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

[Chocochip]

CleanSpark Announces Microgrid Software Deployment in Costa Rica

The microgrid will consist of a 222-kW PV solar system, and a Tesla 111-kW/223kWh Powerpack provided by CleanSpark

(+ the mPulse functionality from CleanSpark sounds lot like AutoBidder though)

Sounds like a tiny system, just one Powerpack deployed. The equivalent of just over two Model S battery packs. Not sure why this is news. It's definitely positive, but really nothing to get excited about.

 

[st_lopes]

With the way this new capital raise is structured, isn’t it in the best interest of those underwriting it to drive the share price down as low as possible since they can then sell at whatever price they want? Seems to me if they can get shares at say $450-475 and then turn around and sell them for $500+ they have an incentive to spend a bit now to drive the price down? Correct me if I’m wrong in my assumption.

If each sales agent gets a commission of 0.5% of funds raised, in theory each bank should be incentivized to try to sell as much at the highest price to maximize their fees. Unclear if Tesla will set a limit per institution or not, but I like to visualize a stock market trader's pit with reps from each bank bidding off each other to see who will sell the highest to maximize their take home.

 

[TheTalkingMule]

And to all the new retail investors just purchasing their first TSLA shares after the split, thank you for flying the turbulent skies of TSLAirlines. (Pro tip: We often fly through imaginary severe turbulence between 9:30 and 10:30 am).

Fortunately, beverage service is NOT delayed due to turbulence!

 

[engle]

Tesla offering could result in 2% to 3% dilution???? I guess he's calculating based on float, not total market cap???? Still the wrong way to calculate in my opinion. By market cap, its a 1% 'dilution', which Tesla will spend extremely efficiently to further its growth. So as we've said many times on this forum, dilution is the wrong term.

Agreed. If my math is correct, assuming an average selling price of $500 (but likely higher) TSLA would sell 10M new shares.

Dilution = 931,596,365 / (931,596,365 + 10,000,000) = 98.938%

In other words, each share we own will own 98.938% of the fraction of the company it did before the new shares were issued, for a 1.062% dilution.

What kind of "analyst" is Dan Ives? Shouldn't basic math competency be a requirement for his job? /s

What is the formula for equity dilution? - Quora

I wonder how Dow Jones came up with 1.1%?

Correction to Tesla stock sale.
DOW JONES & COMPANY, INC. 8:03 AM ET 9/1/2020

Symbol Last Price Change
TSLA 489.83 -8.49 (-1.7%)
QUOTES AS OF 11:11:21 AM ET 09/01/2020
Tesla Inc.'s (TSLA) plans to raise up to $5 billion in stock offerings from time to time represents roughly 1.1% of the company's $464 billion market capitalization. "Tesla to Sell Up to $5 Billion in Stock," published at 8:54 a.m. ET incorrectly said it was less than 1%.

 

[TheTalkingMule]

Next Mon is labour day & the week will be a short trading week. Getting worried this momentum break might become bigger than expected ... just thinking out loud. But there is still S&P and battery day so maybe not

In past years 4th of July week(and other holidays) was always a bear raid. Whenever volume is down, they jump in. I don't see anything slowing this run up while inclusion is still looming. They're gonna have to rip the band-aid off soon.

 

[engle]

If each sales agent gets a commission of 0.5% of funds raised, in theory each bank should be incentivized to try to sell as much at the highest price to maximize their fees. Unclear if Tesla will set a limit per institution or not, but I like to visualize a stock market trader's pit with reps from each bank bidding off each other to see who will sell the highest to maximize their take home.

The total is only $25M (0.5% of $5B) which is probably a drop in the bucket for these firms.

 

[lafrisbee]

And/or slow down stock rise a little to make it a more healthy sustainable rise. I see a lot maturity in this move from multiple perspectives.

That is a good point... like they could really screw with the MM's when it comes to a Friday and MaxPain. if there were a lot of Put Money just below where the MM's have spent a considerable amount of their resources getting it where they wanted it Tesla could come in and sell shares to drive it to a spot that would crush the MM's.

 

[M|S|M MYP]

If my math is correct, assuming an average selling price of $500 (but likely higher) TSLA would sell 10M new shares.

Dilution = 931,596,365 / (931,596,365 + 10,000,000) = 98.938%

In other words, each share we own will own 98.938% of the fraction of the company it did before the new shares were issued, for a 1.062% dilution.

What kind of "analyst" is Dan Ives? Shouldn't basic math competency be a requirement for his job? /s

Better get some 'real' analysts like GJ, Chanos, and Speigel to explain

 

[ggr]

Agreed. If my math is correct, assuming an average selling price of $500 (but likely higher) TSLA would sell 10M new shares.

Dilution = 931,596,365 / (931,596,365 + 10,000,000) = 98.938%

In other words, each share we own will own 98.938% of the fraction of the company it did before the new shares were issued, for a 1.062% dilution.

What kind of "analyst" is Dan Ives? Shouldn't basic math competency be a requirement for his job? /s

What is the formula for equity dilution? - Quora

But the company is worth $5B more than it was before, which is also a bit more than 1%. The value of your shares is unchanged.

