TSLA Market Action: 2018 Investor Roundtable

[anticitizen13.7]

We'd sue for damages.

If you’re at the point where you are pinning your hopes on a lawyer, you’re screwed.

I’ve witnessed firsthand what happens when a business related dispute goes south and lawyers get involved. The only winners are the lawyers. It sucks.

The only thing to do when it’s over is to “Press F to pay respects”.

 

[Ulmo]

For calming reasons, I excused myself from this forum for some hours. I am back! Sorry you missed me.

I look at this chart of today:

To me, it looks like the Shorts want to just enjoy shorting the stock and eventually dumping their short positions between the intent to go private consideration announcement yesterday and the week's end on Friday. Am I right to wonder if Tesla is going to time their next stock offer to make certain that the timing is most destructive to the most destructive traders of -$TSLA to whom Tesla has no fiduciary duty, and do so well before Friday's Close of Market?

 

[Sudre]

I've actually un-ignored our shorts because now more than ever they will be providing quality entertainment that I don't want to miss!

WOW... good idea. Nothing like reading their pain and panic.

 

[Remus]

Why would you want to own shares in a company with no financial information releases? Are they making money? They are certainly spending money. Their shares are obviously not very liquid. You have been trying to buy them for five years.

You have no idea how many people tried for years to get Space X shares. If you knew you won't doubt the source of the funding for taking Tesla private.

 

[Unpilot]

Actually, he is right. I have been saying this for a long time. Without a profit there is no P/E ratio. Without that it is hard to measure Tesla against other stocks or automakers. Investors are free to believe whatever they want as the true value of Tesla. But faced with hard evidence the stock would likely plummet especially for a company in as bad a financial condition as Tesla. Achieving a 2018 annual profit of $1 per share would give Tesla a P/E ratio of an astronomical 370 at today's closing price. Think about that. To wipe out the losses of the first half would take about $1.5 billion in profits in the next two quarters, which is virtually impossible from here in 8/8/18.

But analysts would use a Q3 profit to extrapolate an annual amount. If Tesla does not achieve a Q3 profit the stock will likely plummet anyway. Talk about being between a rock and a hard place...

Yep Tesla is doomed for sure /snark off

 

[beachbum77]

You have no idea how many people tried for years to get Space X shares. If you knew you won't doubt the source of the funding for taking Tesla private.

Remus, buying a few shares of SpaceX is lightyears away from funding $30-50 billion to take a company like Tesla private. First off, small investors do not qualify to be participants. You need to be an accredited investor. That is why Fidelity set up a special fund.

Read up on the latest news. Most of the biggest players are claiming to have no knowledge of this effort. Only Softbank says that Musk approached them back months ago and they turned him down. Even the Saudis claim to have no more interest then what they have acquired since March.

 

[Ulmo]

Sorry to interrupt the important conversation going on, but I gotta say, that is a nice curve.

Holy Wow.

 

[beachbum77]

Yep Tesla is doomed for sure /snark off

Now you are sounding like Musk with his "hater" comments. A realistic valuation of a company does not spell "doom". If Tesla had a realistic price now there would be no one shorting the stock.

The stories of haters and conspiracies are total nonsense and many have been sucked into it. Every company has its "short sellers". They are just people playing the opposite side of the coin who think a stock at a given point in time is overpriced and due for a correction. If Sears suddenly spiked 50% for some news item I'd be there buying puts. Because the underlying picture would probably not have changed.

The fact Tesla remained under $380 today tells me most buyers do not believe the odds of going private are that great.

 

[UnknownSoldier]

GUYS, GUYS, HE'S TWEETING AGAIN!

Such a tease. I went to look at his Twitter only to find something about Autopilot haha

 

[Toolsmack]

According to Ihor, short’s went from 35m yesterday to “just a tad over 34m short” today. And we were down. Is that insignificant? Or does that lead to a conclusion that longs and/or traders were selling at these prices.

If we get short covering at just under a million per day and are still down 9 pts, that doesn’t feel like a short burn is imminent.

FYI - Looking for insight, not making a statement.

 

[Jayjs20]

Holy Wow.

I know right. In the last 10 years, they make investing in appl look like a mistake.

 

[SO16]

Agreed. And now with the SEC asking for answers, we should know more soon.

As if they wouldn’t ask any extremely large public company that’s going private.

 

[Ulmo]

Such a tease. I went to look at his Twitter only to find something about Autopilot haha

Elon retweeted this tweet:

Fred Lambert on Twitter

 

[Moderatefan]

Or does that lead to a conclusion that longs and/or traders were selling at these prices.

55m volume in the last 2 days. Assuming Elon isn't trading his shares, that's more than 1/3 of all shares. Seems a lot of people are not holding on to theirs.

 

[SO16]

Remus, buying a few shares of SpaceX is lightyears away from funding $30-50 billion to take a company like Tesla private. First off, small investors do not qualify to be participants. You need to be an accredited investor. That is why Fidelity set up a special fund.

