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

[Todd Burch]

They are not requesting authorization for any split. They are just about out of shares and need got get more to do any board dictated split. That requires a share holder vote. Tesla's original incorporation shares are probably mostly gone. Certainly not enough to support any meaningful split. They could do an odd or uneven split say 3:2, 5:3 to use up whatever is still left but everyone would get complain.

Of course that’s what I mean.

 

[Rarity]

Just a slightly different view; most parts of Goldman are effectively independent of each other. I dealt for a decade or so with three of their non-US units, each of which seemed to be quite independent of the others. The only connection I noted was that they referred each other to my firm. As vendors of services to Goldman they were impeccable and were quite generous. Under no circumstances would I really want to deal with them as an investor. I would be slightly hesitant to use them to raise money, depending on the market. In the US I would NOT use them at all, for any purpose. OTOH what other would you trust, if any? Personally I'd would not trust any of them to raise capital or to advise on anything at all.

Apparently, Musk has decided that he can trust everybody-but-Goldman in the case of his Twitter go-private. Or maybe that they can only be trusted as a group, not as individual firms.

 

[MartinAustin]

So many laughs in this, but I am sincerely hopeful they succeed.

Ford beefs up F-150 Lightning production in a forceful bid to dominate the electric pickup market

"In this market, being a first mover is a very, very important move," Ford CEO Jim Farley told CNBC.

www.cnbc.com

Sweet Jesus help us.

I liked this sentence - "Some believe the F-150 Lightning could be the first true test of whether Americans are ready to adopt electric vehicles that aren’t Teslas."

 

[AudubonB]

…. OTOH what other would you trust, if any? Personally I'd would not trust any of them to raise capital or to advise on anything at all.

Brown Bros. Harriman, Goodbody & Co, Cyrus J Lawrence, EF Hutton, First Boston…

Oops. Am I dating myself?

Or just outing myself?

 

[generalenthu]

I suspect Elon is telling large shareholders that they can keep their share in his new private Twitter if they want to. I have a feeling Jack is on board and in this category.

He probably won’t need to use the full finance package he’s assembled.

This is a bit hand-wavy. The large stakeholders in Twitter are index funds who need to sell. They can no longer hold any significant number of shares.

Let's run some numbers:

Elon put together a bid for 43.4 Billion - $54.2 per share for 800.6 million shares. It does have 6.4 billion in Cash, which could offset 5.6 Billion in Debt that needs to be bought out. This is assuming that the term debt / bridge loans are not secured against this cash. (Also cash could need to be repatriated for this and this might become difficult)

The details of the financing are here among other places.

• The first tranche, per the filing, comes from Morgan Stanley and “certain other financial institutions” that have “committed to provide $13 billion in financing” to Musk in the form of a $6.5 billion “senior secured term loan facility,” a $500 million “senior secured revolving facility,” a $3 billion “senior secured bridge loan facility” and a $3 billion “senior unsecured bridge loan facility.”
• The second bucket of cash comes from, once again, Morgan Stanley and others that have “committed to provide $12.5 billion in margin loans” to Musk, against what we presume are his shares in Tesla and other companies.
• And, third, an “equity commitment letter” from Musk to “provide equity financing for the Proposed Transaction or the Potential Offer sufficient to pay all amounts payable in connection with the Offer and the Merger” net of the above funding sources. The total value of this equity commitment from Musk is “expected to be approximately $21 billion,” the filing states.

Out of this 21 Billion in cash Elon is committing, his current Twtr shares will account for 4 Billion. Assuming he wants to keep a simple majority in the private entity, he will need to bring in another 6.5 Billion at least (21 billion*50% - 4 billion) to the table. More likely though, he will have to bring in close to 12 or 13 billion.

This cannot be margin loans as they are already accounted for. I am not sure where the rest will come from. I suppose he has some cash left over from some of the sales last year when he raised more cash than he needed to. But I believe he used up most of that for his purchase of Twitter shares.

Feel free to refute this math, or come up with alternate scenarios.

 

[Curt Renz]

Welcome to the Twitter Motors Club.

 

[StealthP3D]

I will scan, redact and post tonight when I get home.

They did label it as "preliminary". Maybe they got confused with AMZN or GOOG.... I mean these WS types aren't always the sharpest knives in the drawer....

It makes zero sense they got confused between TSLA and AMZN or GOOG. Both AMZN and GOOG have announced stock splits, the dates are fixed and thus the info is not preliminary. Wall Street types and brokerages tend to be very good at getting the simple stuff right, it's only when things become more nuanced that they become as stupid as a pile of rocks.

 

[traxila]

It makes zero sense they got confused between TSLA and AMZN or GOOG. Both AMZN and GOOG have announced stock splits, the dates are fixed and thus the info is not preliminary. Wall Street types and brokerages tend to be very good at getting the simple stuff right, it's only when things become more nuanced that they become as stupid as a pile of rocks.

I was being funny. Sorry.

Maybe I got confused. Don't think so. Am surprised that no one else has received anything though. Was received last week.

