TSLA Market Action: 2018 Investor Roundtable

[Cosmacelf]

Changing direction on this thread a little if you don't mind. I have always gotten the impression that Elon always hated the fact that he had to take the company public. I think he would have been much happier going the way of SpaceX and keeping it a private company. If at some point down the road he wanted to return it to it's original private status how could that be done. I am new to all this stock market stuff so forgive my potentially stupid question.

I realize that this is not a viable option but am curious as to what it would take. Thanks for any and all info.

Dan

Fundamentally, you have to buy up all the shares of Tesla to take it private. That means finding (read borrowing) $50B. Well, a bit less since Elon wouldn’t have to buy his own shares. Anyways, It simply isn’t going to happen. No one wants to lend Tesla $1B at a reasonable rate, let alone $50B.

Taking companies private is only an option after the share price has been beaten up a lot. It might be a shock to some folks on this forum, but TSLA is still an overpriced stock according to many metrics.

Any any rate, it isn’t the right strategy for Tesla. Private buy outs make sense if the company is a stable cash cow. They absolutely don’t make sense for a growth company that has tons of future opportunity, but need lots more investment cash to realize those opportunities. If Tesla is going to fullfill its potential, it needs a lot more investment in the future. It’s just the nature of the beast for a capital intensive growth company like Tesla.

 

[Dan Detweiler]

Fundamentally, you have to buy up all the shares of Tesla to take it private. That means finding (read borrowing) $50B. Well, a bit less since Elon wouldn’t have to buy his own shares. Anyways, It simply isn’t going to happen. No one wants to lend Tesla $1B at a reasonable rate, let alone $50B.

Taking companies private is only an option after the share price has been beaten up a lot. It might be a shock to some folks on this forum, but TSLA is still an overpriced stock according to many metrics.

Any any rate, it isn’t the right strategy for Tesla. Private buy outs make sense if the company is a stable cash cow. They absolutely don’t make sense for a growth company that has tons of future opportunity, but need lots more investment cash to realize those opportunities. If Tesla is going to fullfill its potential, it needs a lot more investment in the future. It’s just the nature of the beast for a capital intensive growth company like Tesla.

Thanks, I totally understand this isn't possible in Tesla's case...just wondering about the process.

Dan

 

[TradingInvest]

I am not a fan of margin and short term options.

Adding TSLA with free cash seems to be a winning move. Buy and hold for at least one year to get long term capital gain tax.

 

[EinSV]

Fundamentally, you have to buy up all the shares of Tesla to take it private. That means finding (read borrowing) $50B. Well, a bit less since Elon wouldn’t have to buy his own shares. Anyways, It simply isn’t going to happen. No one wants to lend Tesla $1B at a reasonable rate, let alone $50B.

Taking companies private is only an option after the share price has been beaten up a lot. It might be a shock to some folks on this forum, but TSLA is still an overpriced stock according to many metrics.

Any any rate, it isn’t the right strategy for Tesla. Private buy outs make sense if the company is a stable cash cow. They absolutely don’t make sense for a growth company that has tons of future opportunity, but need lots more investment cash to realize those opportunities. If Tesla is going to fullfill its potential, it needs a lot more investment in the future. It’s just the nature of the beast for a capital intensive growth company like Tesla.

As with a merger, I believe they would also have to pay a significant premium on whatever the SP is at the time to get shareholder approval. How does privatization affect a company's shareholders?

 

[dmckinstry]

Changing direction on this thread a little if you don't mind. I have always gotten the impression that Elon always hated the fact that he had to take the company public. I think he would have been much happier going the way of SpaceX and keeping it a private company. If at some point down the road he wanted to return it to it's original private status how could that be done. I am new to all this stock market stuff so forgive my potentially stupid question.

I realize that this is not a viable option but am curious as to what it would take. Thanks for any and all info.

Dan

I wonder about this as well. Is there a way that retail investors that don't want to sell can be forced to give up their shares?
I'm completely naive on this.

 

[Dan Detweiler]

I wonder about this as well. Is there a way that retail investors that don't want to sell can be forced to give up their shares?
I'm completely naive on this.

Good question...I have no idea!

Dan

 

[jelloslug]

I wonder about this as well. Is there a way that retail investors that don't want to sell can be forced to give up their shares?
I'm completely naive on this.

He could buy enough shares to have a complete majority stake in the company. Any other investor would not have much say in anything then.

 

[Dan Detweiler]

He could buy enough shares to have a complete majority stake in the company. Any other investor would not have much say in anything then.

Just reap the capital gains off their shares!

Dan

 

[bdy0627]

TSLA really isn't doing much worse than many of my growth stocks today. Most of mine are down 2-3%. I am shifting some stock over to calls at this stock level.

 

[DocZ]

Man the stock has been beaten up for months now. Looks like this is what it will be until Q3-Q4. Stay strong longs. I’d buy more if I could.

 

[bdy0627]

Man the stock has been beaten up for months now. Looks like this is what it will be until Q3-Q4. Stay strong longs. I’d buy more if I could.

If you mean range bound, then yes that's certainly possible for a while. It also could rapidly move out of the channel soon.

 

[bdy0627]

3) That option_sniper dude on twitter is magic sometimes

Man was he wrong on NVDA recently! It's down over 4% today.

 

[Cosmacelf]

I wonder about this as well. Is there a way that retail investors that don't want to sell can be forced to give up their shares?
I'm completely naive on this.

