TSLA Market Action: 2018 Investor Roundtable

[Fact Checking]

I don't understand why the Board is being so passive about Elon being handled this way. Why aren't they coming out with a more detailed defense of Musk?

Doing that is not without risks:

• It doubles the news cycle: first article is about the NYT interview, second article is about "Tesla board attacking NYT for honest Elon Musk" interview
• Journalists tend to stick together when criticised for their reporting, which behavior is especially likely if criticism comes in defense of Pravduh inventor Elon Musk. To them watching the watchers is censorship.
• The board would inevitably be seen as biased partisans, which would further erode the efficiency of their communication.

The board has come out swiftly to refute some of the anonymous hearsay attributed to them in the NYT article, but they might not be the best defenders of Elon here.

Normally doing that would be the job and duty of independent investigative journalists...

 

[Cattledog]

I have a question...

So Elon tweets 'funding secured', the stock goes up about 30 bucks, the next day there are class-action lawsuits citing manipulation.

Two weeks later...

The New York Times writes a story about Elon's emotional rollercoaster, takes way more than 140 characters (proving they are way less efficient than Elon), the stock goes down about $30...where are the lawsuits?

 

[Krugerrand]

Actually, very athletic. Or you found a cat as crazy for attention as Trump. On Ambien or marijuana? The cat, of course, not you.

This cat and I are just feeling upside down about the current state of affairs. Will be my avatar until Tesla goes private and the world rights itself.

 

[Drumheller]

Asking Musk and/or the Board to do more with announcements with mainstream media isn't likely to help. They'll just spin it to the negative. My opinion is that they should go fully 100% news to alternative new media, like the YouTube channels.

 

[Fact Checking]

Possibly the board is trying to appear more independent and not simply Elon cheer leaders. Maybe.

Legal reasons: in this specific case of the going-private buyout Elon is a buyout proponent, while the board is representing all shareholders and is still investigating the buyout proposal.

This is how it was done when Michael Dell and Silver Lake bought out Dell as well.

So for the going-private decision the board is independent of Elon. This makes it (temporarily) difficult for the board to defend Elon.

They still came out in defense of Elon strongly - in general terms, without mentioning the buyout.

 

[Skryll]

Legal reasons: in this specific case of the going-private buyout Elon is a buyout proponent, while the board is representing all shareholders and is still investigating the buyout proposal.

This is how it was done when Michael Dell and Silver Lake bought out Dell as well.

So for the going-private decision the board is independent of Elon. This makes it (temporarily) difficult for the board to defend Elon.

They still came out in defense of Elon strongly - in general terms, without mentioning the buyout.

This exactly. And I don't want the Board to waste cycles on this anyways, I want them to focus on getting tesla private and out of the crosshairs of $13b short money.

 

[Quassinoid]

It looks like the guy is sharing pictures of what could be Tesla's intellectual property. If true, he should be arrested immediately.

Sorry if this has already been reported, but it looks like MT's Twitter account has been disabled.

 

[AZRI11]

Wall street sucks. Funny thing is my best childhood friend claimed to be a direct decedent of one of the 30 walloon families "first settlers" of New Amsterdam. Knowing his politics he is probably short tsla too.

 

[Fact Checking]

This exactly. And I don't want the Board to waste cycles on this anyways, I want them to focus on getting tesla private and out of the crosshairs of $13b short money.

Yeah.

That short money might not be easy to shake off though: if the rumor that many big shorts were on ~300% leverage at $360 price levels is true, and if we assume an average entry price of $270, then they could start reaching 500% leverage at around $420, which could result in liquidation and $5b+ in losses - possibly much more if the liquidation is disorderly.

End of Q3 might also be brutal: it's usually the time for hedge funds to mark down the TSLA stock price and have much lower "paper" losses, but this time expectations are very positive, which would make any end of quarter window dressing very expensive.

I fear shorts won't be going down easily or willingly - and definitely not quietly.

 

[mickificki]

agree, and willingly and respectfully accept the deserved punishment

How dare you call them micropenises!

—M(for micropenis) Spiegel

 

[ggr]

This is a great idea! I’ll submit mine later this evening. Count me in!!

Currently says it's down for routine maintenance.

 

[Skryll]

Yeah.

That short money might not be easy to shake off though: if the rumor that many big shorts were on ~300% leverage at $360 price levels is true, and if we assume an average entry price of $270, then they could start reaching 500% leverage at around $420, which could result in liquidation and $5b+ in losses - possibly much more if the liquidation is disorderly.

End of Q3 might also be brutal: it's usually the time for hedge funds to mark down the TSLA stock price and have much lower "paper" losses, but this time expectations are very positive, which would make any end of quarter window dressing very expensive.

I fear shorts won't be going down easily or willingly - and definitely not quietly.

