You are missing the entire Taiga for the forest, nevermind the trees: Within 5 yrs, 4 mths Elon will need to sell ~150 MILLION shares of TSLA just to pay the income taxes he'll owe on executing his CEO stock options before they expire.
How do you think Elon selling 150M shares within 5 yrs affects the SP? That's 30M/yr avg EACH YEAR. That's more than he sold in 2021, and more than he sold in 2022. EVERY YEAR, unless he sells them all at once (either ASAP, or as late as possible).
Look at the limits - first the lower time frame: Elon's excercise price is around $23/share. If the SP was still at that level (it was there 50 mths ago), then he'd owe NO INCOME TAXES (no net gain). He'd just need the $7B in cash in order to excercise the shares. Now as @mongo showed us upthread today, Elon can get that cash by selling half the shares (ouch), or by shaking his OTHER couches to find a space $7B. Then let the SP ride up over time, and pay just capital gains taxes on subsequent sales.
View attachment 889278
Now let's look at the Upper Limit - for convenience let's just call it the ATH of $412 from Nov 4, 2021. If Elon sells 150M shares to pay his imcome taxes at $421, he gets nothing, the Gov't gets $62B, and WORSE for TSLA shareholders, $62B in capital is extracted from the Market. What effect do you think that will have on Tesla's Market Cap?
Let's use the past 13 mths as a guide. Sure some of this drop is macros. Let's factor that out: QQQ down 33% since Nov 4, 2021 while TSLA is down 72.5%. Let's attribute ALL of the difference to Elon selling TSLA and bears jumping in on the shorting opportunity. That's a 40% drop in Mkt Cap, or roughly -500B in Mkt Cap due to the selling.
So that's the estimate of our ratio of Elon's selling to the drop in Mkt Cap: Elon sold ~$40B in shares and it cost $500B in Mkt Cap, so that's approx a 12:1 ratio of shorting to selling. And that's how you estimate how Elon selling 150M shares within 5 years would affect the Mkt Cap: it'd have about the same affect as selling 1.8B shares of TSLA which is roughly 80% of the float. Yeah. Gulp. This is an unavoidable future, IMO. There IS NO dark pool big enough to float 1.8B shares of TSLA. Even the S&P 500 addtion as only about 600M shares (about a third of the selling Elon needs to do)
Where do you think that would leave the SP? Below $23? At what point in selling can he execute and not pay any income taxes? Do you see the point I'm trying to make is that BOTH alternatives (sell now, or wait to the end) winds up with a substantial dip in the SP, and Elon selling most of his shares in a lump while paying minimal taxes? Isn't it better to do this sooner, get the disruption over with, so the company can built value back into its SP?
How can we avoid this? Elon has to excercise all his stock options at a SP low enough that he can pay the income taxes in cash. And given the number of shares involved, it's better if he can afford to but more with any set amnt of cash he may have, then he'll have to sell half of the rest to pay the taxes. It's just that simple. And that's best case, if he still have the fire in his belly after this decades long grind. Maybe he'll want to get out, maybe he'll want to stay in (we're generally not helping ATM).
At any rate, this is my profound hope. And hope is a dangerous thing...
Cheers to the longs!
5 years 1 month, plan expires January 20, 2028.
This won't happen. It is identical to Elon just buying shares with nothing to show for his compensation plan.
Your saying no net on the sold shares?
Assuming the two events are directly correlated and there were no other factors.
1. He'd be hurting himself selling the shares low
He must hold the shares for five years after exercise.
If share price were $23.33, there is no reason for Elon to even exercise them. They have no value and tgere are no taxes. It would be identical to just buying shares.
Amd is still in the S&P and they lost money for a decade after 2008.
I am interested in peoples views about how low the stock can go and the reasoning to help me time further buys.
If he paid the loans would that not be a material event which Tesla would have to announce ?
I doubt that. There is only enough for 1000 per week and the Model Y has plenty of run rate to absorb this in Texas with the structural design.
An additional factor i have as a hypothesis is the S&P inclusion leaps expiration. I am sure there are other side of the bets who want these to be never ITM. As I'm looking at Jan 20 2023, I'm not sure how much of a factor these old Leaps still are.
