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

[StealthP3D]

This is not what I'm talking about. I completely understand this theory, and believe it's almost certainly true. The only question is to what extent this is happening.

Well, I don't even know that it's almost certainly true but I agree, if it is true, we don't know the extent of it.

The thing that I am extremely skeptical of, because neither a plausible theory nor evidence has been presented, is that the stock split affects these naked short positions differently than normal short positions. In all likelihood, these naked short positions should also go from x shares @ y $/share, to 5 * x shares @ 1/5 * y $/share, and stay equal in dollar amount.

I don't think anyone that has spoken up here knows how the mechanics of the system works in relation to selling the stock short without having borrowed shares to back them up (except to the extent the market makers have 3-12 days or so to borrow the shares). We don't know the regulatory process (if any) or the legal framework this occurs under or the detailed rights and responsibilities of the market maker when they do this.

But what I do know is the system is very lightly regulated (operating mostly on trust and faith). And I know if there is a way to game a system to make more money, and the consequences are not severe (or the chance of getting caught is very low), then people will game the system and make more money. And I also have noticed that the manipulators appear to have much more control over TSLA's price movements compared to other stocks I have followed closely. This would be consistent with having a large pool of phantom shares that they can grow and shrink at will when it serves their purposes. By taking control of the share price movements, even though it's not absolute control, they could make millions of extra dollars. And, if they could, and the consequences were minimal enough, they almost certainly would.

Now here's what I suspect: That the process of gaming the system in normal day to day trading is a lot easier and less risky than issuing 4 new shares for every phantom share already created through whatever process they might be using. Without understanding what that process might be, I can't theorize about this in a more detailed manner. But, suffice to say, issuing 4 new shares for shares that are already supposed to be transitory in nature (and not eligible for new shares) would be a much more serious offense and probably stand out like a sore thumb due to reporting requirements of facilitating the split. They would have to blatantly lie on reporting forms they fill out to record the split activity.

 

[Ameliorate]

Fun Fact: TSLA Market Cap is up $125.90B in the past 8 trading sessions.

Average Daily Volume since the Stock Dividend announcement is 18.0m shares.

Previously, the 8-day avg volume before the announcement was 7.9m shares/day.

"Stock splits mean nothing" -- CNBC Guest | Aug 12, 2020​

Fun fact AAPL is UP >100B today alone. Also AAPL gained about 1.16T from March, where Tesla gained 313B.
Makes the argument for Tesla's climb a little easier, I don't really follow AAPL but it boggles my mind that they could gain that much valuation when I understand how fast Tesla is growing and into the massive sectors that it is.

 

[ggr]

How do we get whatever letter they’re requesting for proof?

It would be an interesting drive from NY trying to avoid COVID and fires along the way.

I just downloaded a broker statement for July, and used that.

 

[FrankSG]

I don't think anyone that has spoken up here knows how the mechanics of the system works in relation to selling the stock short without having borrowed shares to back them up (except to the extent the market makers have 3-12 days or so to borrow the shares). We don't know the regulatory process (if any) or the legal framework this occurs under or the detailed rights and responsibilities of the market maker when they do this.

But what I do know is the system is very lightly regulated (operating mostly on trust and faith). And I know if there is a way to game a system to make more money, and the consequences are not severe (or the chance of getting caught is very low), then people will game the system and make more money. And I also have noticed that the manipulators appear to have much more control over TSLA's price movements compared to other stocks I have followed closely. This would be consistent with having a large pool of phantom shares that they can grow and shrink at will when it serves their purposes. By taking control of the share price movements, even though it's not absolute control, they could make millions of extra dollars. And, if they could, and the consequences were minimal enough, they almost certainly would.

Now here's what I suspect: That the process of gaming the system in normal day to day trading is a lot easier and less risky than issuing 4 new shares for every phantom share already created through whatever process they might be using. Without understanding what that process might be, I can't theorize about this in a more detailed manner. But, suffice to say, issuing 4 new shares for shares that are already supposed to be transitory in nature (and not eligible for new shares) would be a much more serious offense and probably stand out like a sore thumb due to reporting requirements of facilitating the split. They would have to blatantly lie on reporting forms they fill out to record the split activity.

