TSLA Market Action: 2018 Investor Roundtable

[Fact Checking]

You are adding words that aren't there. It actual says "denying the allegations in the complaint". There is no mention of facts.

Indeed, you are right - I misread that. So Elon cannot contradict the SEC's conclusions - but he doesn't have to admit wrongdoing either. There's language that allows them to defend themselves in non-SEC lawsuits though, which I suspect they will be doing.

I have edited my original comment because I got this bit really wrong.

Anyway, I don't think this part is particularly significant - and I like the 'Twitter filter' process defined by the Tesla board that Elon has to go through, a lot!

I suggested such a filter program for his smartphone a couple of weeks ago: a list of Tesla board members would get those tweets and just one of them approving would send it out. This means there's no single person filtering Elon, and no real negative influence over him, but none of them would approve pedo-guy style tweets I suspect ...

 

[tander]

Thank you both for jumping in and answering.

While dissaponting to not know these things, I would like to think it would be an improvement.

My logic being is I think the board should have and would have advised Elon to settle under the original terms if it was bearable.

Game theory would tell us the SEC was going to to do what they did on Friday if Musk said no to the terms.

The SEC gets its pound of flesh today. Just no idea if the chunk hurts less in “effective terms”.

Don't forget Tesla has gotten the equivalent of many Super Bowl ads out of all these crazy tweets. You've got to really be trying over the past few months not to hear anything about Tesla.

 

[Xpert]

YES!. good job Elon, wearing the big boy pants now.!!!

While the deal is much better than the alternative, I'm pretty certain we'll see a capital raise now within 6 months. So, factor that into your optional thesis.

disagree. I'm pretty certain we won't see a capital raise within 6 months. unless they start building factory in Europe that we didn't know about. what are you suggesting they would use the money for? China local banks loans would take care of china factory, and they are going to be profitable going forward.

 

[CorneliusXX]

Is there anything stopping EM adding a couple of new yes men to the board in addition to the independent directors?

 

[Cosmacelf]

Could one of you wise folks tell me what "without admitting or denying the allegation" But paragraph 13 reads like he is prohibited from denying the allegation?

It means that he isn’t allowed to say in a random interview that he denies the allegations. Or put out a press release saying he is innocent.

 

[HG Wells]

As to a new chairman of the board. We need someone with experience running a large car company.
Perhaps, some one as well respected as Bob Lutz ?

/S

 

[MXWing]

I was looking forward to Elon fighting this and winning, so I'm actually a bit disappointed. Guess I'll just have to console myself with the likely increase in stock price on Monday.

To be realistic, Elon had to settle. Whether it was last week or today it had to happen.

Years of uncertainty isn’t going to work for a company in a fragile position like Tesla.

Elon isn’t winning against Vern. He never was and never will. And that is independent of the results of the suit.

 

[MP3Mike]

I think he pulled the wool over their eyes since the entire agreement is null and void because they spelled his name Elan Musk on the last page of the text version. Who is this Elan? Must get to the bottom of this right away!

I assume that "text" page is just an OCR version of the actual document, not part of the official agreement.

 

[Krugerrand]

I know this. If Elon Musk tweeted he wanted his followers to jump off a cliff as a sign of loyalty, half the people on this board would be gone.

You’re ugly inside.

 

[wipster]

Is there anything stopping EM adding a couple of new yes men to the board in addition to the independent directors?

Aha, using the FDR "stack the court" strategy eh? Actually I hope not. Good independent board members who are knowledgeable about the things that the company may need help with in the future can be a big asset IMO. I know it helped with the startup that I was involved in.

