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

[larmor]

Apparently the MMD got too predictable.

Tuesday through Thursday after 10 am EST. I wonder if other equities have similar trading patterns, or is it just tsla?

 

[mongo]

a further drag on the SP is that Tesla will owe payroll taxes for Elon's stock compensation (to be reported in the next qtly results), which again was large in 2022 (paging @The Accountant for an estimate of 2018 payroll taxes; specifically confirmation that the amnt depends on the SP at time of exercise)

Mostly 1.45% of Elon's gross gains after exercise for Medicare. $1 Billion of tax for every $227 the stock price is above the $23.33 exercise price.

NOT true... cap gains taxes are never "due immediately"

It's not capital gains, it's ordinary income and Tesla is required to hold back 37% along with the 0.9% bonus Medicare tax, probably CA tax also.

SOME of the options would've been "earned" while a CA resident, but lots of them would not. His net rate across the whole package should be significantly less than 53%, though how close to 37% it turns out is unclear.

It's prorated by residence from the time of award to exercise. Best case, only 30% or so of the full CA rate of 13.3 or 4%
37 + 4 + 0.9 + 1.45 = 43.35%

 

[Artful Dodger]

Was wondering when the was gonna say something before earnings: [GLJ new PT $23.53]
View attachment 1011530

That's suspiciously close to Elon's exercise price for his 2018 CEO comp. plan shares.

Excerpted from: Tesla Special Proxy Statement Meeting held on Mar 31, 2018:

​

Exercise Price

Fair Market Value (FMV) of Teslacommon stock on the date of grant, January 21, 2018, which was $350.02 per share (based on the closing price on January 19, 2018, the last trading day prior to the grant date).

TSLA has split 15:1 since this plan was adopted by shareholders on Mar 31, 2018 so the equivalent Excercise Price now is $350.02 / 15 = $23.335 so El Gordo's new SP is just 20 cents above that. Who says he can't read?! But this is quick confirmation that GLJ Research is a front for Short-faced bares... and who's paying the bills for the FUD.

Cheers!

P.S. Again, if the SP equals the Excercise Price at the time of excercise, Elon owes no extra income taxes on the gains, only income tax on the shares themselves, and Tesla also only would owe payroll taxes on the total Excercise amnt (paging @The Accountant for confirmation of this interpretation).

 

[SmokyPeat]

Started strong..... and deja vu.

 

[mongo]

P.S. Again, if the SP equal the Excercise Price on the time of excercise, Elon owes no extra income taxes on the gains, only income tax on the shares themselves, and Tesla also only would owe payroll taxes on the total Excercise amnt (paging @The Accountant for confirmation of this interpretation).

In that situation Elon makes NOTHING, there would be no gains, he would be buying shares at cost.
Tesla would owe $0 on payroll taxes on $0 earned.

 

[Richard007]

I forget if we can do predictions here!

Being a contrarian, I think stock goes up this time after Q4 / annual results tomorrow —and keeps rising to $275 next week to everyone’s delight.

 

[Mengy]

I forget if we can do predictions here!

Being a contrarian, I think stock goes up this time after Q4 / annual results tomorrow —and keeps rising to $275 next week to everyone’s delight.

That would certainly be a most welcome change of pace. However, I feel the opposite will probably happen.

 

[Artful Dodger]

In that situation Elon makes NOTHING, there would be no gains, he would be buying shares at cost.
Tesla would owe $0 on payroll taxes on $0 earned.

So in that scenario would Tesla have to pay any taxes on the value of the shares issued? I can see that there'd be no income to Elon (he'd just be buying shares from Tesla at the same price as the Market), but does Telsa the company owe any taxes for issuing the shares?

Cheers!

 

[Thekiwi]

He has been so grossly wrong about Tesla from the start. He never understood it. He always wanted to model the company like every other company on the planet. He didn’t recognize who made Tesla different. Yet there were hundreds of us plebes right here on this forum without the fancy degree and industry reputation who KNEW he didn’t know what he was talking about.

