I don't think Bloomberg has a 'position' on Tesla, they are the media. Their coverage of something changes day-by-day, although like most of the media they have been relentlessly negative for years now and the specter of privatization and not having Ol' Musky to kick around anymore is probably frightening to them because news about Tesla and Elon brings in impressions and revenue.
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I think it is evident, that Q2 call was the ideal moment for "Go Private" announcement.
I'd modify this slightly. I think he had to announce it in order to be able to negotiate properly with current investors, without limiting their ability to trade the stock. But it was poorly done; all announcements need to be coordinated with all parties. He apparently did it again with Silver Lake and Goldman Sachs.
Have I mentioned before that Elon is generally overoptimistic?
Which is in one way great, because he never would achieved the things he has had he let normal human pessimism dissuade him from trying. But he needs to get a handle on limited disclosure when it comes to negotiations - as much as he understandably hates that. Because overoptimism + full disclosure = trouble.
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Sunlight
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I freely admit that the stockmarket thing is a bit of a mystery to me and half the terms used are alien to me but...…
It seems so odd to me that the shareprice has traded in such a limited range for quite a while now (excluding the little jump when Elon tweeted). It is like a balancing act with equal buyers and sellers - huh?
Is it being 'manipulated' to stay in that range or is that just coincidental? Funnily it is around the price after the Q2 report (as if that is the 'real value'..?)
Is it in the interests of the bears/shorts or the long term investors/new investors to hold this value?
It seems so odd to me that the shareprice has traded in such a limited range for quite a while now (excluding the little jump when Elon tweeted). It is like a balancing act with equal buyers and sellers - huh?
Is it being 'manipulated' to stay in that range or is that just coincidental? Funnily it is around the price after the Q2 report (as if that is the 'real value'..?)
Is it in the interests of the bears/shorts or the long term investors/new investors to hold this value?
If you don't know, trade the fundamentals. Which IMHO is all that's going to happen until there's any more solid privatization news in either direction. I do feel that the market is largely discounting the prospect of privatization at this point, now that it realizes that it's nowhere close to happening yet.
Until then, the stock will rise and fall based on production numbers, margins, things that change the picture for future production numbers and margins, etc. Its a shame we have so long before the Q3 report. And unlike previous news fluctuating on spy shots and the like, how do you spy shot a vehicle margin? It limits potential volatility.
For those who sell, maybe. For those who hold (and/or accumulate), no.
I'm glad I've been informed of the discussions at the same time as the big shareholders. Why keep this a secret? What's the point of being a public company if small shareholders as not informed like any other?
The only thing I would have done differently, is say
- funding is not a problem (instead of "secured")
- one reason why this is not certain is that it’s contingent on a shareholder vote (instead of "only reason").
That's it.
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Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Your observations are very good, for someone who admits that the stock market is a mystery
(In fact it is a mystery to everyone, even the "pros").There are always an equal number of buyers as sellers but you're right that a stable price range means roughly equal buy pressure and sell pressure. You should make note of the relaitvely low volume of shares traded yesterday. On days with relatively low volume it is easier for actor(s) with an interest in keeping that price at some particular level to "manipulate" the price by exerting sell pressure whenever there is a tendency for a rise in price, and buy pressure when the price starts falling. There can be many reasons for this, some that come to mind is:
- Market makers tend to make money in the options market when price is kept steady, as both put and call options lose time value when the underlying equity doesn't move in price (market makers are generally much more on the side of having sold calls and puts than buying them).
- Actors with large short positions may hope to carefully exit their short positions through luring in new and "dumber" shorts who interpret "the markets reaction" to the news as negative - a game of musical chairs where "smart money" are exiting short positions and "dumb money" will be left holding them when the deal goes through
- Actors who want to aquire stock on the open market before the de-listing may want to "scare" retail investors in to selling at depressed prices, triggering stop-losses and genereally creating the impression (again) of "the market having a negative reaction" to the news.
The old saying in the stock market is "If you don't know what to do, do nothing" and right now no one knows what to do because the whole going private situation is so completely fluid and changing daily. I think most people are watching and waiting before they do anything. Some longs might be accumulating slowly, some shorts may be covering slowly, but for the most part trading has not been very convincing one way or the other the past few days.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
If the deal goes thorugh, and Tesla de-lists, there can be no short postions left in the end. So whatever you're cautious about in the short term will be a non-issue in the longer perspective, given of course that the taking-private transaction actually goes through. This of course being much of Elon's whole reason for wanting to take Tesla private.
The stock market behavior of Tesla these days is odd, strange and unpredictable all together to say the least but without a doubt manipulated heavily compared with all other stocks I follow or followed.
The situation we are in is unusual as well which may explain a part of it. A few weeks ago it was easier to name who wants the SP to go up or down but today the game has changed and new short term strategies and tactics have been defined.
To be clear there should not be any concern that it will go up over time, the fundamentals and the outlook are just too good but until we have certainty around the privatization and all investors are clear what they do we will see a lot of wild swings in both directions.
Keep calm, don't get distracted and look on the longterm which all together should help you making the right decision.
I get the feeling the FUD we hear these days won't stop but rather increase for a while and some longs get shaken although its quite a bad idea to sell if you have an almost guarantee to get $70 plus per share if you wait a little.
The situation reminds that during the Solarcity merger we heard the same nonsense and FUD in the media and now its past and nobody does question the takeover any more.
The same will happen with the privatization.
So it can be vacuum-cleaning of the weak investors which is to expect, but it also can be HST in action.
One of the features of the high speed trading is probing. Small transaction orders to monitor stock trends.
The shorts pinned against a execution wall. A majority of them will be carrying major unrealized losses, and/or are over leveraged. Others have money tied up in premium in long Puts that are all likely to have strikes under $360.
The retail over leveraged shorts will likely get margin called if price breaches the ATH, this is likely to cause a cascading effect where they are forced to buy back pushing price up and taking out slightly less leveraged shorts and so on till we get to the big shorts.
These guys will be able to take a bit more pain but once we get above $420-$430 they will cover, at this point they will find it difficult to cover and liquidity gaps in the extreme highs will cause price to jump taking out most other shorts.
A secondary effect is those with long puts will start buying to hedge their options going to zero, adding more upside pressure. There will also be those wanting to get in before Tesla goes private.
In order for this to happen I think price needs to approach $380 and then an announcement of the private plan will trigger it to go above $400.
The above is just one scenario that could occur and not trading advice.
When some one initially short (sells) a stock, they look just like weak longs. They are just someone selling their stock because they think the value is high, and they want to sell high.
So the price goes sideways.
Any seller is a weak holder. At the time of the sell transaction.
You're talking about a possibility (Tesla privatizing), and one that's months away (would guess half a year). In the mean time, the stock keeps being traded. And buying at a point in time when short interest is low poses the very risk that short interest will rise again (always does with Tesla) and lower the stock value, rendering your buy at the higher price a waste of money.
Volatility is not going to just vanish for the next six months. Assuming the deal actually even goes through.
I have a buy set for $339, but I'm thinking about lowering it to $329, given the low short interest at present and the possible price reduction if it rises.
The price does not go sideways when short interest rises; it goes down.
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This. The situation we are in is frustrating at the moment, but in the end I would be a lot more upset if Elon had not sent out that tweet. Maybe upset is not the right word, betrayed.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Agreed. Now everyone has to face the same uncertainty, but at least the playing field is as level as possible - big money doesn't have the usual informational arbitrage advantage as compared to small-time investors as usual. (Those potentially involved in the deal of course do have more information, but it's very clear - will become clear - who those players are and therefore they will obviously have their hands tied due to insider laws).
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