TSLA Market Action: 2018 Investor Roundtable

[Boomer19]

sure: but the key issues was this :.
$420 is not a given price point for closing the short position.

true.

there is a scenario, say a few shorts left that escaped whatever turmoil unfolds between now and effective date

and the margin longs he was offset against chose the cash option, he’d basically be paying those longs the $420,
kinda like internalizing (dtcc wouldn’t know the position there)

 

[Lessmog]

It only requires insiders plus top 7-8 investors to declare a "yes" vote for the tally to cross 50%.

Once the vote is a certainty, every "no" will sell above $420:

• arbitration traders will push the price all the way to $419.9 - any lower price is free money,
  
• and the combined force of new investors interested in a private Tesla and the shorts covering will certainly push the stock price well past $420.

So within a couple of months most "no" shareholders will happily cash out and be replaced with new "yes!" investors.

In the end Elon might not have to spend a single dollar on the buyout.

Apologies for any relevant posts I may have missed during the time warp, but ISTR that this kind of change requires a qualified majority, like 2/3 instead of 50%. That could be material here, no?

 

[Boomer19]

when the “board seeks pool of investors to prevent concentration” came out and it dropped 7 in like 30 seconds - i think street misinterpreted as “funding not secured”

i think the opposite is true
board thinks that elon’s funding would be too much concentration.
they want pool, and may pro-rate the investment elon was tweeting about. isn’t that a good thing?

 

[Mich]

And someone dumped over 750K shares to bring the price down from $360 to $351.28 in span of 5 minutes from 2:57-3:02pm.

Who do you know that there where 750K shares involved? Volume= transactions and modern trading happening in milliseconds AFAIK. Is there any way to go through the sell orders of this minutes to see how large the single orders are?

If you think in milliseconds you might just need 1000 shares, sell them if the price goes up, buy back if the price goes down because others jump in the move, repeat every millisecond and react on every new order within 1ms. For sure, this costs money as you loose with every transaction, but you don't need 750k of shares...

 

[sundaymorning]

Lots of investors who only trade using options will soon need to buy shares if they want to own part of Tesla.

 

[Boomer19]

Sorry, I misunderstood your point, and it's a good point!

Question: what are the regulations on NASDAQ, what happens to short positions when a stock is delisted? Does anyone know this?

this is what’s been bugging me a bit about the offer structure. they obv can’t end up short private equity shares.

the dell deal ended up cashing out anyone who didn’t go private right? but it traded below the offer payout ironed date, i think i read from your post about this...

hypothetically:
it seems tesla will have to vet the private equity share elections and then cash out the NET of anyone left long not eligible.

then the delist occurs separately once there is no tsla position left at dtcc

 

[Fact Checking]

Apologies for any relevant posts I may have missed during the time warp, but ISTR that this kind of change requires a qualified majority, like 2/3 instead of 50%. That could be material here, no?

Just curious: do you have links/citations that this requires a 66.6% super majority vote?

 

[ZachShahan]

My best guess is we see covering into the close since there's a likelihood of more info coming over the weekend, or an 8-K filing before market open.

if so, not gonna be much ...
i honestly feel like either i'm insane or they're insane.

 

[lmaccaro]

I am 100% sure that the potential investor bought shares via market and will do so until share price is above 420. Not every single share, because that would have caused kind of a squeeze. Typically "quiet" buying is possible up to 5% of the total volume traded.

Possibly the taking private buyout price could revised upwards, say 450 or so. Then buying Action beyond 420 is the deal...

420$ is IMO a first indication. 450$ and more seems very likely to me. Not to mention what happens of other parties entering the game since the could be the last chance for a take over...

GLTAlongs

No doubt there is a lot of quiet buying going on. Whoever is backing this has incentive to control as much as possible before the vote. Not just for getting control at less than $420, but because they understand the game, while all the retails don't. They are going to want the # of shares available to sell at $420 to be as small as possible.

Consider a world where a robber baron billionaire could buy 127% of float of TSLA, then unilaterally vote to take the company private. 35 million shares sold short would have to cover, but the robber baron billionaire would control every long share outstanding. He could charge them literally ANYTHING to close. There is no upward limit. This is the situation Elon is setting up, with a conglomerate of investors.

 

[Fact Checking]

Who do you know that there where 750K shares involved?

There's NASDAQ volume data included on most charting platforms - in that block of very active 10 minutes there were about 1 million shares traded, with a very aggressive seller (but quite some resistance at around $253).

 

[jelloslug]

The SEC comments are overly focused on the announcement Musk made. They were already investigating Tesla because of concerns with their regulatory filings and reports (projections, financials, audits).

Unfortunately it’s bigger than a bread box.

Prove what you are saying.

