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

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That's a fugly ratio for those dabbling in options. What happens to the 500 or 1000 strike options? In case of a split like 1:5, they can slice the strike price by 5 and increase the count by 5 and it works out.

Now it's not so clean. If they create a basket, like what they did with SCTY options, that will be even worse. In these cases, they will create a TSLA1 basket comprised of 3 post split TSLA shares and your old options will be on TSLA1 which then become pretty illiquid.

Sucking out liquidity like this is not generally great. And the market makers make out like bandits when making market in these illiquid chains.

There is still a big inventory of leaps going out to June '24.

Ugh..

I didn’t even think about that.

When solar city went 11 SCTY:1 TSLA (IIRC) there were a lot of random TSLA1 options chains left. They weren’t hard to trade but I suppose the bid-ask spreads would have been better with more open interest.

You have me thinking about changing my LEAPS out to strikes that are a multiple of 3.
 
I wonder what even is the point of splitting the stock if the multiple is so small? I guess I'll never understand the intentions of stock splits to begin with.

Elon dislike naked shorting. They must swap their made up shares for real shares for the split.

And

Since our stock split in August 2020 to June 6, 2022, our stock price has risen 43.5%. While this value appreciation has led to our employees benefiting enormously through the years, we want to make sure all employees, no matter when they join, have access to the same advantages.

We believe the Stock Split would help reset the market price of our common stock so that our employees will have more flexibility in managing their equity, all of which, in our view, may help maximize stockholder value.

In addition, as retail investors have expressed a high level of interest in investing in our stock, we believe the Stock Split will also make our common stock more accessible to our retail shareholders.
 
I wonder what even is the point of splitting the stock if the multiple is so small? I guess I'll never understand the intentions of stock splits to begin with.
Well there are very real impacts when it comes to naked shorting. In that it forces naked shorting to cover before the split dates since all shares have to be accounted for.

We saw this play out on Tesla's last stock split where the float was traded over multiple times in a week, for multiple weeks in a row. The only way you get that sort of sustained volume for that long is huge number of naked shorts being unwound. Now I definitely do not think TSLA is being naked shorted nearly as much as it was leading into the summer of 2020. I think there were a lot of long term naked short positions that had been there for many quarters and even years. So the effect of this stock split on naked shorting won't be the same. But I would definitely say there's been a heavy amount of naked shorting on TSLA ever since May 4th.

Of course, the naked shorting can resume right after the stock split. But I have a suspicion given the past week of FSD deployments....as in Tesla appears to be sending out FSD beta to nearly every person in the US that purchased it and who has signed up for the safety score and that Tesla intends to recognize a significant portion of the deferred revenue during Q2.......causing a pretty big surprise when it comes to earnings.

And then once the stock split is past, Tesla will (hopefully) be on smooth sailings in terms of Shanghai production......leading to a 400k + Q3 P/D. So anyone naked shorting after the stock split will probably think twice.
 
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Well there are very real impacts when it comes to naked shorting. In that it forces naked shorting to cover before the split dates since all shares have to be accounted for.

We saw this play out on Tesla's last stock split where the float was traded over multiple times in a week, for multiple weeks in a row. The only way you get that sort of sustained volume for that long is huge number of naked shorts being unwound. Now I definitely do not think TSLA is being naked shorted nearly as much as it was leading into the summer of 2020. I think there were a lot of long term naked short positions that had been there for many quarters and even years. So the effect of this stock split on naked shorting won't be the same. But I would definitely say there's been a heavy amount of naked shorting on TSLA ever since May 4th.

Of course, the naked shorting can resume right after the stock split. But I have a suspicion given the past week considering FSD deployments....as in Tesla appears to be sending out FSD beta to nearly every person in the US that purchased it and who has signed up for the safety score and that Tesla intends to recognize a significant portion of the deferred revenue during Q2.......cause a pretty big surprise when it comes to earnings.

And then once the stock split is past, Tesla will (hopefully) be on smooth sailings in terms of Shanghai production......leading to a 400k + Q3 P/D. So anyone naked shorting after the stock split will probably think twice.
You keep your fancy ideas to yourself. We'll be doing 86,000 deliveries this quarter and 2022 should match 2021 deliveries IF we're lucky.
 
I wonder what even is the point of splitting the stock if the multiple is so small? I guess I'll never understand the intentions of stock splits to begin with.
I think if the SP was higher, then we would probably have seen 5 for 1 or maybe 10 for 1... the reason I was looking forward to 20 for 1 is that's what was rumored. But using today's closing price, 3 for 1 would give us $232.23 and that's a reasonable price, double Amazon and Google after their 20 to 1 splits (Google is coming). Many early investors look at the SP for valuation rather than market cap and a 20 for 1 split would put us at $35 and that might give some naive investors the impression we're going out of business! So I'm ok with 3 for 1... just wish it was happening sooner than August!

But good things come to those who HODL...
 
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So bit weird they went for 6B total shares?

They have 1,036,390,569 outstanding now of 2,000,000,000 possible.

They intend to have 6,000,000,000 after the vote.

A 3:1 means of that 6 billion, 3,109,171,707 will be outstanding.

Leaving less than needed for even a future 2:1 split. Similar to the current situation where they can't do a split without another shareholder vote.


Why bother going to 6 billion in that case instead of say 4? And why not go to at least 7 or 10B to make another split at least possible without a vote?
 
So bit weird they went for 6B total shares?

They have 1,036,390,569 outstanding now of 2,000,000,000 possible.

They intend to have 6,000,000,000 after the vote.

A 3:1 means of that 6 billion, 3,109,171,707 will be outstanding.

Leaving less than needed for even a future 2:1 split. Similar to the current situation where they can't do a split without another shareholder vote.


Why bother going to 6 billion in that case instead of say 4? And why not go to at least 7 or 10B to make another split at least possible without a vote?
Yeah. I like Gary's suggestion to atleast do a 4:1. That'll still leave room for all future issuance. And keep things round.
 
University of Michigan consumer confidence index hits all time low, lower than GFC and Carter…

Which to me says the UoM consumer confidence index has some issues in terms of how it's doing it's measurements or that it's confidence index is completely irrelevant and out of touch with reality. It's likely a mixture of both.

GFC was banks on the brink of going under, credit/money freezing overnight, dramatic increase in unemployment, a house bubble built on practically fraudulent lending practices that left millions defaulting.........none of which is present today. How in the world people can take that index like gospel.....all while the unemployment rate is at historical lows, is beyond me.
 
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Which to me says the UoM consumer confidence index has some issues in terms of how it's doing it's measurements or that it's confidence index is completely irrelevant and out of touch with reality. It's likely a mixture of both.

GFC was banks on the brink of going under, credit/money freezing overnight, dramatic increase in unemployment, a house bubble built on practically fraudulent lending practices that left millions defaulting.........none of which is present today. How in the world people can take that index like gospel.....all while the unemployment rate is at historical lows, is beyond me.
I had no idea the Geelong Football Club had ever been in financial trouble...

/s
 
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