You really, really can't. You'd have to have a lender who was willing to accept not getting their shares back, which means the lender has to be someone who is planning to get cashed out at $420. That's the thing about a deal where a large number of the shareholders are holding onto their shares....
We're not going to find out how many shareholders will be able to hang on during the transition to a private company for a while. We won't find out how many will *choose* to hang on until after that. If it's too many (see the math below), the short-sellers are in awful trouble. It probably won't be that many.
However, think about this: most of the lenders of shares are large institutions which are quite capable of holding and carrying private equity. All the borrowing is going to have to come from institutions which are capable of holding private TSLA stock and choose not to. Where's the supply of shares to lend going to COME from?
I expect an orderly exit; it's possible that the short-sellers who hang out until the bitter end of the go-private deal will borrow from an institution which plans to cash out all its shares merger-arbitrage style. But that institution has a strong incentive to demand more than $420 from the short-seller.
Hilarious.
I think there's not going to be a squeeze. But it's math. If 75% of the stockholders who aren't Musk, Saudi, or Tencent decide to stay on in the private company, *and* are able to do so, then there will be a squeeze. I think that's a bit too high to be likely.
If the deal falls through for whatever reason -- and I think it's unlikely since Musk is hell-bent on going private and has a lot of potential sources of funding -- the clear profits will definitely have some positive impact on the stock price, though the *insane disinformation campaign* seems to be neverending.
It's looking to me like Bailie Gifford can stay in and like they want to stay in.
This makes the math:
170.59 million shares outstanding
33.74 million shares fabricated by short-sellers
97.81 million shares held by institutions
(including 13.17 million held by Bailie Gifford)
33.74 million shares held by Elon Musk
roughly 1.7 million shares held by other insiders
8.17 million shares held by Tencent
Between 5.11 and 8.52 million shares held by Saudis, but call it 5.11
So, 57.80 million shares held by miscellaneous non-institutions (including us).
So miscellaneous non-institutions plus institutions which aren't Bailie Gifford (hereafter referred to as "miscellaneous stockholders") amount to 142.44 million shares. Of those, short-sellers will have to redeem 33.74. The remainder is 108.70 million shares. If all of them want out (which is ridiculous), it'll cost $45.65 billion dollars.
If half of the miscellaneous stockholders want out, that's 71.22 million shares, of which the short-sellers have to redeem 33.74, leaving 37.48 million for the go-private consortium to buy back; that's $15.7 billion.
If as Musk guesses "2/3" of all stockholders stay on, that means 1/3 * (170.59 + 33.74) = 68.11 million shares want out. This is surprisingly close to half of miscellaneous stockholders; the short-sellers have to redeem 33.74, leaving 34.37 million shares or $14.4 billion.
If only 25% of miscellaneous stockholders want out, that's 35.61 million shares; after the short-sellers redeem their shares, that's 1.87 million shares, or $785.4 million! This seems unduly low, though.
So there's your likely range of costs: $1 billion to $45.65 billion. Guessing $20-$25 billion seems eminently reasonable, though that may be on the high side.
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Despite the fact that it would seem to make sense to wait for the buyout at $420, I suspect a bunch of "weak longs" are bailing out now (perhaps because they don't trust Musk). This is probably something which makes Musk happy as he doesn't like to have traders who aren't committed in his stock.
But the *side effect* is that the new owners buying now are more and more likely to be owners who want to keep their shares through the go-private process. If they actually can keep their shares through this, this effect is continuously reducing the amount the go-private deal will cost. (As well as increasing the chances of the yes vote.)
The other sort of new owner who might be buying, of course, is merger arb traders who would want out. But I don't think that's particularly likely to be a large percentage of new buyers because most merger arb traders do very shallow research and bet on a lot of merger arbs, so they're likely to believe the FUD and not think the deal will go through. Only the sort who researches individual deals and makes big bets on them would be going in.
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To be clear, I think Musk is hell-bent on going private and will do it if it is at all possible. If this means some of us are forced out, he'll do it (though he'd like to minimize that and has good reason to minimize that). If this means a higher deal price, he'll do it if he can line up the money. If it means a lower deal price, he'll do it. If it means borrowing money against his SpaceX stock, he'll do it. He is clearly stressed out and completely sick of the disinformation campaign, the short-sellers, the market manipulation, the lot of it. And I can't blame him at all.