 

[Boomer19]

Lots of investors who only trade using options will soon need to buy shares if they want to own part Tesla.

yes this should concern those
looking for private shs
if there’s a record date stipulation (as in you need to hold settled shares as of ‘n’ date in order to elect those for private eq shs)

 

[Mich]

There's NASDAQ volume data included on most charting platforms - in that block of very active 10 minutes there were about 1 million shares traded, with a very aggressive seller (but quite some resistance at around $253).

I know, but it doesn't say of one share was traded 750k times or if 750k shares where traded one time. For sure at the one minute level one shared traded 750k times is not plausible, but the question is: how many net shares are there involved.

According to
High-frequency trading - Wikipedia
up to 70% if the volume is HFT. My guess is that manipulated stocks like TSLA will have a much higher ratio.

 

[Fact Checking]

BTW., there's one interesting detail I noticed in the "big Friday dump" price action that begun at 14:56 and ended around 15:09:

• initially it looked like a big dump of shares, but it actually started with a very quick breakout to $360.00
• this is totally the wrong thing to do if you want to break down the price intentionally: the breakout will trigger both stops and activates momentum traders/algos, which provide a fair amount of buy liquidity.
• the ~15 minutes long price action looked like two big players 'fighting' about the subsequent direction of the move.
• at the end of the day a sub-$350 price did not materialize.

Anyway, we can add this to the list of "that's weird!" observations about TSLA price action ...

And as I speculated about yesterday, Friday indeed ended up being "interesting".

 

[ZachShahan]

Disagree. I feel Elon improvise on many things, and I would not be surprised he started process with soft information, rather than hard commitments. He just isn't afraid of playing low odds, as long as he can have major influence on the outcome. With a good reason mind you, and I believe he has a very good chance of pulling it off.

But current price, I think, reflects that market thinks there is low chance of success. So unless some more info comes through about who is ready to support him, chance of failure will weight in on the share price.

If buyout fails, I think we fall to $300 in a short term, so I feel market believes about 40-45% Musk can pull this off.

Totally agree. Best summary I've seen.

 

[Dennisj00]

All my shares are at Fidelity in several taxable/ IRA accounts. Is this any advantage in the process?

Best case, I would assume those delisted shares would be flagged / transferred to the TSLAP fund with no tax implications. Any ideas, comments?

 

[UnknownSoldier]

if so, not gonna be much ...
i honestly feel like either i'm insane or they're insane.

It's important to realize that they are not mutually exclusive.

 

[ZachShahan]

Bloomberg: Terms of Service Violation

 

[lmaccaro]

Again, no. Any institutional investors who can't take part in a private Tesla have an effectively limitless amount of shares that they need to get rid of. They have the choice:

A) $420, during the buyout; or
B) Greater than $420, selling to shorts

So obviously, they want (B). The problem is that their supply vastly outpaces the number of shorts that needs to cover. Now, if they could all coordinate their actions, they could say, "Okay, none of us sell until the stock hits $600, then we'll each sell X% of our holdings". Except that they can't do that. That'd be illegal. So it's a free, open market, where supply outstrips demand.

If party A tries to sell at $600, party B is going to look at that and think, "I don't want to be stuck with all my stock sold at $420; I'm selling at $599." To which party A will look at that and think, "Well, I don't want to be stuck with all of my stock at $420; I'm selling at $598". And so on and so on. It's a race that will resolve itself virtually instantly; indeed, it'll never get to $600, or anywhere close, because everybody knows how this is going to play out. Their stock will sell only marginally over the $420 price point because they have more to get rid of than shorts need to buy, and nobody wants to get stuck with only getting $420 for all of their stock.

If it wasn't for investors that have to liquidate, I'd agree that it could go well over $420. But because they exist, and because they surely well outnumber shorts that need to cover, I can't envision this massively-over-$420 short squeeze that some here are envisioning.

Can you imagine a situation where the institutionals mostly stay in? For example.. transfer their ownership from a fund that invests in public companies to one that is focused on privates. Or set up TSLA as an unlisted public company, such that institutionals could remain? Or use some kind of vehicle to directly transfer their stake to the Big Investor? I'm asking from a position of curiosity. There exists clear motivation to think outside the box here on all Tesla long's part.

 

[EarlyAdopter]

I know, but it doesn't say of one share was traded 750k times or if 750k shares where traded one time. For sure at the one minute level one shared traded 750k times is not plausible, but the question is: how many net shares are there involved.

According to
High-frequency trading - Wikipedia
up to 70% if the volume is HFT. My guess is that manipulated stocks like TSLA will have a much higher ratio.

A single share traded back and forth hundreds of thousands of times isn't going to clear through the order book and blow down through all the standing bids $7 in a minute. That was really 750k shares getting dumped. If your broker gives you access to Level 2 quotes and Time and Sales info, it's quite clear.