 

[PV4EV]

this is unacceptable...i wish you could transfer to a better broker

.. funnily enough I decided to 'just ask chuck' about this a couple of weeks ago, but the process is not straightforward if you want to transfer shares without incurring CGT. There is likely going to be a gap of many days where I'll be unable to trade which is just as bad as the situation I am currently in with the UK broker.



.

 

[Bet TSLA]

I'm afraid you fail to grasp the theory that has been presented. Nobody is trying to take anyone's shares but you can't deliver shares you don't have. That would explain the unusual delay. The inability to deliver the shares is evidence of a large number of floated shares, with no underlying shares to back them up. They would need to purchased on the open market which would add the kind of delays we are seeing and cause the price to rise. It is effectively increasing the number of buyers without any increase in the number of sellers. I've never seen such widespread inability to account for the shares. Did you know every share/block of shares has a unique identity? This is not rocket science. They had all last week to accomplish this.

The market makers run on very thin margins but the ability to float a large number of shares at will would give them the ability to manipulate the share price to their advantage when needed. The theory is not that they are trying to steal anyone's shares, just manipulate the natural functioning of the markets to their profit advantage.

The theory that has been presented is that we are seeing certain things and there is a nefarious explanation for them that's clearly true. Actually, the nefarious explanation is one of many much more likely possibilities. This is simply paranoid theorizing.

The truth is that nobody here (or anywhere so far as I know) has been unable to conduct their trading as they wish, barring certain unusual circumstances involving foreign banks and proxies who warned their customers in advance that it would take some time. There's just no there there. Simply idiotic conspiracy theories. And all while people here are making money like crazy.

 

[Tes La Ferrari]

Next things.. for Tesla Welcomes Hiromichi Mizuno as New Independent Director to its Board and others at Tesla (not sure who should get the kudos - Elon, Zach, Hiro or others)

1. 1 cent dividend
2. 2 for 1 stock split announcement with an accelerated timescale. The price is too high after all.
3. vote by shareholders on issuing more shares for future splits!

Very interesting quote from Hiro’s appointment announcement :

“He also challenged many established market practices, including short-selling, to promote long-term value creation by corporations.”

 

[engle]

But the company is worth $5B more than it was before, which is also a bit more than 1%. The value of your shares is unchanged.

That is true but they are apples and oranges. Stock or equity dilution is the decrease in existing shareholders' ownership percentage of a company as a result of said company issuing new equity. That's what I calculated.

Value dilution is what you're writing about. Yes, there is none in this case since new shares are issued at the "market" price.

The formula for value dilution is:

The theoretical diluted price, i.e. the price after an increase in the number of shares, can be calculated as:

Theoretical Diluted Price =

Where:

• O = original number of shares
• OP = Current share price
• N = number of new shares to be issued
• IP = issue price of new shares

For example, if there is a 3-for-10 issue, the current price is $0.50, the issue price $0.32, we have

• O = 10, OP = $0.50, N = 3, IP = $0.32, and
• TDP = ((10 × 0.50) + (3 × 0.32)) / (10 + 3) = $0.4585

source: Stock dilution - Wikipedia

 

[mikevbf]

I haven't had any caffeine today so am a little slow. The number of shares made available are about the number of shares the naked shorts need to acquire post split, right? So is Tesla saying pay your fines directly to us for your bad behaviour?

 

[engle]

Why does Dow Jones quote this moron?

From:
Tesla Is Raising Cash. This Isn't Your Typical Stock Offering. -- Barrons.com

"The offering is a little different than other stock sales. "At-the-market" means "investors who purchase shares in this offering at different times will likely pay different prices." There is no one block of stock being allocated by bookrunners.

That is a bad sign to some. GLJ analyst Gordon Johnson believes it's a sign that institutional demand is drying up for Tesla stock, and that retail investors are driving the offering. "If they need the cash, that's a problem with the story," Johnson tells Barron's.

It's a bearish take, but Johnson is indeed a bear. He rates Tesla Sell and has a mere $17.40 price target, the lowest target price on Wall Street for a stock that trades around $500. Not everyone fells as Johnson does. New Street Research analysts Pierre Ferragu is fine with the capital raise."

Let's all flood Barron's author Al Root with email:

Write to Al Root at [email protected]

Here is Al's LinkedIn:

https://www.linkedin.com/in/allen-root-b0030313/

"About

I am (was) a portfolio manager and equity analyst working on Wall St since 2001. I have passed the Series 86/87 qualification exams.

Now I work at Dow Jones writing (incisive) stories about financial markets. "

 

[Artful Dodger]

View attachment 583177
View attachment 583176

Lol, nailed it. When was that you say? Oh, Thursday...

Indeed. I would also now be in favor of a Cap raise. Say a modest 65M shares @ $450 (post split). This provides half the liquidity that will be sought by NDX funds, and $30B cash to Tesla.

