TSLA Market Action: 2018 Investor Roundtable

[Xorbit]

Several have expressed concern on having just one strong player. I share this concern along with EM...

I'm less concerned. I'd be very surprised if Elon wrote today's blog post publicly naming the Saudi's without asking them first. If they gave him their approval, then this suggests to me they are serious, otherwise everyone (including the Sovereign Investment Fund) is going to look very foolish if they back out at the last minute.

 

[dondy]

I take the news with a bit of grain of salt.

Don't know if verbal agreement means "secured" to SEC or they would expect to see something signed.

During all time Tesla had one notification from SEC. And more than 10 "SEC investigations" in mass-media.
Right now SEC representatives decline commenting on Tesla tweets. Go figure why.

Also, some people here expressed confidence that Musk is 10 steps ahead I think were proven wrong by Musk. Discussions still ongoing with other potential investors, so only 1 was "secured".

As he says openly he wants quick transfer of equity without damaging current distribution of powers in the company. Beside all other things it means he doesn't agree with Saudis or any other investor for that matter grabbing major investor status.
So he invites more people who didn't decide yet, and most probably has some who didn't finalize their "offers" which mean for most of real investors necessity to free or overload big pile of cash. It costs time and most importantly money.

From the Saudis side, why would they hide behind <5% to avoid filing?

5% is a threshold when investor has to disclose his ownership.
Saudis disclosure triggered another round of a bull run. For a reference look at the 2017 and what it meant for Tesla.
High volatility is very bad for any public company because it scares any classical high volume public investor. See B3 rating again.
Another consideration that it's the last chance for Musk to make Tesla private.

Any downside to buying 15-20% at below $420 price? I'm not sure why would they not be buying right now..

Inside trading. They can not.
Funds who have agreed with Musk plan and are going to keep new "420" shares can't use this information without disclosing their intention and company plans.

Everything you see will be channeled through Tesla PR from this moment.
Musk is micromanaging maniac and people who work with him accepted it. It's not that unusual trade of very successful people.

Funnily enough selling is still possible.

.unless they had some verbal agreement w/ Elon that they can't have more than ?20% to stay on good terms with him and expect to pick up as much during buyout.

lol

 

[sub]

Theory on why he tweeted vs other methods:

To some investors, Elon's tweets may be the only real-time Tesla news channel. So he wanted ALL his private investors to know before we learned about it in the news (along with all the confusion and bear theories). He was talking to us "at the same time" so we stayed in. Kinda simple and thoughtful if so, and maybe intentional to hold on to everyone who cares.

I’m a bazillion pages behind but saw this. Nailed it according to this morning so blig.

 

[beachbum77]

I’m buying a car. (Ironically, not a Tesla in this example).

I get a pre-approval letter from my credit union.

I go pick out my car.

I negotiate it’s price.

I negotiate warranties and consider all financing options. I commit to one, likely my credit union because it has offered great rates. I call them from the dealership and provide the final details. I drive home in the car, drop off the check the next day.

When am I telling my wife “funding secured”?

When I get pre-approved from my credit union.

There are still a number of options, including not using the credit union, but that’s when I’m telling any interested parties.

Unless the SEC has some obscure ruling where the term “funding secured” is defined in its legal sense, then I don’t understand any concern over this. I don’t understand how a normal, unbiased person finds this confusing.

Ben,

That's the problem. Musk does not have that pre-approval letter signed by anyone. He assumed the director's approval was all he needed. Wrong, that is not how the Saudis operate. There are a lot of articles and some actual courses out there for foreign business leaders to understand the Saudi investment and purchasing processes. Similar to the same type of information when dealing with the Chinese and Japanese.

The tone of today's blog post may not sit well with the Saudis at all. Musk is essentially blaming their director for his going public with the announcement before the Saudis have even seen his plan to go private. That may have been a very bad move. Rub them the wrong way and they bite back. Just look to Canada for a current example.

 

[avoigt]

I take the news with a bit of grain of salt.

Don't know if verbal agreement means "secured" to SEC or they would expect to see something signed.