I agree that probably no one at TMC knows enough about the inner workings to say how naked shorts are gaming the system, if they are.

However, naked-short positions and phantom shares are just debts. Either a broker doesn't own enough shares to cover all its clients, so it is indebted some amount to its clients. Or a market maker did a naked short and has to come up with the shares some way. Again, this is just a debt.

All that the stock split changes about debts, be it shares borrowed by convert holders or regular shorts, or be it naked short debts, is that the number of shares is multiplied by 5 and the $/share divided by 5. The dollar value of these debts does not change because of the split. The debtor will simply have to come up with 5 shares @ $400, instead of 1 share @ $2,000.

Even if there is insane fraud going on at clearing houses, and clearing houses are telling owners of TSLA stock that they have more stock than they actually do as part of some sort of scheme in cooperation with evil market makers, then why would a stock split discourage them from halting this massive fraud? Why wouldn't they just continue telling people they own more shares than they do? (Highly doubt this is happening though. That'd be REALLY nuts.)

 

[StealthP3D]

Even if there is insane fraud going on at clearing houses, and clearing houses are telling owners of TSLA stock that they have more stock than they actually do as part of some sort of scheme in cooperation with evil market makers, then why would a stock split discourage them from halting this massive fraud? Why wouldn't they just continue telling people they own more shares than they do?

The answer to your question is likely contained in the first sentence you wrote:

I agree that probably no one at TMC knows enough about the inner workings to say how naked shorts are gaming the system, if they are.

You are assuming the manipulators would be breaking the law if they were creating massive amounts of shares that didn't exist. Yet, we know they are legally allowed to create these shares but that there is supposedly a time limit on them. I'm theorizing there are loopholes as there are in most regulatory systems. Most regulatory rules are not written perfectly or air-tight. So my theory is they have a way to abuse their privileges while maintaining enough plausible denial (or a close enough relationship with the regulators) that the worst they would do is slap their hands and tell them to "cut it out". But knowing how these things work, chances are the regulators know it's happening but look the other way. It's also possible an unintended loophole allows them to create excessive share legally (even if against the assumed spirit of the rules).

But a loophole to do it one way might not work through a stock split. There are reporting requirements. It may be they have to get the number of phantom shares down before they have to report how many "phantom shares" are currently exist (because the disclosure of exactly how many there are might be mind-boggling). As you and I both seem to agree, we don't know the details of how they might be able to abuse their privileges therefore neither of us can say exactly why it might be a problem to go through a stock split with excessive un-loaned shares in existence.

I've read your stance that a split is a simple accounting exercise and thus would not change anything and don't find that argument convincing at all. Not even a little bit. For the reasons above.

 

[Steve m]

There are more conspiracy theories here than on facebook...


At least Tesla cars are arriving and being registered in Norway and the Netherlands

 

[Steve m]

News from Portugal

 

[wipster]

Is it Monday morning yet?

 

[Knightshade]

No, you were getting disagrees because you said that the build out of additional service centers and Superchargers needed to match the growth of sales. And that link doesn't say that at all.

You know who else said that?

Elon Musk.

But I also got flooded with disagrees when I literally quoted him on robotaxis too.

Some people just wanna be mad about stuff....even facts.

Speaking of facts-

Just reviewed Tesla’s service locations in North America & realized we have major gaps in geographic coverage! Sorry for this foolish oversight. Tesla will aim to cover all regions of NA (not just big cities) within 3 to 6 months.

Now- being Elon, that date blew WAY past without remotely making his target...but clearly they're finally getting around to it


When later asked about SC expansion he said

Service center expansion is at max speed

In fact, on an earnings call in 2019, he made the same argument I made and got a slew of disagrees on.... that expansion of service centers and superchargers are key to future sales... and that it needs to scale with the fleet

people around the world pretty much want the same thing, so in my experience. They have to have a service location that's convenient so it can be like you've got to drive eight to five hours to a service location. You've got to have service, you have to have the supercharging and charging all sorted out, consumer financing and then the price must makes sense. And any place where those four things are true, our sales are great. So we're rolling out service centers like crazy. Service centers are the key to sales.

