TSLA Market Action: 2018 Investor Roundtable

[Fact Checking]

I've heard numbers like 2500 and 3000 being thrown around, but I think that's a bit too ambitious.

Shorts have the following problem:

• It will take months for the deal to be vetted and finalized and for the shareholder vote to be held, and in that time the composition of Tesla shareholders will "improve" steadily: more and more people and institutional investors will buy TSLA only because they think going private is a great idea that will result in very good returns.
• The longer this goes on, the higher the entry price of TSLA is going to be (it could significantly exceed $420), and the higher the expected future stock prices of TLSAP are going to be as well.
• If shorts start covering at this point they'll further improve the pool of shareholders: the "weakest" shareholders are going to sell at lower prices (knowing that they'll likely not have a TESLAP stake), and as time goes on it will be harder and harder to find shareholders willing to sell at that price levels.
• For shareholders it makes sense to wait as long as possible: the daily short interest is well known and the price is likely to increase as time passes.
  
• I.e. the price should increase and there will be a hefty "expected return premium" and "emotional premium" attached to missing out a "once in a lifetime" opportunity, plus a nice "time premium" caused by longs not selling due to knowing that there are still enough shorts to sell to if the price improves further.
  
• Also, every month Tesla is selling ~25k new Teslas, which will further increase the pool of potential shareholders. If the deal takes 6 months to finalize that's 150,000 more potential shareholders and investors.

I wouldn't expect $2,5000 or even $1,000 as an equilibrium price - but prices 30-40% above $420 should be very much possible: i.e. $500-$600.

There could also be significant transients: too many shorts covering at once and longs not making up their minds fast enough to soak up their demand. I.e. there might be price transients caused by intraday lack of supply. These transients could easily go beyond $1,000.

The only hope shorts have is that there's not enough Tesla fans out there and that the Model 3 is going to be a flop.

I wouldn't bet on either.

 

[MarcusMaximus]

I have absolutely no idea.

Other people in this thread seem to be going off of Elon's claim that it'll be bigger than VW's squeeze. I've heard numbers like 2500 and 3000 being thrown around, but I think that's a bit too ambitious.

I put in a Limit Sell order at 3000, and I also think that’s too ambitious. I don’t expect it to go anywhere near that high, but figured on the off chance it does, I’ll make a lot of money.

 

[neroden]

Back to things that matter. I wonder if the delay could be Tesla doing price discovery with large institutional investors who can't/won't convert to private shares to learn at what buyout price they'd be willing to vote 'yes.' Remember, $420 is an initial offer, subject to shareholder approval.

I'd love to see the 8-K come out with "After consulting with some of our largest shareholders, we've settled on a price of $450 which we feel best meets shareholder expectations. We are confident at this price the vote will be affirmative."

Yeah, I'm a bit afraid that the drop in price after the announcement means that $420 is gonna be it. :-(

 

[Unpilot]

Well, when I've looked up major holders on sites which track holders of *options*, I've discovered there are some speculative funds doing MASSIVE plays in options on TSLA Options worth more than 10 million shares, more than 20 million, more than 30 million.

So maybe a big player is on the wrong side of an options trade. This seems very plausible.

Once upon a time I believed people would not gamble with other peoples money. Then I grew up and realized there are snakes and thief's who would sell their mother by the ounce for a chance to earn another million/billion.

This change to private can't happen fast enough for me.

 

[neroden]

In your statement who is "you've"? In my case it is Elon personally in a non-official capacity. I think you are thinking that it is Tesla or Elon acting on Tesla's behalf.

Again, if I personally secure funding to buy Tesla at $315 and make an offer does the board have to file an 8-k even if they flat out reject it? (Or are still reviewing/considering my offer.)

Actually, yes.

What if I secure the funding at $500 but I never make the offer. How would the board know to file the 8-k? (Since you say that securing funding alone requires the 8k disclosure.)

Well, then, no.

 

[Reciprocity]

ROFL.... Musk never wanted a Chinese JV partner because of control issues. You really think he would let them get a majority stake in Tesla now? No way in hell.

Actually if you read the 200 other posts before this one, you would have noticed that no investor would have and option to buy a controlling interest. Only about 13B will be required the rest of the share holders stay basically the same. 13B is a lot but not 51%.

 

[ggr]

I have absolutely no idea.

Other people in this thread seem to be going off of Elon's claim that it'll be bigger than VW's squeeze. I've heard numbers like 2500 and 3000 being thrown around, but I think that's a bit too ambitious.

From just before ($200) to the peak ($950 ish) was 4.75x. Starting at $348.17 (last friday's close, post Q2 earnings, before Saudi and delisting) my guess is >= $1653.80.

 

[UnknownSoldier]

In all honesty, any guesses on how high the price could go on an epic squeeze?

I'm planning to keep most of my money in private Tesla, but if it jacks up to $2000 or even $1000, I might be tempted to sell.

Unless your plan is to take the proceeds from a putative sale and retire TOMORROW, I think it would be very short-sighted to divest all your shares into a squeeze. If there was a big squeeze, I would definitely liquidate my Roth IRA since it's status is so uncertain in terms of holding private equity. I might also dispose of a small number of shares so I can pay down the remainder of my loan on my S. But the rest would go private with Elon.

When I actually do plan to retire in 10 years, hopefully the second IPO will have happened by then and I'll be able to retire to the estate I want to build on St. Croix in the U.S. Virgin Islands and live the rest of my days watching the sun rise and set over my private beach, leaving only during hurricanes and when I'm traveling around the world looking at stuff.