Also, some people here expressed confidence that Musk is 10 steps ahead I think were proven wrong by Musk. Discussions still ongoing with other potential investors, so only 1 was "secured".

From the Saudis side, why would they hide behind <5% to avoid filing? Any downside to buying 15-20% at below $420 price? I'm not sure why would they not be buying right now...unless they had some verbal agreement w/ Elon that they can't have more than ?20% to stay on good terms with him and expect to pick up as much during buyout.

At a certain level of investment you usually get something like a board seat in return. Thats common sense and you need that as a large fund to justify your investment and the destiny of the investment. Elon talked to them quite frequently so they are coordinated. If the fund want to play a role in the company other than just investing than you better play by the rules and that is what they did.

They asked Elon multiple times to take Tesla private as that is what they want. Having continued buying beyond 5% is of course legal but would be considered a hostile act and could be seen as an attempt to take Tesla over. You better don't try that in particular if the company you invest in does consider to go private because they can determine in a private company much better who is in and who is out.

So the fact that the Saudis don't buy now at $355 is a sign that this is serious.They would buy if they believed the deal will not happen.

Another reason is that Elon does not want the SP shooting up to $420 which would require him to confirm to add to the premium to make it happen. He is likely forced to do it later anyway but if that happens already now he would need to go early higher. One of the rare moments where Elon likely wants the SP to stay where he is.

The logic above may be true for all other funds too BTW.

 

[ezevphl]

It is somewhat disturbing the money comes from Saudis. I am no longer sorry that I will have to cash out 90% of my investment due to this deal.

Now, let's read a bit between the lines of Elon's update blog post. He said talking to the largest investors, he has so far gathered that about 2/3 of shares held by the large investors are willing to go private. IMHO, this means the vote is pretty much secured too, since those would obviously vote yes, so he already has 2/3 majority. So all that is left is going through the bureaucratic motions, working out the fine details of the whole system how he wants to allow most investors to transfer to private ownership, then present the package for voting etc. All technical details but no more major roadblock, not even the slight doubt of the original tweets regarding shareholder vote.

Any short not jumping out now is following the logic of the frog in the boiling water...

I agree with you. I'm not doubting the 420 or that the deal will happen.
I'm also not doubting that Elon wants most private investors to stay in and that he wants to stay in charge and not change the direction of the company.. Elon is an optimist

 

[replicant]

The tweet points to a posting on "ir.tesla.com", which is INVESTOR RELATIONS. It is not a "blog" post. It is official communication from Tesla, as represented by its CEO and Chairman. The take private offer is headed by Elon as an individual. Let's all try to get that straight.

So what? That would have been another reason for Elon to tweet the link before (or instead of) @tesla.

I don't think you understood my comment (or maybe it isn't comprehensible enough).

By the way, why would a blog post not be "official communication"?

 

[mongo]

What to make of the large volume...yet little SP movement?

Lots of people selling to lots of people of buying, and buyers not buying at market (much).

 

[EV forever]

I had been hoping, really hoping that it was not the Saudis. It is completely my personal bias, but I just like anything to do with theme overall Middle East in general. I feel that the leaders are nothing more than tribal chiefs, keeping their power with suppression of the masses and with no regard for human rights. Feeling disappointed that it is them.

I am still staying in with my shares if I can but not as over the top excited about this as before, or like I would be if it was Google, Apple or a group of investors. Still fully confident Tesla will be private soon.

 

[schonelucht]

There is no other way to interpret the fall in share price than that market simply flat out does not believe Elon's blog.

 

[TintDepot.com]

I would feel completely different if the update mentioned Apple, one of the google guys and the Saudis were already on board collectively. I’d open new debt accounts to buy at current price levels if that had been the case.

I think that is what the consensus among longs were baking into the deal already, this update just left me underwhelmed and a bit leery of having only a single source that even at 95% confirmed is leaving a bit of wiggle room for ‘financial approvals’ and quite honestly even if done 100 with the saudi’s only still has a lingering question about how much to trust them long-term

I too am concerned about Saudi's long term plans.

a. They might want to hedge their future to both EV & oil.
b. Diversify their holdings
c. Have more sinister ideas of slowing down EV growth to get the most out of their oil reserves
d. All of the above
e. Something else that I haven't thought of?