Huge wall of text....You are missing the entire Taiga for the forest, nevermind the trees: Within 5 yrs, 4 mths Elon will need to sell ~150 MILLION shares of TSLA just to pay the income taxes he'll owe on executing his CEO stock options before they expire.
How do you think Elon selling 150M shares within 5 yrs affects the SP? That's 30M/yr avg EACH YEAR. That's more than he sold in 2021, and more than he sold in 2022. EVERY YEAR, unless he sells them all at once (either ASAP, or as late as possible).
Look at the limits - first the lower time frame: Elon's excercise price is around $23/share. If the SP was still at that level (it was there 50 mths ago), then he'd owe NO INCOME TAXES (no net gain). He'd just need the $7B in cash in order to excercise the shares. Now as @mongo showed us upthread today, Elon can get that cash by selling half the shares (ouch), or by shaking his OTHER couches to find a space $7B. Then let the SP ride up over time, and pay just capital gains taxes on subsequent sales.
View attachment 889278
Now let's look at the Upper Limit - for convenience let's just call it the ATH of $412 from Nov 4, 2021. If Elon sells 150M shares to pay his imcome taxes at $421, he gets nothing, the Gov't gets $62B, and WORSE for TSLA shareholders, $62B in capital is extracted from the Market. What effect do you think that will have on Tesla's Market Cap?
Let's use the past 13 mths as a guide. Sure some of this drop is macros. Let's factor that out: QQQ down 33% since Nov 4, 2021 while TSLA is down 72.5%. Let's attribute ALL of the difference to Elon selling TSLA and bears jumping in on the shorting opportunity. That's a 40% drop in Mkt Cap, or roughly -500B in Mkt Cap due to the selling.
So that's the estimate of our ratio of Elon's selling to the drop in Mkt Cap: Elon sold ~$40B in shares and it cost $500B in Mkt Cap, so that's approx a 12:1 ratio of shorting to selling. And that's how you estimate how Elon selling 150M shares within 5 years would affect the Mkt Cap: it'd have about the same affect as selling 1.8B shares of TSLA which is roughly 80% of the float. Yeah. Gulp. This is an unavoidable future, IMO. There IS NO dark pool big enough to float 1.8B shares of TSLA. Even the S&P 500 addtion as only about 600M shares (about a third of the selling Elon needs to do)
Where do you think that would leave the SP? Below $23? At what point in selling can he execute and not pay any income taxes? Do you see the point I'm trying to make is that BOTH alternatives (sell now, or wait to the end) winds up with a substantial dip in the SP, and Elon selling most of his shares in a lump while paying minimal taxes? Isn't it better to do this sooner, get the disruption over with, so the company can built value back into its SP?
How can we avoid this? Elon has to excercise all his stock options at a SP low enough that he can pay the income taxes in cash. And given the number of shares involved, it's better if he can afford to but more with any set amnt of cash he may have, then he'll have to sell half of the rest to pay the taxes. It's just that simple. And that's best case, if he still have the fire in his belly after this decades long grind. Maybe he'll want to get out, maybe he'll want to stay in (we're generally not helping ATM).
At any rate, this is my profound hope. And hope is a dangerous thing...
Cheers to the longs!
That's just him buying 7B in shares, no link to the 2018 plan. An option with 23 dollar basis when the stock is 23 has zero value. At $24, he grosses $304MNot on the day of, but if those shares go to $412 in a few years (when capital gains apply), this is extremely valuable.
Like "20x on $7B" valuable, with unlimited upside. TE should be raking in Auto-biz type $$$ by 2028, TN should be a growing concern, and Optimus could be ready for Prime time...
E. sees a path to Tesla becoming the most valuable company in the world in 5 years. That's 2028.
looks to me more like they don't want to trigger the uptick rule
It is a stretch. We don't know how many 4680 lines are ready to go live. The 1000/wk is a mere dot on a curve. They could stockpile for CyberTruck like they did with the early castings, or feed a Semi ramp right now (edit, not semi thx). Yes, that's more likely, but I also think we're long overdue for a surprise. So here's my best guess, then I'm back to work.
TSLA has traded down hard to this point, but appears to have pulled back to 'test' the landing over the last week or so. II am not suggesting whether or not the landing pad will hold - just that this price range has been on the radar for a while as one that needs testing.