An initial valuation as a luxury car company? Please. Did he forget to read The Master Plan? Was it too complicated for him to understand? Did he not bother to research who Elon Musk was a person? Who J.B. Straubel was a person? You’d have to think pretty highly of yourself to do that research and come away thinking the people at Tesla were going for luxury car company.

Then even as he learned from his mistakes and made valuation adjustments, he still got it wrong because he still didn’t understood. It’s beyond his ability to understand because his knowledge, experience, and learnings fit in a particular box, and Elon doesn’t do boxes.

And not to make any mention about the years of brutal shorting to drive the company bankrupt nor the continued sheer oversized amount of options for the ticker nor the macro environment and how those things drove the SP -

He’s been bewitched by the FUD and ongoing narrative manufactured by those in control of the ticket. Simply put, he can’t be taken anymore seriously than our usual analyst suspects and he’ll be proven wrong yet again.

Remember who was right and made all these blowhards look like fools? Andrea James.

Your description above is precisely why I shared that post (in addition to the great price cut graphic).

He repeatedly has undervalued Tesla, makes very conservative assumptions, explicitly excludes whole future product lines already in development, and yet the current stock price is only 10% above his fair value estimate.

I see that as very bullish.

 

[Jim Holder]

https://twitter.com/x/status/1749500989265047727

 

[Christine69420]

Believe it or not, the FUD, the short interest, even the phantom shares are not TSLA's biggest problem (and yes, I mean challenges to the SP, not problems for Tesla, who are fine). The biggest problem is Elon's 2018 CEO comp package, and what happens when he exercises his stock options. I've written here exhaustively on the topic, so I'll just summarize here:

• Elon controls ~301M shares via vested stock options; he must exercise b4 exp. 04/28
• Depending on the SP at the time of Excercise, Elon will owe either a huge or a gargantuan income tax bill, payable immediately
• Unless Elon has cash to pay his income taxes, he's forced to sell ~53% of new shares. He also needs cash to pay Tesla the excercise price (EDIT: he could pre-sell older TSLA shares while paying a lower long-term capital gains tax rate to get that cash)
• Selling shares to excercise Elon's 2012 Comp plan took the SP down a hundred bucks in a few days back in Dec 2022. That was just ~10% of the shares granted in the 2018 plan
• a further drag on the SP is that Tesla will owe payroll taxes for Elon's stock compensation (to be reported on the next Qtrly results), which again was large in Q4-2022 (paging @The Accountant for an estimate of payroll taxes due when 2018-plan shares are executed; specifically confirmation that the amnt depends on the SP at time of exercise)

So the situation is that shortzes know Elon has to sell a fistful of shares, the SP will drop precipitously when he does (assisted no doubt by more naked shorting), then they can buy HALF of his new shares (~160M) on the open Market at fire sale prices, thus profiting from their years of perpetual shorting. Boo-yah!

It's an even worse dynamic in this one way, the interests of these shortzes and Elon are somewhat aligned: if the SP is lower, Elon pays less income tax (see the Starlink/FCC hatred for motivation #42 to give less $$ to the Federal Gov't). Bonus: Tesla pays less payroll tax.

Shortzes live in hope for this day (again which is NLT April 2028 or just over 4 years). They can cover, make back all the money they lost since the 5:1 split was announced on Aug 11, 2020. Phantasy League Shortsville.

Tesla is self-funding now, and isn't likely to ever need to go back to the Market to raise capital. Elon/Zach directed Tesla to use cash to pay down debt, thus removing their vulnerability to the Market attacks. This means there's only two sources of legitimate shares (not phantom/naked short shares):

1. Elon's new shares being sold to pay taxes ( perhaps 160M shares to be sold), or
2. Retail shareholders pannick sell (the puffins in the seagulls sights)

Point No. 2 explains the FUD attacks since CT delivery day in Nov 2023. They NEED your shares, and want to get them CHEEP. They're willing to spend big on a FUD campaign to get as many Retail shareholders as possible to pannick sell. And if certain comments on this forum are to be believed, it works (but public forums are rotten with trolls and eggplants).