I would hope that Elon's 20% stake & those of his investor "partners" could keep control of Tesla and avoid any negative impact of Saudi holding a very large % to Tesla.

I would prefer Noway's sovereign wealth fund vs Saudi.

 

[Don TLR]

The Saudi's picked up a few hundred last year for Taxi's.

Tesla signs deal to supply 200 Model S/X vehicles with ‘fully self-driving-capability’ to Dubai’s taxi company

This appears to be a sign from above for the Tesla shorts,, you're a$$ will be fried.. I've been trying to get Elon to see this.. Took it this weekend while getting some Starman Milky Way shots and a storm rolled in..

 

[BenPrice]

Saudis should be buying now then right? Seems like next move would be Saudis filing 13D for crossing 5% threshold, would have 10 days from crossing to file. Would lend much more credibility to the situation.

 

[Krugerrand]

i think underestimating elon’s drive is a mistake, but thats just me

It’s not just you. Whatever he wants, he goes and gets. Anyone doubting a private Tesla is not paying attention.

 

[Vitold]

I think Musk spilled the beans so other investors can get in the game and to lower Saudi’s share and subsequently their involvement.

 

[Boomer19]

I think Musk spilled the beans so other investors can get in the game and to lower Saudi’s share and subsequently their involvement.

this is an interesting angle
and one that some here have speculated as well, as far as em not wanting SA to gain too big a stake in case they try something hostile

 

[c041v]

The Saudi's picked up a few hundred last year for Taxi's.

Tesla signs deal to supply 200 Model S/X vehicles with ‘fully self-driving-capability’ to Dubai’s taxi company

View attachment 325364

While both Gulf states, Saudi is not UAE.

 

[MilosK]

No spin needed. It is the blog post itself:

"Following the August 7th announcement, I have continued to communicate with the Managing Director of the Saudi fund. He has expressed support for proceeding subject to financial and other due diligence and their internal review process for obtaining approvals. He has also asked for additional details on how the company would be taken private, including any required percentages and any regulatory requirements."

This is FAR from a done deal. Then you have this tidbit:

If and when a final proposal is presented, an appropriate evaluation process will be undertaken by a special committee of Tesla’s board, which I understand is already in the process of being set up, together with the legal counsel it has selected. If the board process results in an approved plan, any required regulatory approvals will need to be obtained and the plan will be presented to Tesla shareholders for a vote.

"IF"? This was clearly written by his legal staff. They are trying to get him off the hook for his "Funding secured" comment. But it may not work. One director's "commitment" means nothing with the Saudis. There are apparently no written commitments, no Letters of Intent. All there seems to be is Musk's "understanding".

Once the Saudi's get access to the books in their DD, you can probably kiss this deal goodbye. While Tesla has been doing a good job with distractions about production the Saudis will zero in on deliveries which is what brings in the money.

Oh, the deliveries? Which Bloomberg currently estimates at just under 6,000/wk. I see.

And the Saudis have been after Tesla for 2 years - I think they may have had some discussions among themselves during that time.

 

[mekberg]

I think Musk spilled the beans so other investors can get in the game and to lower Saudi’s share and subsequently their involvement.

This.

To paraphrase Elon: "I'm going to take Tesla private. I have Saudi funding if I need it. If you want to join me now is the time."

 

[Krugerrand]

I’m buying a car. (Ironically, not a Tesla in this example).

I get a pre-approval letter from my credit union.

I go pick out my car.

I negotiate it’s price.

I negotiate warranties and consider all financing options. I commit to one, likely my credit union because it has offered great rates. I call them from the dealership and provide the final details. I drive home in the car, drop off the check the next day.

When am I telling my wife “funding secured”?

When I get pre-approved from my credit union.

There are still a number of options, including not using the credit union, but that’s when I’m telling any interested parties.

Unless the SEC has some obscure ruling where the term “funding secured” is defined in its legal sense, then I don’t understand any concern over this. I don’t understand how a normal, unbiased person finds this confusing.

Like vote for the message, disagree vote for it not being a Tesla.