I believe it depends specifically on the company’s bylaws and the state law under which is was incorporated. In general, any major change in control like this would have to go to a shareholder vote. As you’ll recall, there was a minor amount of drama when Tesla bought SolarCity. Before it could be finalized, they had a shareholder vote. If the vote passes, then shareholders have the option of getting bought out for cash, or in Solarcity’s case, getting some Tesla stock in exchange. For a private buyout, the latter isn’t an option.

So, yes indeed, minority shareholders are at the mercy of a shareholder vote.

 

[strider]

I wonder about this as well. Is there a way that retail investors that don't want to sell can be forced to give up their shares?
I'm completely naive on this.

Yes. I recently went through this when my former company was sold to HP.

If the board approves the sale and a majority of share(holders) vote to approve then all the existing shares will be converted to cash at the agreed upon price. Assuming you are holding your shares at a broker like eTrade this will be automatic. If you are physically holding the certificates you will have a deadline by which you would need to surrender them for cash before they become just bits of paper.

 

[andrewt3000]

Adam Jonas, CFA – Morgan Stanley
May 15, 2018 4:01 AM GMT



Following 1Q18 results, we are making significant cuts to our near-term and long-term auto margin forecasts and allow for marginally greater equity dilution. We see Tesla as trading near fair value with a balanced risk-reward. We remain EW.
Regarding the feedback from the 1Q18 conference call… Elon Musk reserves the right to do very difficult things that could yield great commercial value long term. At the same time, investors reserve the right to understand the costs and the risks near term. We believe any impact on the investor engagement side is fairly limited and the market will focus on more pertinent and quantifiable debates such as the interplay between cash consumption and capital raising. A recent increase in the pace of management departures and an apparent reorganization of the business suggest to us the need to address some of the technical and fundamental hurdles weighing on company margins. Lowering our earnings forecast - driven by margins. While 1Q18 results were broadly in line with consensus expectations (and slightly above our forecasts), we are making material reductions to our earnings estimates to reflect lingering manufacturing issues with the Model 3 - most recently at Fremont final assembly. While our volume forecasts are largely unchanged, we have reduced our medium and long-term gross margin assumptions for Tesla’s passenger car operations. It is our view that the challenges in ramping up Model 3 production reflect fundamental issues of vehicle design, manufacturing process, and automation levels that can weigh against the profitability of the vehicle. The company has acknowledged that it, to some extent, overautomated the Model 3 production process and is now reengineering accordingly. Movements in raw material prices and FX add further headwinds vs. our prior expectations. Tesla management believes the Model 3's margin performance below its 25% target level will be temporary, whereas we believe this headwind is more structural. Given....

 

[ZachF]

I said this earlier, but I still think Tesla wants to test the lower end of it's large long term SP channel.

It's stuck in a short-term downward channel right now that intersects with it's longer-term upward channel. I think you could be looking at a $270-320 SP for a few months.

Once it tests it, it could rocket upward to $450 very fast though.

 

[corduroy]

Just bought more at $282. Couldn't resist.

 

[Iceman]

I did a 827 share offload in the 301.XX the other day.
I´m gonna try to be patient and time this bottom as well as I can and go in for full 1000 shares once I jump.

Dis gon be gud if I get the timing just right-ish...

 

[jhm]

The problem is, more and more people are getting into Teslas and getting complacent, thinking the car will safely keep them from rear-ending a car in front of them. I would be very hesitant to have certain people I know drive a Tesla on Autopilot because I think they would not be vigilant enough, maybe enough 50% of the people I know. It's frustrating, since it is due to bad judgement by drivers. Maybe Tesla should do something to help avoid these unnecessary deaths due to people assuming the car will not rear-end cars (or medians) in front of them.

It's not just complacency when someone is using AP to 60 mph into a red light. This is surely well above the legal sped limit for a lighted intersection. The way AP let's you do that is if the driver is actively pushing on the accelerator to force the car to go faster. Additionally, AP does not read traffic signals or slow down for them. This is exclusively the responsibility of the driver. Had it not been for crashing into the fire truck this vehicle would have sped through a red light and put other drivers at serious risk.

I do not buy the line that this sort of reckless driving and abuse of AP is mere "complacency." All drivers face a little complacency and inattention in our daily driving, but most know to reign this in and focus on the road. There is nothing special about AP that causes complacency. It is nothing new. Cell phones, texting, eating, whatever, all these things cause drivers to become complacent and inattentive. Though it is not perfect, AP helps safeguard against those distractions and so is saving lives. But if a driver abuses AP, it's his own damn fault.

 

[Dan Detweiler]

It's not just complacency when someone is using AP to 60 mph into a red light. This is surely well above the legal sped limit for a lighted intersection. The way AP let's you do that is if the driver is actively pushing on the accelerator to force the car to go faster. Additionally, AP does not read traffic signals or slow down for them. This is exclusively the responsibility of the driver. Had it not been for crashing into the fire truck this vehicle would have sped through a red light and put other drivers at serious risk.

I do not buy the line that this sort of reckless driving and abuse of AP is mere "complacency." All drivers face a little complacency and inattention in our daily driving, but most know to reign this in and focus on the road. There is nothing special about AP that causes complacency. It is nothing new. Cell phones, texting, eating, whatever, all these things cause drivers to become complacent and inattentive. Though it is not perfect, AP helps safeguard against those distractions and so is saving lives. But if a driver abuses AP, it's his own damn fault.

Totally agree here. Well said.

Dan