 

[bhtooefr]

Thoughts:

• It'd be nice to see Tesla's settlement, as Musk's is missing some of the details of the structure of this. (What's the definition of "independent Chairman" in this case? I know independent director means, essentially, no financial ties to the company other than their pay for being on the board, which isn't great, but if Tesla has the freedom to choose who their independent directors are, it's not damning. Does it mean an independent director as Chairman, or does it mean not the CEO?)
• Getting Musk to STOP TWEETING is a damn good thing.
• The fines seems like they're reasonable sized - enough to sting both of them, not enough to actually hurt (even though the maximum possible fine, if there were no ill-gotten gains, would've been $100k for Musk, $500k for Tesla, settlements don't follow those rules).
• Speaking of the fines... seeing as the pounds of flesh that they extracted from Musk and Tesla respectively is in the SEC's hands to distribute, I may well claim the losses on the two shares that I bought under the belief that the deal would go through - I wouldn't claim them if it were Musk/Tesla distributing it, but if it's out of a fund that they've forfeited already?

 

[Fact Checking]

I'm pretty certain we won't see a capital raise within 6 months.

In fact, in the last quarterly conference a couple of weeks ago Elon said that no capital raise, ever:

How do you plan to fund all of this growth without going back to the capital markets to raise funds?
[...]

Elon Reeve Musk - Tesla, Inc.

[...] we will not be raising any equity at any point [...]

For China, I think, our default plan will be to use essentially a loan from the local banks in China and fund the Gigafactory in Shanghai with local debt, essentially. And we certainly could raise money, but I think we don't need to and we – yeah, I think, it's better to – it is better discipline not to.​

So not only are there no plans to raise equity, they don't want to raise equity, and Tesla will fund through internally generated cash and local non-recourse debt for projects like the Shanghai Gigafactory.

Yeah, our default plan is we pay – we start paying off our debts. I don't mean refi-ing them, I mean paying them off. For example, there's a convert that's coming due soon, a couple hundred million, $900 million, something like that. We expect to pay that off with internally generated cash flow.
​

I.e. Elon wants Tesla to self-finance from free cash flow, similarly to Amazon.

 

[gringotuanis]

Why would we have a capital raise in 6 months when revenue will be through the roof with excellent cash flow and lots more cash on hand?

They need to do one to start Model Y and China Giga factory. The revenue from Model 3 alone won't be enough to deploy the next steps quickly.

 

[dmckinstry]

Well I don't suppose telling them to go **** themselves would help, however satisfying it might feel at a the time.

Yep. Telling an a**h** that he is such won't win a handshake or hug.

 

[wipster]

I assume that "text" page is just an OCR version of the actual document, not part of the official agreement.

I hope so, because there are a LOT of misspellings at the end of this one. Check out the agreement that was linked earlier and press the text link at the top and you'll see what I mean. Some interesting dates too.

 

[bhtooefr]

They need to do one to start Model Y and China Giga factory. The revenue from Model 3 alone won't be enough to deploy the next steps quickly.

China Gigafactory will be funded with local debt, not equity.

 

[Words of HABIT]

Sorry if this was already addressed, can't keep up with all the posts.
With the SEC settlement secured, will all the ambulance chasing lawyers with lawsuits against Tesla now go away? That is what the $20MM is for, for those that can prove losses? Realizing $20MM is a small gesture of goodwill. Comments please.

 

[Fact Checking]

As to a new chairman of the board. We need someone with experience running a large car company.
Perhaps, some one as well respected as Bob Lutz ?

Shortsville Times: Elon Musk settles suit with SEC, our pick for Tesla chairman of board is Bob Lutz!

[ BREAKING NEWS, DETAILS TO FOLLOW. ]

 

[Cosmacelf]

I'm seriously confused? Musk rejected a deal that seems to be less bad 1 day ago, and now he suddenly accepted this deal. What has changed to change his mind or am I just bad at seeing the differences?

First, we don’t know what the original deal was, just imperfect reporting about it. Second, the big difference is one night’s sleep. Does wonders.

 

[azaz]

First, we don’t know what the original deal was, just imperfect reporting about it. Second, the big difference is one night’s sleep. Does wonders.

yes, and the nyt report specifically said his advisers, friends and lawyers were stunned he pulled out of the settlement deal. another day of taking to them and big institutional investors probably led Elon to believe that in clearing his name he was going to do a lot of harm to the investors he actually cares about.