Ihor Dusaniwsky on Twitter shows that the shorts reduced their aggregate shares borrowed by almost two mllion shares lately, at the same time that the stock price kept going down. Normally you would expect the stock price to go up when they are buying? Or is the volume just so low... This could be a clear indicator why the SEC has to look into shorters media activities. If they convince retail or weak longs that are trimming their margin bought positions to sell to them at a much lower price than the go-private target of $420, isnt that obviously criminal fraud activity?

 

[kbM3]

My financially savvy neighbor (Worked on the street for 20 years) does not believe the $420 private buyout is possible and I couldn’t provide a compelling reason why it is.

He said when Warren Buffett was asked why would you pay a 20% premium to take a company private, his answer was control. Control of the company gives you a lot of power.

My neighbor says that there is no way a consortium of buyers would pay such a premium for the stock in the absence of such control and that board seats would be a sufficient inducement. There is no reason for them to do this and not be purchasing the stock now at such a discount to $420.

Does anyone know of a past instance of several entities coming together to pay a premium to delist a company?

 

[Drumheller]

My financially savvy neighbor (Worked on the street for 20 years) does not believe the $420 private buyout is possible and I couldn’t provide a compelling reason why it is.

He said when Warren Buffett was asked why would you pay a 20% premium to take a company private, his answer was control. Control of the company gives you a lot of power.

My neighbor says that there is no way a consortium of buyers would pay such a premium for the stock in the absence of such control and that board seats would be a sufficient inducement. There is no reason for them to do this and not be purchasing the stock now at such a discount to $420.

Does anyone know of a past instance of several entities coming together to pay a premium to delist a company?

I don't have an example.

Here are my thoughts: look at how SpaceX's valuation has grown over the past 10 years (43.5x). Paying a 20% premium now to get locked into that kind of potential growth Tesla seems like a bargain. Without the noise and focus on short term results, I think Tesla and Musk can do more. They can take bigger risks, borrow more, and grow faster.

 

[Skryll]

I don't have an example.

Here are my thoughts: look at how SpaceX's valuation has grown over the past 10 years (43.5x). Paying a 20% premium now to get locked into that kind of potential growth Tesla seems like a bargain. Without the noise and focus on short term results, I think Tesla and Musk can do more. They can take bigger risks, borrow more, and grow faster.

That and Q3/Q4 profits will demonstrate that tesla is severely undervalued.

 

[kbM3]

I don't have an example.

Here are my thoughts: look at how SpaceX's valuation has grown over the past 10 years (43.5x). Paying a 20% premium now to get locked into that kind of potential growth Tesla seems like a bargain. Without the noise and focus on short term results, I think Tesla and Musk can do more. They can take bigger risks, borrow more, and grow faster.

But they could be purchasing some of those shares today at 30% off. They still get the same benefit when it goes private.

 

[Intl Professor]

Legal reasons: in this specific case of the going-private buyout Elon is a buyout proponent, while the board is representing all shareholders and is still investigating the buyout proposal.

This is how it was done when Michael Dell and Silver Lake bought out Dell as well.

So for the going-private decision the board is independent of Elon. This makes it (temporarily) difficult for the board to defend Elon.

They still came out in defense of Elon strongly - in general terms, without mentioning the buyout.

Your explanation makes the most sense to me, even more than mine—Musk is trying to control the outcome by setting some parameters. $420 a share, for example. The board might be pissed he did not give them a heads up, and in any case, as you clearly point out, they had no other course than to remain agnostic on his proposal. That may change, however, as the committee's due diligence bears fruit.

 

[UnknownSoldier]

That and Q3/Q4 profits will demonstrate that tesla is severely undervalued.

The definition of undervalued is pretty complicated when a typical tech company might trade at 40-50x forward P/E and Tesla is trading around 190x expected 2019 earnings. So the concept of value for a Tesla investor is at best nebulous and at worst absolute fantasy. Everyone puts a lot of intrinsic value into Tesla being run by Elon which is why a single NYT article can make the value drop by 10% in a day. I know I don't own TSLA because of extrinsic value (read: fundamentals) because the numbers literally make zero sense, that is after all why all the Wall Street financiers are short TSLA.

The fact that TSLA has been as low as $244 and as high as $389 in the last 2 months is more or less proof that TSLA trades entirely on sentiment, not anyone's calculation of value. This is probably the biggest reason I can think of why Tesla needs to go private, because sentiment literally changes day-by-day and that's no way to stably run a growing company, especially when it's a company led by Elon who is probably a bigger Twitter meme right now than the other 499 CEO's in the Fortune 500 combined. I know of only one person on Twitter who is currently more memetic than Elon and that person is the President of the United States right now.

 

[Open Interest]

Currently says it's down for routine maintenance.

Yes still down at 9:25 pm PDT

 

[Intl Professor]

This cat and I are just feeling upside down about the current state of affairs.

I really do admire all of your posts, your integrity, and humor. But there's something in this one that doesn't ring true and causes, for the first time, some doubt about your honesty. Rather than play with a mouser, I'll spill the beans, or indulge in another mind fart: you were not upside down when you took the picture or pasted it. I know, you had a caveat, but still.... Not an advice for avatar change.