He also mentioned:

as the total fleet scales -- service needs to scale

But yeah--- when I said LITERALLY the same stuff... I was one of those crazy shorting FUDs out to disrupt Teslas future...

 

[CorneliusXX]

Fun Fact: TSLA Market Cap is up $125.90B in the past 8 trading sessions.

Average Daily Volume since the Stock Dividend announcement is 18.0m shares.

Previously, the 8-day avg volume before the announcement was 7.9m shares/day.

"Stock splits mean nothing" -- CNBC Guest | Aug 12, 2020​

While stock splits are known to have a positive impact on stock price, it's extremely difficult to believe that this run could possibly be solely due to the stock split announcement in normal circumstances.

Macros have been quite favourable and there may be a push from delta hedgers. But the only two scenarios I think have the potential to push the stock price this far this fast are front running S&P inclusion or the naked short forced close out scenario. Can't wait to see how the next couple of weeks unfolds.

 

[LN1_Casey]

While stock splits are known to have a positive impact on stock price, it's extremely difficult to believe that this run could possibly be solely due to the stock split announcement in normal circumstances.

Macros have been quite favourable and there may be a push from delta hedgers. But the only two scenarios I think have the potential to push the stock price this far this fast are front running S&P inclusion or the naked short forced close out scenario. Can't wait to see how the next couple of weeks unfolds.

I agree, I don't think it was just the stock split. Q3 results had lackluster response, even going down, despite it being one of two positive automakers in the world being positive during the pandemic. I think the stock split announcement was the catalyst to shove it all into effect. Micros also helped maintain this sentiment. Then Delta hedgers had to keep up, and it just kept adding up.

I am excited for the next few weeks as well.

 

[engle]

Anyone's applying to attend the event in person?

I think I'm gonna do just that. And if lucky enough to be selected, I'd just fly down there to attend and visit my cousin who lives in Fremont too.

There's something about attending these events in person... like Apple/Google Developers Conference.

Agreed, but this year will be really weird. My first annual meeting was in 2012 back when we only had 200 shares and a Model S reservation, although I haven't gone every year. One year, we got to drool over the Roadster II and check out the Semi parked outside the Computer History Museum in Mountain View. I wonder if they will even bother shipping the CyberTruck up from Hawthorne this year?

I live only 3 miles away from this year's meeting so I just entered the lottery. The only reason I would still go in person if I "won" is because I have a P-100 mask and clear goggles to wear for COVID-19 safety. 900 Page Ave is a very large building with a high ceiling. I was there once to wait in line to reserve our Model 3. If I felt it was too crowded for proper social distancing, etc. I would just leave. I'll enter my sleeping wife's name, also, but I think she would decline unless we both "won". "Winners" cannot bring any guests even if they are also stockholders this year for obvious reasons. If a "winner" does not respond to their invitation within 48 hours they will give it to someone else.

 

[Sancho]

If you focus only on the last few weeks, the rise of the SP after the split announcement looks bizarre, and is leading us to some fanciful explanations.

But widen the lens to see all of 2020. The SP really broke through a multi-year drought in Q1 as investors finally started believing in the Tesla story. The SP was rising fast In Q1, and was on a trajectory that could have taken it to 2000 in Q2.

But then Covid hits, Fremont shuts down, and the SP rise is halted.

Until July 2. When the P&D report is released showing that Covid hadn’t really slowed Tesla down. Boom, the meteoric rise that had started pre-Covid resumes.

When the SP hit the nice round 1500, there was a very brief pause for profit taking and consolidation.

The announcement of the split may have accomplished nothing more magical than ending the brief consolidation, allowing the continuation of a meteoric trajectory that really started in Jan-Feb.

If this is what’s going on, the question then is: what stops the 2020 meteoric trajectory? Unless there is a really adverse macro development or adverse Tesla-specific development, this rise may continue for some time, and really has very little to do with the split, potential S&P inclusion or Battery Day.