 

[EinSV]

Shorts have the following problem:

• It will take months for the deal to be vetted and finalized and for the shareholder vote to be held, and in that time the composition of Tesla shareholders will "improve" steadily: more and more people and institutional investors will buy TSLA only because they think going private is a great idea that will result in very good returns.
• The longer this goes on, the higher the entry price of TSLA is going to be (it could significantly exceed $420), and the higher the expected future stock prices of TLSAP are going to be as well.
• If shorts start covering at this point they'll further improve the pool of shareholders: the "weakest" shareholders are going to sell at lower prices (knowing that they'll likely not have a TESLAP stake), and as time goes on it will be harder and harder to find shareholders willing to sell at that price levels.
• For shareholders it makes sense to wait as long as possible: the daily short interest is well known and the price is likely to increase as time passes.
  
• I.e. the price should increase and there will be a hefty "expected return premium" and "emotional premium" attached to missing out a "once in a lifetime" opportunity, plus a nice "time premium" caused by longs not selling due to knowing that there are still enough shorts to sell to if the price improves further.
  
• Also, every month Tesla is selling ~25k new Teslas, which will further increase the pool of potential shareholders. If the deal takes 6 months to finalize that's 150,000 more potential shareholders and investors.

I wouldn't expect $2,5000 or even $1,000 as an equilibrium price - but prices 30-40% above $420 should be very much possible: i.e. $500-$600.

There could also be significant transients: too many shorts covering at once and longs not making up their minds fast enough to soak up their demand. I.e. there might be price transients caused by intraday lack of supply. These transients could easily go beyond $1,000.

The only hope shorts have is that there's not enough Tesla fans out there and that the Model 3 is going to be a flop.

I wouldn't bet on either.

Also, conveniently, depending on the timing we should get Q3 results which could be very positive. Interesting times!

 

[Fact Checking]

So maybe a big player is on the wrong side of an options trade. This seems very plausible.

If true then I'd expect an attempt to break down the price tomorrow as well - while the bounce back from $350 was strong, I saw the same patterns to suppress the price later in the day as well.

The AH pop up obviously doesn't help them.

Tomorrow could be interesting...

 

[neroden]

Elon proposed a "special purpose fund enabling anyone to stay with Tesla."

View attachment 324510

It's not at all clear whether this is possible. I mean I suppose it could be like Altaba, but I'm not sure that gets him anything.

 

[neroden]

Considering that SP went below the Saudi announcement level, could it be that the whole going private move have spooked the Saudi investor and they are dumping their shares now causing this drop ? Maybe that was the point of Elon going public with the plan there and then ?

That's a *really* interesting scenario. Seems very doubtful, but I *like* it (because I don't like Saudi investment in Tesla). I think it's just wishful thinking though.

 

[MarcusMaximus]

Actually, yes.

In that case, I have secured funding for 500,000,000 different offers of $0.0001 per share and will submit all of them to the board. I expect a full report to the SEC for each one.

 

[neroden]

He said he's already doing it with SpaceX. Why can he do it there but not with Tesla?

He's not doing it with SpaceX. Accredited investors only for SpaceX. The all-SpaceX funds allow smaller investments but the investors still have to be accredited. Non-accredited investors can invest in funds that have <15% of their assets in SpaceX but who wants to do that?

(Employees are different; there's a special exemption in the laws for employees to own stock in private companies. If an employee dies, their heirs are often forcibly cashed out if they're not accredited; same if an employee's stock gets taken in a divorce settlement, etc.)

 

[neroden]

In that case, I have secured funding for 500,000,000 different offers of $0.0001 per share and will submit all of them to the board. I expect a full report to the SEC for each one.

Oh, well, it has to be a *serious* offer.

 

[Ratanpara]

Even if things clears up tomorrow , stock might not be able to move up a lot, tommrow is option expiry day , trader could buy cheap call option and short it at the same time, though it will only protect until end of the day.

 

[andrewwood]

I think I know why the market can b so volatile. Even if i assumed all longs hold their shares and dont sell. Their shares can still be lent out to short sellers (to earn interests). Hypothetically, it is possible that the day’s volume can simply be 100% from shorts, transacting with each other shorts who are closing / opening their positions at different price levels. I just thought this up, but it makes sense to everyone here?

 

[neroden]

I would think the problem with NOT filing an 8k would be that Tesla disclosed that Elon's twitter feed was an acceptable place to provide information about the company. In this case, there is no way to determine that he is speaking in an individual capacity rather than as CEO of TSLA.

If I were advising the board, particularly after they acknowledged the discussions were occurring at the board level, how could they NOT file, even if it were under the more general 8.01 section regarding disclosure of information "deemed important" to shareholders? Even if Elon WAS posting in a personal capacity, given the attention, the Board's announcement, and each Board member's duty to shareholders, I cannot imagine they wouldn't file, even if only to say that "Elon's group has made an offer, but the board is still mulling and a material agreement has not yet been reached to take to the shareholders for a vote."

That's exactly what I'd expect to see in an 8-K. "We have received a preliminary offer to buy out Tesla shares for $420 a share and delist the company, but we do not have full terms and are still considering the matter."

 

[HG Wells]

In that case, I have secured funding for 500,000,000 different offers of $0.0001 per share and will submit all of them to the board. I expect a full report to the SEC for each one.

I'm in.
Where do I send the check ?

 

[neroden]

Ok what happen if this scenario comes, Tesla publicly declared to go private, I think they have no obligation to declare who is providing funding

They do have that obligation; they have to tell us who's buying our equity. If it's the company, they have to tell us where they got the funds for it.

However, it can be a "straw buyer company" -- "Tesla Acquisition LLC" -- who doesn't have to disclose its owners. (Subtle distinction there...)