Given my assessment above, I see 4 possible scenarios how this could play out:

1. Elon sells his shares on the Open Market; SP tanks; Elon and Tesla pay minimum taxes; Retail 'weak-hands' pannick-sell and lose out on future gains (and a likely rapid recovery). Elon owns more TSLA after all this, but that's not cash for his City on Mars, which will require moar SELLING later, ad nauseum. Shortzes are the BIG WINNERS,
2. Elon finds cash to exercise his shares outside selling TSLA (maybe why the 'G' won't fund rural Starlink, and other Musk Industries?) He still benefits from a lower SP though, so I don't seen him 'pumping' the SP until he's finished exercising his stock options. Big Winner: FATHER TIME since this could take until April 2028 to grind out the cash. (I rate this possibility as the least likely of these 3 options), and
3. Elon let's the shortzes swing (see: "Henry Ford" since Aug 2018 | Arttful Dodger on TMC): Elon threatens to take his ball and go home, the SP tanks, Elon exercises his options on the cheap (and pays cash). SHORTZES get nothing, retail HODLers eventually recover ('weak' hands and Options 'gamers' are rekked), and Tesla pays miniumum payroll taxes. I rate this as a phantasy scenario, but we are taking Elon here...
4. Elon and the Tesla Board create some sort of novel 'Shares-for-Votes' swap for his next CEO comp. plan: Elon said what he cares about is having ~25% of Tesla voting shares to guide the future of AGI at Tesla (a dubious thesis IMO). Would Elon be willing to trade some or all of his 2018 shares to get that? It'd be $10s of Billion$ to shareholders if he did, so may be accepted in a shareholders vote. Result is SHORTZES lose their exit plan, but have no real enforcement action which causes them to close their perpetual shorts/phantom shares. And the Game goes on... but hopefuly the Board learns that they created all these problems with the terms of their 2018 CEO comp. and will NEVER DO IT AGAIN!

Which do I think is most likely? #1. Which scenario would I prefer? #3. What will Elon do? WFKNs!


You're Welcome! and Thank-you, too!

Cheers to the longs

P.S. I inserted an edit above that Elon could pre-sell some of his existing shares to obtain the cash he needs to pay income taxes. This could be done as part of a 10b5-1 plan (like other Tesla Executives) with just 90 days notice, and be timed so that are stock options are exercised by April 2028. I truly hope the Board is thinking about exit ramps like this, as I await comments from @mongo

New SEC Insider Trading Rules for Executives Trading in Company Stock | steel-eye.com (Mar 31, 2023)

Thank you for the well laid out explanation, Dodger!

What do you mean by "wreck millions of people"? Who are these people? Do you mean shareholders?

Elon wants to save the world, not the shareholders.

Elon will definitely exercise his shares precisely because he believes that the things he will do with the money are altruistic.

Wrecking the share price would also wreck the investment accounts of numerous Tesla employees who get part of their compensation in shares. Which won't be worth much if the share price is continuously tanking.

Edit: I also believe the share price must be higher for Tesla to be worth more than Apple + Saudi Aramco like Elon suggested a while ago.

 

[Artful Dodger]

Wrecking the share price would also wreck the investment accounts of numerous Tesla employees who get part of their compensation in shares. Which won't be worth much if the share price is continuously tanking.

But wrecked for how long? A month to recover based on fundamentals? A quarter? It'll all come down to time with other catalysts. We can see that in my phantasy scenario #3 that Elon is the 800 lb gorrilla humping the shortzes leg. When an 800 lb gorilla humps you leg, it stays humped... (they have no source of shares other than 'weak longs' to cover while good news breaks like a tide: CT, Model 2, Teslabot, FSD, Robotaxi).

Cheers to the Longs!

P.S. Don't use margin, stay long inspite of the cacophony of FUD, and you'll be fine.

P.P.S. I've got about $95K in cash on the sidelines ready to go all-in on TSLA if something stupid like this were to happen... 10x to a million bucks on the backs of shortzes?

P.3.S. All Tesla has to do is announce a $10B buyback at these prices, then just watch the cockroaches scurry to the exits: Note also that $23.33 * 304M is ~ $7.1B in buybacks.

 

[SOULPEDL]

I forget if we can do predictions here!

