Joe F
Disruption is hard.
Yeah, well, good luck with that.
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Fact Checking
Well-Known Member
Well, that would be an implicit effect of them being unable to trade, but a rising price is in the interest of most big shareholders, as they are owning a lot of shares. The buyout likely won't increase their stake by more than 100%, so their main interest is in having a good share price.
I'd guess the buyout gets weighted by participant shareholder share count, which would necessitate a moratorium on buying: otherwise a big shareholder could abuse the lack of buying and gobble up a lot of shares cheaply without competitors - screwing the other participants.
But if the buying moratorium ends with an agreement of the majority of the large shareholders I'd expect all participants to start buying in the open market: every share purchased below $420 increases their stake more cheaply than through the buyout.
The Tesla going-private buyout/share-conversion is an unprecedented construct, with likely unprecedented rules.
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Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Thanks for the English lesson!
(I think we can agree we're witnessing the same degree of desperation from the FUD-slingers right now though).
Tesla employees say the main Model 3 production line has been shutting down early
The FUD is working overtime.
Tesla needs to go private ASAP
The FUD is working overtime.
Tesla needs to go private ASAP
The report on seeking alpha
Fact Checking
Well-Known Member
Yeah, so I basically see no way how the big shareholders could negotiate the going-private deal in good faith with each other without first entering into a stock buying moratorium.
If the moratorium ends with an agreement by a majority of major shareholders and the board accepts then I'd expect heavy buying: every share bought below $420 increases the buyout stake of major shareholders and reduces the cash cost of the buyout.
Major shareholders might even keep buying above $420: for example if an institutional investor is valuing the current $TSLAP share fair value at $470 they'd keep buying until those price levels: there's no guarantee they'll be able to purchase more in the future.
They'd still be getting shares from the buyout pool in addition to whatever shares they purchased before. An increase of the buyout price wouldn't be a problem as there would be few shareholders left at that point who would elect a buyout.
I.e. a $TSLAP gold rush.
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
This of course is the dream scenario for any long retail hoping to cash out all or some of their position before the de-listing. If this is in fact what will happen, and the current lack of buy pressure is caused by this "temporary vacuum" of institutional buyers, then those who take up new short positions now - lured by the slowly dropping stock price and all the low-quality-but-high-quantity FUD being thrown around - are going to find themeselves in deep trouble.
Fact Checking
Well-Known Member
Agreed.
If this is true then note another paradoxical outcome: if there's no agreement and the deal falls apart then beyond a panic dip we should see heavy buying again: there's been 2-3 events in the last two weeks that improved Tesla fundamentals.
I'm wondering whether there's any other way for big institutionals to negotiate the going-private deal without a buying moratorium: could they segregate their trading desk from the negotiation team, thus guaranteeing the proper treatment of non-public material information?
The problem is that with many funds the top guys who'd negotiate the deal are also the ones making high level trading decisions. Plus if I was a paranoid fund manager I'd not trust anything else but an easily verifiable buying moratorium...
The main problem I have with this hypothesis is how convenient it is to longs who are seeing dropping prices, and how dangerous this view is if it turns out to be wrong. So it would be nice if there was a way to verify or falsify this hypothesis.
BTW., this would also explain why even shareholders like GS are downplaying the chances of a deal: they cannot buy now, and regardless of whether the going-private deal happens or fails they want to be able to buy more shares cheaply once the moratorium ends...
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Johan
Ex got M3 in the divorce, waiting for EU Model Y!
I don't think there's any reliable way to do that. But my thinking is that sometimes it's more important to not only look for who is saying something and what they're saying, but also who isn't saying anything and what isn't being said. There can be information in that too. Usually there's some mix of negative sentiment being met by positive sentiment, negative news being met by positive news, right now there's almost only negative sentiment being propagated and from those usually bullish there's mostly only silence. I think that signals confidence and while it doesn't verify your theory it does at least increase the likelyhood of there being truth to it.
Fact Checking
Well-Known Member
Yeah, that makes sense.
Note that there could still be buyers: smaller funds not invited, or larger ones unwilling to sign restrictions. But if there's enough big players missing that indeed causes not just lack of buying pressure ('vacuum' as you said), but also lack of FUD-busting.
All of that could build up pressure for a heck of an event...
Note that if price starts creeping up that would probably be an incentive for the negotiations to be wrapped up faster: they'd be missing out on some juicy deals.
(I'm also wondering whether a moratorium would limit derivatives positions as well. It probably should.)
Mader Levap
Member
It is just me or there are concern trolls out of woodworks lately?
(I still find useful responding and explaining things to them for benefit of lurkers and bystanders reading this forum)
(I still find useful responding and explaining things to them for benefit of lurkers and bystanders reading this forum)
Yes I agree....and the cancled order/Tesla service sucks crowd seems to have increased
skitown
Member
As a pick me up, my family has 2 Model 3s arriving at our closest service center (SLC) next week. Correspondence with our adviser on these orders has been prompt and professional. Can’t wait.
TaoJones
Beyond Driven
Point taken, although as a percentage of delivered vehicles, one could argue that the volume of delivery/post-delivery service sucks threads has gone down... Remember when the natives were pretty restless during the initial Model X deliveries? Now the delivered volume is much higher.
Maybe there are more posts per thread (longer thread life) before they die of disinterest, the horse can be beaten no more, or the posts get banished into the snippiness wasteland.
JRP3
Hyperactive Member
This must be a new short tactic, show up here posting irrational concerns and pretending to be long.
skitown
Member
No that’s the classic “care bear”.
We’ve been seeing that for years. AnxietyRanger filled that role beautifully. Alas, simpler times......I think it’s more like 2 or 3 years, no? What are examples timelines for other large, highly visible class action suits?
pz1975
Active Member
I agree - very easy to notice: recent join date and "I have been a huge Tesla fan for many years and own one but now I have major concerns about the company going forward. Oh woe is me this is awful. Elon may go to jail and the company is going down."No that’s the classic “care bear”.
Ummm, what? I never knew this was a thing. Seems to me just the opposite!!
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