All will be answered this evening.

 

[Todd Burch]

For the record, I believe our man Rob Maurer is predicting a 20:1 split.

 

[oneday]

For the record, I believe our man Rob Maurer is predicting a 20:1 split.

Is it consensus here that the only way this can be accomplished is through a shareholder vote?

 

[WattsHappening]

I admit I'm a bit puzzled and annoyed by today's action. Is Wall Street THIS clueless as to what Q1 earnings announcement means? Or they still haven't absorbed it even though we are now at day 3 after announcement? Or are they so short-sighted that all they can think about is a potential hit to Q2 numbers due to Shanghai shutdown?

Or am I just being delusional thinking it's so obvious that TSLA is going to dominate several huge markets and the stock price should reflect this inevitability?

I was fully ready to accept a down day based on macros. But to see the SP underperform QQQ and many high-growth stocks is baffling to me.

 

[StealthP3D]

Yea I commented a few pages ago that it was hard to explain this to the wife. So tired of endless Tesla is doing great posts, YouTube videos followed not only lack luster SP performance but actual downward trends! I know Gordon J is full of sugar but it's hard to hide from the current stock price trend.

In my experience the share price should not be used to determine how well a company is doing. Thinking that way is what causes people to buy bad stocks at their all-time highs and sell good stocks at bargain basement prices. If the share price of every company always reflected the true value of a company, there would be no reason to buy one company over another. Using the share price to judge how well a company is doing would have made Nikola a great company for the summer of 2020. The fact is the market is often wrong and it happens in both directions. This is not Tesla's fault or the fault of shareholders such as (presumably) yourself.

Given Tesla's continued exceptional performance, especially in the face of hardships that are bringing other players to their knees, I think posts giving insight into Tesla's outstanding performance should be welcomed and celebrated, not treated as if they are unwanted. Not many companies (any?) have been executing as well as Tesla. Did you read Tesla's most recent quarterly report? Maybe print it up, along with the investor presentation and give it to your wife. Or, read it yourself so you can explain it to your wife. Complaining that it's hard to explain to your wife makes me think you might not understand the underlying fundamentals and trends that make TSLA such a compelling investment going forward. And in hindsight for that matter.

 

[NZ10K]

For the record, I believe our man Rob Maurer is predicting a 20:1 split.

20:1 is such a stupid idea. And it's a shame that Rob is on it.

 

[2daMoon]

Is it consensus here that the only way this can be accomplished is through a shareholder vote?

The shareholder vote is to approve an expansion of available shares.

Without that there can be no significant split. The split itself is a board decision, not a shareholder vote.

This isn't consensus, it is the nature of the contract that TSLA exists under.

 

[Ogre]

I liked this sentence - "Some believe the F-150 Lightning could be the first true test of whether Americans are ready to adopt electric vehicles that aren’t Teslas."

What a weird comment.

Non-Tesla EVs sell just fine. The good ones sell at a premium to their MSRP. Most of the problem is auto makers either don't want to or can't build enough of them.

I guess when they are choosing the narrative here saying they are incompetent at manufacturing doesn't mesh with their world view.

 

[Skryll]

20:1 is such a stupid idea. And it's a shame that Rob is on it.

5:1 or less would be better, and do it annually to keep naked shorts under stress

 

[FireMedic]

Does anyone have a link for this? Hate to post something I can’t get confirmation of but it’s from our own @avoigt, so I trust it’s accurate.

https://twitter.com/x/status/1518644819438022656

 

[TheTalkingMule]

I admit I'm a bit puzzled and annoyed by today's action. Is Wall Street THIS clueless as to what Q1 earnings announcement means? Or they still haven't absorbed it even though we are now at day 3 after announcement? Or are they so short-sighted that all they can think about is a potential hit to Q2 numbers due to Shanghai shutdown?

Or am I just being delusional thinking it's so obvious that TSLA is going to dominate several huge markets and the stock price should reflect this inevitability?

I was fully ready to accept a down day based on macros. But to see the SP underperform QQQ and many high-growth stocks is baffling to me.

Nobody likes to hear it, and I'm beating a dead horse, but max pain is 1005 this week. Without adequate buying pressure/volume TSLA gets pegged to max pain because it's options market is massive.

When sufficient large interests begin accumulating it'll skyrocket. Could be tomorrow, July 25th, Nov 28th, or anytime in between. I don't see any way in hell we go beyond 3Q earnings for the next massive run up.

 

[oneday]

The shareholder vote is to approve an expansion of available shares.

Without that there can be no significant split. The split itself is a board decision, not a shareholder vote.

This isn't consensus, it is the nature of the contract that TSLA exists under.

Can you ELI5 why an expansion of available shares is necessary for there to be a significant split?

 

[Ogre]

Is it consensus here that the only way this can be accomplished is through a shareholder vote?

Can you ELI5 why an expansion of available shares is necessary for there to be a significant split?

Because they don't "Split Shares". They issue a share dividend. That is they give every shareholder of record X shares for every share they own.

In order to do this, they need to have available shares.