This retires Tesla long-term debt completely, and simultaneously increases Tesla's cash position more than 200% for just about 7% dilution:

• $30B Cap raise:
  • $12B to retire debt
  • $18B to cash:
    • adds to $8B current cash
    • $26B cash after Cap raise
    • 225% increase in Cash postion

With that amount of cash on hand, Tesla can fast-track its build program as much as posible, the acceleration of which may pay for the dilution by seizing Tesla's 'First Mover' advantage not only in EVs, but especially in battery manufacturing, and associated T.E. products like Megapack.

This also allows Tesla to accelerate the build-out of the Megacharger Network for Tesla Semi, and to prioritize the transition to large scale production for Semi. More dedicated powertrain manufacturing facilities in Texas, including new-tech batteries (taking load off of GF1/Sparks 2170 lines).

Or buy mining companies. Or become a battery supplier to any remaining automakers

On the short side, I think S&P should give NDX funds 1 quarter to build their TSLA positions after the Cap raise (50% right away, remaining 50% by end of 2020). This puts the shorts in an unenvious position: every share sold at below Market Value will be eagerly snapped up by an nearly insatiable demand from NDX funds:

"Go ahead, short my day. Question is, do ya' feel lucky, punk?"

Eventually, the shorts get squeezed out, find greener pastures, and move on. TSLA stabilizes at a higher equilibrium SP, and begins its multi-year run toward a Trillion+ Mkt Cap.

And so, Tesla accelerates the World's transition to renewable energy. I'm for it.

Cheers!

 

[M|S|M MYP]

Why does Dow Jones quote this moron?

From:
Tesla Is Raising Cash. This Isn't Your Typical Stock Offering. -- Barrons.com

The offering is a little different than other stock sales. "At-the-market" means "investors who purchase shares in this offering at different times will likely pay different prices." There is no one block of stock being allocated by bookrunners.

That is a bad sign to some. GLJ analyst Gordon Johnson believes it's a sign that institutional demand is drying up for Tesla stock, and that retail investors are driving the offering. "If they need the cash, that's a problem with the story," Johnson tells Barron's.

It's a bearish take, but Johnson is indeed a bear. He rates Tesla Sell and has a mere $17.40 price target, the lowest target price on Wall Street for a stock that trades around $500. Not everyone fells as Johnson does. New Street Research analysts Pierre Ferragu is fine with the capital raise.

Thanks for this! Even though this is so poorly written with grammatical errors.....anytime GJ speaks about $TLSA....$TSLA rockets

 

[Hock1]

The theory that has been presented is that we are seeing certain things and there is a nefarious explanation for them that's clearly true. Actually, the nefarious explanation is one of many much more likely possibilities. This is simply paranoid theorizing.

The truth is that nobody here (or anywhere so far as I know) has been unable to conduct their trading as they wish, barring certain unusual circumstances involving foreign banks and proxies who warned their customers in advance that it would take some time. There's just no there there. Simply idiotic conspiracy theories. And all while people here are making money like crazy.

You have a lot to learn about how markets work. Let's talk about it this weekend. In the meantime, probably best not to call some pretty intelligent, knowledgeable and respected people here, idiotic. I think you'll be surprised how much you can learn.

 

[Artful Dodger]

"When the student is ready, the teacher will appear"
-- some moldy Sumerian God, or Buddha

Time to introduce phase 2 of the 'Hiro plan': burying abusive Market Makers and Hedgefunds. Follow along:

1. the S&P Committee will naturally be conflicted over admitting TSLA to the NDX
   1. they want large, high growth Companies, however
      
   2. they don't want stock tickers that are constantly whip-sawed by shorts
2. so to move on to phase 2 (S&P 500 listing), TSLA must 'shred the shorts'
3. note that large passive index funds (ie: Vanguard) are 'Shareholders of Record', not 'Beneficial Owners'
4. this means that MM shenanigans are no longer possible for the ~26M shares going to these NDX funds
5. this effectively decreases the float available to abusive MMs, because their disengenuous 'promises to deliver' will carry no weight while NDX funds pursue fewer and fewer shares
6. if any MMs tries massive naked shortselling post-S&P announcement, those phantom shares have a very strong likelyhood of being bought with the (very real) money of a 'Shareholder of Record', one who will not be satisfied with a 'failure to deliver' event: they want the actual SHARES
7. any such MM will be forced to borrow actual shares to deliver to replace their failed phantom shares, which will drive up the cost of borrowing, and ultimately reduce the supply of shares available to borrow
8. this last bit is the key: the market forces of supply and demand will be restored to TSLA when phase 2 kicks in, that is, the S&P 500 announcement
9. Supply will meet demand at an elevated equlibrium share price; this is not novel, this is the way Markets are supposed to work

TL;dr Abusive MMs/Hedgies are stuffed. Elon tried to warn them. Poetry is in motion. Buckle up.

Cheers!

TL;dr Abusive MMs/Hedgies are stuffed. Elon tried to warn them. Poetry is in motion. Buckle up.

 

[tesila]

If Gali needs to liquidate 10% of his TSLA position to buy a MY, that means he is not even a Teslanaire yet... We really should start a GoFundMe campaign for the guy