TSLA Market Action: 2018 Investor Roundtable

[EVMeister]

In other words, it'll be short-eats-short out there.

Now all I can think of is Bart Simpson.

 

[Bobbyducati]

its mind blowing to me the SP is going down right now. wish i had more cash

 

[Revhappy2]

I expect a headline very soon that SEC is going to investigate and expect a 10% fall. Watch out guys.

 

[gluu]

Many of the pro shorts are hedged by the convos. Many of the rest of us are hedged by put spreads or similar. Very few sensible investors would trade this stock unhedged.

This makes sense. It seems that when TSLA hits 360 and above there is strong selling, which must be professionals doing convertible arb. This means that if TSLA were to pay off the convertibles we’d essentially have a stock buyback situation and the stock would have less resistance at higher prices. I can’t imagine any smart money actually being naked short TSLA, there are just too many hidden surprises to the upside.

 

[Ulmo]

Actually, if the TSLA price spikes to over $1,000, similarly to what happened in the Volkswagen squeeze of 2008, and if we assume an average short position entry price of $242 (as per S3 Partners), then shorts will lose $26.5 billion dollars.

But note that the Volkswagen event happened at a lower short interest (15%), and lasted only a couple of days. The Tesla event could eclipse the Volkswagen event: a spike to $2,000 would cause the shorts a loss of $61.5 billion dollars.

If the price spikes to $3,000, then the mark-to-market losses of the shorts would be $96.5 billion dollars: higher than a full buyout of Tesla at $420 would be.

Very few shorts will have the collateral and the margin levels to survive a bigger spike, so the losses will probably be lower - but the losses of the shorts are literally unlimited.

Someone else said:

Very few sensible investors would trade this stock unhedged.

At the very least, the fact it happened with VW means that there are a lot more traders that are aware it could happen again, and therefore are careful to appreciate that and avoid being part of it, which means a frenzied runup could be well depressed via many means (including hedging or other). There could even be dark trades going on to keep them off the real time retail charts.

Some swing traders could be working to vacuum up more money from everyone that they can right now to help fund things, and since some margin calls aren't due for a while, that might be how they try to shore things up. Remember how Chanos would manipulate stock price (illegally): with that amount of power, you could shore up a lot of stuff even if part of it was about to fall. I count 8 swings since the "considering going private at 420 with committed funders" announcement by Elon; many of those swings are big enough that someone with a confident bet of the swing could do a lot, possibly in both directions. Inputs into AI market makers and AI traders could even try to time this out, too. I wonder how much colluding AI has evolved to do without human teaching (w/goosing or not); it would be easy to transmit and receive messages between different AI traders via market actions that the AI invented and understands but humans do not; that could have materially changed since the VW spike.

 

[Cosmacelf]

I expect a headline very soon that SEC is going to investigate and expect a 10% fall. Watch out guys.

I very much doubt this will happen. The SEC will be in contact with the company and would only do this if the company was blowing them off for a long period of time.

 

[Singer3000]

“Am considering taking Tesla private”.

“Only reason why this is not certain is that it’s contingent on a shareholder vote”.

And today: “The board has met several times over the last week and is taking the appropriate next steps to evaluate this.

For those wondering why we’re not at 420 and beyond, you only have to look at the messaging, which has at best, carried some contradictions. Then add to the mix that there’s no info on how several tens of billions of private equity will be raised.

There won’t be a squeeze while there’s insufficient clarity to scare shorts into covering. Meanwhile a 5-10% discount to an offer price that was made at a c.20% premium to market seems appropriate at this early stage.

 

[Moderatefan]

Elon Musk's Plan to Take Tesla Private Could Obliterate Auto Industry's Profits
Nice side effect

 

[neroden]

Deep out of money Put premiums have actually increased. Why not just sell these PUTs?

Well, the only reasons not to are (1) you think there's a serious chance of the stock price really crashing downward (I don't), or (2) you don't have the cash / margin capacity to secure those positions (I do)

As you may guess, I did sell some more DOTM puts

 

[Moderatefan]

Then add to the mix that there’s no info on how several tens of billions of private equity will be raised.

That is if you assume Musk is lying about the funding. Seriously? Do we expect him to do this?

 

[anticitizen13.7]

I expect a headline very soon that SEC is going to investigate and expect a 10% fall. Watch out guys.

If your expecting your imaginings to save you, a good outcome for you is unlikely.

 

[Singer3000]

That is if you assume Musk is lying about the funding. Seriously? Do we expect him to do this?

No I do not. But that is not how a good chunk of market participants think and that’s what matters to a stock price.