Being a contrarian, I think stock goes up this time after Q4 / annual results tomorrow —and keeps rising to $275 next week to everyone’s delight.

I agree even though it "seems" unlikely (as @Mengy suggests).

That's why I think it's more likely (I'm also a contrarian). Pattern has already broken up. (Long live the MMD!) They even tripped up ARK who bought earlier this month. So I fully expect Elon to be a contrarian and trip up the street as a surprise. (4D Chess - not over-rated!)

The risk is that I do recall times when Elon would flaunt tech as if to compensate for a poor quarter. However, there was volume in Q4 correct? And still happening it sounds like.

To me, the margin compression story is just a game of numbers depending on what's in or out of that melting pot. Especially because we have no idea how much cost savings (from things like improved cycle time, source materials, you know... the 5Ms + E are all being refined... all the time, every Factory, everyday).

Clearly, I'm giving some credence toward better margins than most here.

(Notice I didn't say "believe" or "think", but used "credence" as in possible but not probable. I have to put this in here otherwise people freak out thinking I'm promoting gambling like a loose cannon - words matter ​

You picked $275 - as a ballpark or looking at things like the Upper BB?

 

[SOULPEDL]

https://twitter.com/x/status/1749500989265047727

Exactly! In case folks don't click on it, the last para is key.

"I don't know about you, but the best time to buy stock is when no one wants it, especially when fundamentals are getting stronger and better every day. I'm buying! "

 

[M|S|M MYP]

Exactly! In case folks don't click on it, the last para is key.

"I don't know about you, but the best time to buy stock is when no one wants it, especially when fundamentals are getting stronger and better every day. I'm buying! "

In all fairness....When are you not buying?

 

[SO16]

Exactly! In case folks don't click on it, the last para is key.

"I don't know about you, but the best time to buy stock is when no one wants it, especially when fundamentals are getting stronger and better every day. I'm buying! "

Yes but sadly this is what the narrative appears to be:

https://twitter.com/x/status/1749517631214760280

 

[mongo]

So in that scenario would Tesla have to pay any taxes on the value of the shares issued? I can see that there'd be no income to Elon (he'd just be buying shares from Tesla at the same price as the Market), but does Telsa the company owe any taxes for issuing the shares?

Cheers!

I don't think so, at that price it is basically a private stock offering.
Print new shares and sell them to Elon.

P.3.S. All Tesla has to do is announce a $10B buyback at these prices, then just watch the cockroaches scurry to the exits: Note also that $23.33 * 304M is ~ $7.1B in buybacks.

Are you really running senarios based on a 90% drop?
Buybacks of Elon's awarded shares would cost (Stock_Price - $23.33)

 

[uscbucsfan]

Yes but sadly this is what the narrative appears to be:

https://twitter.com/x/status/1749517631214760280

That's reality. That impacts the stock much more than ideas.

 

[SOULPEDL]

In all fairness....When are you not buying?

Fair question. Real answer: When it's higher, I sell - same group of shairs. Still NEVER below 90% TSLA Stock in my IRA, just to be clear. And that's the only reason I'm still here for sure.

I figure announcing a sell won't serve any purpose here (ppl are pretty good at bumming out all by themselves). Plus, TBH, I'm afraid someone might track it and tell me that I'm losing money. I don't wanna know, this is pure play for me. I'd rather think I'm smarter than them, than to actually risk knowing after seeing the results.

There are also times where this did not work out so well... so-what right? I'm winning lately. So I take those winnings, and throw a few colored chips on the table. In fact, today I'm holding 10 Calls - the exact opposite of what I would normally do during earnings. I still expect an attack so my dates are a few weeks out to end of year. Clearly, I'm bullish and a risk taker, not Advice.

I considered selling and going DITM on Leaps, but why when I truly believe TSLA will move sooner than later? (Edit: It's an IRA, so no tax consequences on short-term sales.)

I only hope it moves UP. I mean, Elon wouldn't do that to us would he?

 

[Drumheller]

Elon doesn't need to wait until 2028 to exercise all of his grants. He can do it gradually over time and planned so as not to tank the stock price.