. Not fair you say? They don't care.

The uncertainty for us Europeans is two-fold:
1. Are the extra awarded shares viewed as a dividend?
2. If yes (terminology in 8k SEC filing suggests that is the case), what value is attributed to the taxed dividends? For example if SP at split is $1500, are you taxed on $1200 or $0? (The argument for the latter being you are awarded 4 shares of $0 value that happen to start trading at $300 the next trading day)

As said before, I called my broker (Saxo Bank's Binck) about this and they said they got this question all day today. Will notify all of their clients soon, definitely before August 21st. Will post here when I know more.

Key words: "$0 value". There is nothing to tax.

To all the people who doubt this, do you really think Tesla is inept or doesn't care about their International shareholders?

Please stop with the nonsense!

 

[generalenthu]

Robinhood and retail interest could've been a small part of it:

View attachment 575613

But the vast majority of it is due to delta hedging imo:

View attachment 575614

This chart from @generalenthu hasn't even fully updated yet to include the price increase to $1,560, but you can see delta hedging requirements increase by a whopping 9M shares just from $1,374 to $1,499.

In reality, the number market makers had to buy will have been lower, because they don't need to delta hedge 100% of this number, but regardless the delta hedging requirements for market makers went up enormously today. So much in fact, that I wouldn't be surprised if market makers weren't able to buy enough shares today to be delta neutral, considering volume of only ~20M shares.

You missed the update by a couple of minutes. But the take away is none the less the same. Not enough volume given the move. Typically, in situations like this, after hours trading results in price increases, and it behaved as expected.

 

[Prunesquallor]

You can shout this from the rooftops but people gonna believe what they wanna believe. It's a stock split. If it looks like a duck, walks like a duck and talks like a duck - it's a duck. Even Elmer Fudd knows this.

I’m dwiving in my cahhhh. I turn on the wadioooo....

 

[UCF3]

Everyone keeps saying that the stock split is to benefit the retail investor who can’t afford $1,500 a share.

1. Where were these people in December 2019? That was just eight months ago. Does seeing the stock at $1,700 psychologically pull in retail investors that never considered TSLA before? Meaning they think it’s on sale at $320?
2. What happens to these retail investors when we race back up to $800 at the end of the year? Won’t the stock be too expensive again. I’m guessing the hope is this leads to a never ending cycle of splits.

 

[StealthP3D]

I'll maybe feel like celebrating when TSLA is at around $2K/share, where it should be.

All this hand-wringing! I'm disappointed. Because when it hits $2000 I can all but guarantee it will probably close below that some point afterwards, within the next several days, weeks or months. So I don't know what's so magical about $2000 compared to the solid performance we saw today.

I recommend watching the company, not the share price, but if you're gonna watch the share price you have to take it in the context of previous share price moves. If you do that, today was an outstanding day!

Congrats to all TSLA longs!

 

[Knightshade]

Tweet was from "Mrevor Tilton".

Nope.

https://twitter.com/nikolatrevor/status/1293647126962962432

 

[st_lopes]

Thanks / Merci.

Appreciate your expertise here.

On an unregistered account would you say we would need to invoke the Foreign Dividend Tax credit - for any shares sold after the split - or would it just be done as a standard capital gain as would have been the case pre-split ? (but just now at the newly adjusted 5X greater shares @ 1/5th the price )

We should not have any foreign tax credit (FTC) implications pre or post split in unregistered accounts. FTCs only become relevant if tax is withheld (eg, on cash dividends, or on traditional stock dividends) or if for some reason you are a tax resident of another country that would have also taxed your gains on sale of shares.

So, they should be taxed at our normal capital gain rates, with the only adjustment being that your adjusted cost basis per share is now 1/5 of your original cost basis.

 

[OrthoSurg]

At $300, Robin Hooders will jump on the bandwagon on the 31th, again.
Aiming at $2037

 

[StealthP3D]

Unless I don't have an official statement it is all hearsay though and we should hope for the best. One reason why I am alerted is I had a similar case with company options many years ago where they had exactly the same argumentation and taxed me on no gains.

Options are different from a stock split and you can be taxed on options (even here in the US) even if they become worthless. The key consideration is that they had value when they were gifted (earned). And, yes, those laws should be changed. However, in this case you are not getting anything of value (because it's a zero sum transaction).

 

[OrthoSurg]

Nope.

https://twitter.com/nikolatrevor/status/1293647126962962432

Interesting.

He shows good judgment if he buys a Tesla I will buy NKLA shares. 2 or 3 of them.

 

[FrankSG]

You missed the update by a couple of minutes. But the take away is none the less the same. Not enough volume given the move. Typically, in situations like this, after hours trading results in price increases, and it behaved as expected.

Looks like the total came out to 12M. An almost 50% increase in the required delta hedging inventory.

Although the actual number MMs had to buy was lower than 12M, even if it's only 4M, I'm not so sure that volume of 21M shares was enough for market makers to add that much to their long position. 4M shares is a lot.

I don't have much conviction in short term price predictions, but I'd guess that this week will play out either:

1. Market makers and/or other factors push the stock price back down below at least $1,500 to reduce the required delta hedging inventory.
2. The rally continues as market makers struggle to stay delta neutral.

 

[Buckminster]

Merc S Class copying Tesla screen:

2021 Mercedes-Benz S-Class: new images showcase comfort-focused interior | Autocar

 

[Artful Dodger]

I’m dwiving in my cahhhh. I turn on the wadioooo....

OT:

Spoiler: Robin Williams does Elmer Fudd singing Bruce Springsteen

We now return you to the 24-hr Tax Channel...

Cheers!

 

[printf42]

Looks like the total came out to 12M. An almost 50% increase in the required delta hedging inventory.

Although the actual number MMs had to buy was lower than 12M, even if it's only 4M, I'm not so sure that volume of 21M shares was enough for market makers to add that much to their long position. 4M shares is a lot.

I don't have much conviction in short term price predictions, but I'd guess that this week will play out either:

1. Market makers and/or other factors push the stock price back down below at least $1,500 to reduce the required delta hedging inventory.
2. The rally continues as market makers struggle to stay delta neutral.

I have been saying $TSLAQ is irrelevant now.

The true shorts now are naked call selling MMs. They thought they had learned the lesson last year, and thinks they are safe now after jacking up IV to the sky. Yet, they got caught naked over and over again.

The true losers in VW squeeze were also naked call writers, talking about picking up coins in front of a steamroller.

 

[StealthP3D]

Interesting.

He shows good judgment if he buys a Tesla I will buy NKLA shares. 2 or 3 of them.

It's not "good judgement" if the learnings have to come from the school of hard knocks! Even a dog can do that.