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

[StarFoxisDown!]

Honestly this is the weirdest logic.

Accuses market for not understanding Tesla's growth as it becomes the few companies with a trillion dollar valuation. The reason for this is because institutional investors are apes and deep down inside they think Tesla will never expand their revenue to justify current valuation. That's about sums up all the conspiracy theories?

I know right? Been great entertainment this morning

 

[bro1999]

Looks like the stock is trying to a power hour launch.

 

[henchman24]

Looks like the stock is trying to a power hour launch.

Happening on a rather modest buy volume... sign of some strength at these levels.

 

[LST]

but right now 1100 per share just too high. Who is buying at 1100 or above right now? Thumb up if you are

I was, yesterday 50 @ 1126 something
today again 15 @ 1187, its long term….
aversge buy price inching up a tad… to 70-i something

 

[DarthPierce]

He should have exercised his options a month ago. Waiting to the last minute to exercise is what you do to maximize your tax liability. If he wanted to minimized the capital gains liability, he should have exercised back when the stock price was low. Elon should understand this quite well.

No, the point isn't to minimize capital gains tax paid, the point is to minimize the number of shares needed to cover the tax burden (own more shares after tax) - higher price is better.

 

[larmor]

I wish I knew how long it will take to get those installed and running...

Maybe someone can come up with the appropriate poetry, begining with "An ode to line 1"

 

[jhm]

Ok too many people have stated Musk wants the stock lower so he will pay less in taxes.
Do I have this wrong?
Musk is going to pay the same percentage no matter what. And he is literally going to pay it in stock. If he has to pay 2x because the stock has 2x'd then it is still going to be the same amount to him. It will be the same number of shares.

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There are two different tax liabilities here. Musk pays ordinary income taxes on the value of the option when it is exercised, and Musk takes possession of the shares. This is the spread between the market price at time at exercise and the exercise (strike) price times the number of share. Then when the shares are sold, there is a capital gains tax on the gain from when the shares were obtained at market price to the selling price. Musk wants to hold shares indefinitely, so the capital gains tax can be deferred for the rest of his life. Thus, he should want to minimize the ordinary taxable income when he exercises the option. Once the options vest, he should try to exercise when the stock price is at its minimum (in the money) before the option expires. It can be unclear when this minimum will happen, but certainly Musk has enough foresight to know that if Tesla is posting positive quarterly results the price is likely to go up. The higher the stock goes before he exercise the bigger his ordinary tax bill will be, but he is in control of exercising as early as possible.

 

[lafrisbee]

SOMETHING DIFFERENT: So rarely do I get to mention something really "tesla-y And Stock-y, but....
Let me dig up "THE THREE DAY RULE." Several posts were written for the 4 days after the earning report (2 active trading days AND the week end) that The Monday would be the Third day. And that the Third Day after earnings report was the day that TSLA typically made its move since the big companies needed the 2 days to fully digest the Earnings Report.
And while the two active days right after the Earnings Report was posted the SP did improve, That Monday, The THIRD DAY, the stock did start this run.
So my lil ol mind tends to believe the Three Day Rule is true, AND it supports that this is institutions buying after doing the number crunching. And some other things too.
So do any of you agree with that? I like that the Three Day Rule was discussed prior to the third day..and there is some agreement with the Bible...on the third day dry land, the sea, and plants and trees... Pretty much major topics in Global Warming....

 

[hacer]

He should have exercised his options a month ago. Waiting to the last minute to exercise is what you do to maximize your tax liability. If he wanted to minimized the capital gains liability, he should have exercised back when the stock price was low. Elon should understand this quite well.

Minimizing tax liability in this case (by exercising early when stock price is lower) also means minimizing the number of shares held after finishing exercising/selling and having a lower cost basis (and thus future higher tax liability). I don't think Elon's goal is to minimize the number of shares he ends up owning from his options grant. Exercising a month ago also would have the effect of maximizing the number of shares he must sell if he uses selling to generate the cash for taxes and exercise as he said he would do. I'm guessing Elon understands these things too.