It’s really just about Tesla starting to achieve such obvious profitability and construction growth, that overall investor sentiment flipped this year from the five-year darkness of investor perception.

 

[Tes La Ferrari]

Do we see another landing for consolidation at the $2-2.1k level As there was at 1500 - ( pre split or their equivalent post split prices) before resuming the upward march ?

 

[UnknownSoldier]

We might see consolidation this coming week, before the split occurs. Then the new buyers are going to show up and want shares.

The timing of the long-awaited S&P inclusion matters too, if it's an event that overlaps with the annual meeting and battery day then that's going to be something.

 

[Artful Dodger]

While stock splits are known to have a positive impact on stock price, it's extremely difficult to believe that this run could possibly be solely due to the stock split announcement in normal circumstances.

AAPL has been going through the same Share Dividend / Stock split process. It's shares are up 29% since their announcement on Jul 30th, which is a more typical Market reaction for other large cap stock splits.

TSLA is now up 50% in half the time. What's the difference? Who's buying to cover (shorts or MMs)? We'll know more a bit more in Sep when NASDAQ publishes this week's Short Interest data.

Macros have been quite favourable and there may be a push from delta hedgers. But the only two scenarios I think have the potential to push the stock price this far this fast are front running S&P inclusion or the naked short forced close out scenario. Can't wait to see how the next couple of weeks unfolds.

Front running S&P should have begun on July 23rd after the Q2 results made it obvious that TSLA is now qualified to enter the NDX. Yet instead we saw a sell off, typical of abusive market reactions for this equity.

There's not too many alternative explanations for the ongoing runup which began on Aug 14. Forced covering en masse by MMs of their naked short positions is beginning to sound more plausible.

The revolving door / turnstyle of TSLA money is going to come to a screeching halt for any MMs that are caught with their fingers where they shouldn't be...

Cheers!

 

[Yamantasdivar]

Who’s still waiting for that dip?

Rejoice patience! Rumor has it that a big dip to $420 is around the corner

 

[mrdoubleb]

OK, no stupid questions, right?

So the wording on the split announcement says that shareholders registered on August 21 will get +4 shares after market close on August 28 and trading will start with the split value on August 31.

Does this mean TSLA trading is suspended next week and the split is based on yesterday's closing price?

 

[engle]

OK, no stupid questions, right?

So the wording on the split announcement says that shareholders registered on August 21 will get +4 shares after market close on August 28 and trading will start with the split value on August 31.

Does this mean TSLA trading is suspended next week and the split is based on yesterday's closing price?

No. The old shares will trade next week. However, since their buyers will not receive the +4 per share stock dividend on Friday 8/28, those old shares (ex-dividend) will start trading Monday for about 1/5th of the price we closed on Friday, subject to market demand and supply setting the price. In other words, people that were "owners of record" on Friday 8/21 who sell next week will still receive +4 shares per share stock dividend next Friday 8/28 after market close. That is just like receiving a cash dividend when you sell after the "ex-dividend" date but before the payable date. If think one reason for the 5 trading days delay is to ensure all the trades settle normally 2 trading days after 8/21 and then give the brokers time to effect the change in their customer's accounts, who are the "beneficial owners of record".

On August 31, 5 times the old shares will be trading. so the entire float will be tradeable again. If I am correct, this means only 1/5th of the float will be tradeable next week? If there is increased demand for shares at the 1/5th "sale price lol" then the reduced total float in shares that could be sold might drive up the price more than "normal" next week?

 

[WarpedOne]

No suspension, and no splitting of value either.
Elon cannot decide TSLA should cost this much, that is for the market to determine.
What will happen is only, there will be 5x as many issued shares, distributed between existing shareholders.

What will be the SP? We'll see.

If I am correct, this means only 1/5th of the market cap will be tradeable next week?

Yes, this is the real ambiguity that will last for one week.
In 2020 there is no technical reason anymore for a week between record date and distribution of new shares. If it was just "brokers assign new sharers", this can be done in a single tick.

There is more to it that just that.