Read up on the latest news. Most of the biggest players are claiming to have no knowledge of this effort. Only Softbank says that Musk approached them back months ago and they turned him down. Even the Saudis claim to have no more interest then what they have acquired since March.

What’s awesome is that all these “sky is falling” comments will be available to read next year when Tesla is private.

 

[neroden]

I imagine that they will try to avoids taxes. After all, Elon himself would face a massive tax bill otherwise and may have to reduce his stake significantly as a result! I don't think he would want to do that.

Good point.

In that case, I'm betting on something like:
(1) a voluntary tender offer (directly from the go-private investors) to everyone, to cash out most of those who want to cash out
(2) Later, a mandatory buyout (from the company) to non-accredited investors -- and possibly also those who hold in accounts which cannot by law hold private equity.

(The non-accredited investors who didn't take the first offer would have a separate and distinct cause for suing if they thought the valuation was too low, while the voluntary tender offer wouldn't give the same cause for suing. But the number of dissenters left with the right to sue would be low.)

I'm not an expert, but I believe this structure would make sure that anyone who didn't take the tender offer was considered to still be holding onto the same shares.

The deal structure might be akin to a squeeze-out. But I'm just guessing.

 

[beachbum77]

Elon retweeted this tweet:

Fred Lambert on Twitter
View attachment 324222

LOL... How many of them are shareholders?

 

[Unpilot]

Now you are sounding like Musk with his "hater" comments. A realistic valuation of a company does not spell "doom". If Tesla had a realistic price now there would be no one shorting the stock.

The stories of haters and conspiracies are total nonsense and many have been sucked into it. Every company has its "short sellers". They are just people playing the opposite side of the coin who think a stock at a given point in time is overpriced and due for a correction. If Sears suddenly spiked 50% for some news item I'd be there buying puts. Because the underlying picture would probably not have changed.

The fact Tesla remained under $380 today tells me most buyers do not believe the odds of going private are that great.

Then Short like a madman...take a mortgage out. I believe in the potential of the company. I think the valuation based upon future earnings is very low.
I know were I placed my bet.

 

[neroden]

I can see 4 basic szenarios:

1) There is no funding.
The stock and Elon will get destroyed.
But the company fundamentals wont be affected beyond financing, which shouldn't be a problem if Q3, Q4, ... are positive. So new Investors might be able to get in at a bargain after the bloodbath.

2) Board denies request.
Because they think staying public is the better path into the future.
Then we're back at the state prior to the announcement, minus the stock equivalent of a CEO getting reigned in by his board..
Company fundamentals are unaffected.

3) shareholders vote No
Because the majority thinks the stock is worth more than 420.-
And they can't hold private tsla due to broker constraints or liquidity concerns.
This should still put a confidence floor at 420.- because 50%+ think below that price is a good buy.

4) shareholders vote Yes
All shorts get a margin call.
35m shares (assuming no covering till vote) can get out above 420.-
Or tesla could raise up to 20% new equity (14B!) without needing a single new shareholder!!
If more want to get out, they'll do so at a guaranteed 420.-

Any guesses on the respective probabilities?

1 -- 1% (maybe someone backed out)
2 -- 15% (simply can't nail down the deal structure)
3 -- 2% (there aren't enough shares in the can't-hold-private-tsla category)
4 -- 82%

 

[anticitizen13.7]

According to Ihor, short’s went from 35m yesterday to “just a tad over 34m short” today. And we were down. Is that insignificant? Or does that lead to a conclusion that longs and/or traders were selling at these prices.

If we get short covering at just under a million per day and are still down 9 pts, that doesn’t feel like a short burn is imminent.

FYI - Looking for insight, not making a statement.

I don't believe that shorts will give in easily, but I think there are 2 things that will accelerate covering:

(1) Tesla gives more specifics on the privatization plan. Right now, all we have is Elon's tweet and a letter from Tesla's board stating that the matter has been under discussion. Shorts and others who simply hate Tesla have been using the vagueness and lack of information to build themselves a cover story that Elon is a liar and this is a "bluff". If credible and specific information is released on the financial aspects of the plan and legal structure, that cover gets destroyed.

(2) Shorts are still praying that Tesla cannot profitably build Model 3 in volume. I estimate they have 3-6 months before they won't have this cover story to tell themselves either.

My assessment is that the most likely scenario is that many short sellers will Bag Hold until the last minute. Tesla has turned into politics: people dig in. What market result this will have, I don't know.

What I do know is that betting against highly intelligent, ambitious people who are willing to risk everything for a business they believe in, is not a good idea. Anyone who bet against Jeff Bezos, probably suffered disastrous losses in recent years. Betting against Steve Jobs was similarly a bad idea in the long run. Elon Musk is quoted as saying in 2008, in the maelstrom of the Financial Crisis, that he would move into his then wife's parents' basement if that's what it took to keep Tesla alive.

That should scare the %$@! out of people.