 

[jhm]

No, the point isn't to minimize capital gains tax paid, the point is to minimize the number of shares needed to cover the tax burden (own more shares after tax) - higher price is better.

Correction that is minimizing the ordinary tax liability at exercise. He wants to hold forever, so cap gains are deferred. But yes he wants to minimize his tax bill in dollars because borrow dollars against his shares to pay the tax bill.

 

[lafrisbee]

Maybe someone can come up with the appropriate poetry, begining with "An ode to line 1"

Smashing Pumpkins
"An ode to no. one"
(Yes I had to add the "." to get it to play along a little better as In "line no. one." ...but to cover for it the lyrics refer to "git-go cars.")
And a warning to those with delicate sensibilities..

 

[TheTalkingMule]

How great is it to have a CEO who knows the exactl right moment to throw water on a fire? I guess most CEOs aren't engineers.

I'd like to see us hover around 1150-1200 all the way thru 4Q earnings. Too high and we likely see a "sell the news" after 4Q. Too low and the spectre of a split fades.

You hedgies and MM's need to cover looooooong before Groundhog Day, or this whole nightmare repeats itself!

 

[LiveLong&Profit]

And keeps going up in after-hours too, $1218 so 4 Gordo's done. It's almost a full @Krugerrand eyebrow now !

Looking for the "Helpful", "Funny" and "Love" combo-button, but not finding it....
@Mods: Feature request?

 

[jhm]

Minimizing tax liability in this case (by exercising early when stock price is lower) also means minimizing the number of shares held after finishing exercising/selling and having a lower cost basis (and thus future higher tax liability). I don't think Elon's goal is to minimize the number of shares he ends up owning from his options grant. Exercising a month ago also would have the effect of maximizing the number of shares he must sell if he uses selling to generate the cash for taxes and exercise as he said he would do. I'm guessing Elon understands these things too.

Musk is indifferent to his tax liability on capital gains because 1) he can defer that indefinitely and 2) capital gains tax rate is substantially lower than his marginal tax rate on ordinary income. So he does better to minimize his ordinary income.

 

[deffu]

The gap from 800 to 1100 may never fill again like previous breakout?

 

[StarFoxisDown!]

The gap from 800 to 1100 may never fill again like previous breakout?

What gap? You had a small gap 3-4% gap higher last Monday between the close that previous Friday and the open Monday. Besides that, all the gains have been intraday. You don't have to "fill gaps" on intraday moves. That's not how it works.

 

[MartinAustin]

Looks like someone big started buying around 2:46pm EST

 

[thesmokingman]

Looks like someone big started buying around 2:46pm EST

Yea it's recovering alright!

 

[Knightshade]

Correction that is minimizing the ordinary tax liability at exercise. He wants to hold forever, so cap gains are deferred. But yes he wants to minimize his tax bill in dollars because borrow dollars against his shares to pay the tax bill.

he has repeatedly stated (and when the time came in the past done) selling shares to pay his immediate tax bill, not borrowing to do so.

That's what he already said he'd do here as recently as last month.

So your analysis is incorrect and the Hacer one is accurate.

He basically does not care what the SP is when he exercises and sells to pay the tax, he's going to need to sell (roughly) 12.3 million shares no matter the stock price (assuming it doesn't crash 95% or something)

 

[elasalle]

It's probably because this dip is going to be bought up in a move higher.

I find it amusing that anyone thinks the rise starting last Monday was because of Hertz. It was a "catalyst", not the underlining reason. The stock barely moved on fundamentally game changing earnings. That's probably why despite the stock being up 25%, it's only down 3-4% instead of what most people were expecting....which was a selloff of 7-10% or more.

Agree with SP will eventually go up.


But, CC prices has to be rise in Volatility and IV.
Need to wait for BB to contract.