 

[CyberDutchie]

Actually, if the TSLA price spikes to over $1,000, similarly to what happened in the Volkswagen squeeze of 2008, and if we assume an average short position entry price of $242 (as per S3 Partners), then shorts will lose $26.5 billion dollars.

But note that the Volkswagen event happened at a lower short interest (15%), and lasted only a couple of days. The Tesla event could eclipse the Volkswagen event: a spike to $2,000 would cause the shorts a loss of $61.5 billion dollars.

If the price spikes to $3,000, then the mark-to-market losses of the shorts would be $96.5 billion dollars: higher than a full buyout of Tesla at $420 would be.

Very few shorts will have the collateral and the margin levels to survive a bigger spike, so the losses will probably be lower - but the losses of the shorts are literally unlimited.

Losses for shorts are capped, according to this Van Sciver tweet:

“The easiest way to get rid of short sellers is to post sustained profits. Companies do it all the time. Most companies are really communicative with shorts, actually, and often consider their criticisms respectfully.

Elon, given the level of short interest alone, you’re stock would be at $540 or maybe even $640 on a squeeze via execution of your vision. So thanks in advance for limiting our losses.”

 

[X Fan]

Yes. But I think one other important consideration for those thinking this will happen quickly is that people who don't want this to happen will try to tie it up in the courts. That process could possibly take years. Thus we see prices today far below $420.

Fwiw: sadly, it seems like every buyout or liquidity event of a public company has a tranche of lawyers that sue.

 

[Johan]

Losses for shorts are capped, according to this Van Sciver tweet:

“The easiest way to get rid of short sellers is to post sustained profits. Companies do it all the time. Most companies are really communicative with shorts, actually, and often consider their criticisms respectfully.

Elon, given the level of short interest alone, you’re stock would be at $540 or maybe even $640 on a squeeze via execution of your vision. So thanks in advance for limiting our losses.”

The cognitive dissonance is strong with this one.

 

[TradingInvest]

“Am considering taking Tesla private”.

“Only reason why this is not certain is that it’s contingent on a shareholder vote”.

And today: “The board has met several times over the last week and is taking the appropriate next steps to evaluate this.

For those wondering why we’re not at 420 and beyond, you only have to look at the messaging, which has at best, carried some contradictions. Then add to the mix that there’s no info on how several tens of billions of private equity will be raised.

There won’t be a squeeze while there’s insufficient clarity to scare shorts into covering. Meanwhile a 5-10% discount to an offer price that was made at a c.20% premium to market seems appropriate at this early stage.

Elon want's to take Tesla private, it has so many advantages compare to being a public company. Board will easily back his plan. The only thing not sure is the purchase price. Some shareholders might want a higher price.

 

[Singer3000]

T

No I do not. But that is not how a good chunk of market participants think and that’s what matters to a stock price.

Further, I try not to get too swept up in the short squeeze hype. But... in the coming days you’d expect to see a bunch of money that can’t / won’t stay with the company post privatisation take some profits. And if shorts have still not started covering, intuitively a good chunk of buyers are ones who are there for the long haul. So the longer the uncertainy continues, the more interesting things might get.

 

[neroden]

Losses for shorts are capped, according to this Van Sciver tweet:

“The easiest way to get rid of short sellers is to post sustained profits.

Didn't work on freaking Amazon, Apple, or Alibaba.

Companies do it all the time. Most companies are really communicative with shorts, actually, and often consider their criticisms respectfully.

Yeah, and so does Musk when they make realistic criticisms rather than *sugar*-flinging.

Elon, given the level of short interest alone, you’re stock would be at $540 or maybe even $640 on a squeeze via execution of your vision. So thanks in advance for limiting our losses.”

Here's the thing... the stock may still go up to $540+ on Q3 or Q4 earnings release if Musk hasn't managed to take it private by then (and I suspect he won't have).

Honestly I think Musk's financers are trying to take it private before the stock shoots up, which I kind of dislike as a stockholder, but it's a sharp financial move for his financers. I suspect his financers were waiting until the Model 3 ramp got to 5K/week before they made their lowball offer.

The offer's a bad deal. I hope they can be convinced to raise it.

That said I also think they are trying to act before the Saudis do a hostile takeover (the Saudis can also spot a discounted stock) and getting ahead of the Saudis, I am entirely in favor of.

 

[Unpilot]

So Robert Chapman on CNBC parroted Chanos saying in effect the shorts are Tesla best friend.
My sense of what is sane and normal is shaken every time I watch that channel.

 

[tti_7]

I see that the number $70B being mentioned, but in just removing EM share and say 50% of the rest chose to go private; what is a more realistic number? $30B ?