TSLA Market Action: 2018 Investor Roundtable

[SebastianR]

While this certainly makes things easier with regards to holding shares etc. it also puts (at least in my mind) the option of a capital raising back on the table. I know they could have raised in private, too - but a raise for Tesla when cash is needed is a tested narrative. So I predict we will have more FUD stories around cash needs and capital raises. At least until Q3 numbers are released.

And if so much money was lining up to support going private, I’m sure Tesla will want some of that. So I see the risk we will have a walk back from the “profitable, cash flow positive, no raises” argument that was built...

Let’s see.

 

[Fact Checking]

Yeah sane people with a lot of good will like us will interpret that way. For shorts it's Elon will face SEC charge next week. And go to jail the week after that.

The price went up by 8% after the tweet, then down 31% over the next 2 weeks.

The theory that Elon did this to raise the price is defeated by plain market reaction.

While Elon could be sued over the 30% drop I suspect, the arguments will be even more entertaining: Elon did it to drive down the stock price? Really?

The shorts are going to interpret it the same way they've been interpreting it every single day of the past 8 years: bankwuptcy!!!

 

[AZRI11]

Think institutional investors are the cause of the reversal. There should be good support come Monday, big investors will be buying. Shorts will be relieved, and then they won't be relieved. Squeeze on news of production and profits. Lots of buyers next couple of months, fud will lighten a bit. Elon being Elon. Ride, captain ride upon your mystery ship.

 

[beachbum77]

While this certainly makes things easier with regards to holding shares etc. it also puts (at least in my mind) the option of a capital raising back on the table. I know they could have raised in private, too - but a raise for Tesla when cash is needed is a tested narrative. So I predict we will have more FUD stories around cash needs and capital raises. At least until Q3 numbers are released.

And if so much money was lining up to support going private, I’m sure Tesla will want some of that. So I see the risk we will have a walk back from the “profitable, cash flow positive, no raises” argument that was built...

Let’s see.

I agree. Tesla needs more cash to do everything they have on their plate from now thru 2019. Profits from Q3 and maybe Q4 will not be enough to cover all the bases and trim debt too. I do not understand why Musk is so opposed to raising more cash from equity. No one seems opposed to doing it so why not take advantage of it?

 

[Remus]

With positive cash flow and profitability almost a certainty for Q3 and beyond, they’d have to be the extra stupid kind.

Well that will be seen by them as a positive reinforcement of their beliefs. So they'll be more confident that the guidance was just another lie.

 

[Fact Checking]

While this certainly makes things easier with regards to holding shares etc. it also puts (at least in my mind) the option of a capital raising back on the table.

Well, consider the Q2 bombshell that Tesla dropped on us in the August 1 conference call:

• They indicated that they want Tesla profitable and cash flow positive for every quarter in the future: i.e. they want to follow the Amazon path,
• They indicated that they don't want to raise capital in a dillutive fashion ever,
• They indicated that they want to pay back all the convertible notes in cash generated, i.e. not convert to shares and dilute (this is actually an option they have, even if note holders elect to convert)

This news was faded by the going-private distraction, but should come to the forefront again IMO.

 

[Zaxxon]

Board statement: Statement from Independent Members of Tesla’s Board of Directors (Brad Buss, Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Linda Johnson Rice, and James Murdoch): | Tesla, Inc.

 

[Remus]

The sun will still rise on Monday. Tesla will still produce car regardless of going private or stay public. My goal haven't change. Good if it goes up due to the news. Good if it goes down on the news - I am ready to buy more. I love the stay public news.

I am just trying see where to set my buy order limit. 290?

 

[beachbum77]

Board statement: Statement from Independent Members of Tesla’s Board of Directors (Brad Buss, Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Linda Johnson Rice, and James Murdoch): | Tesla, Inc.

The question everyone is going to be asking is WHY did he change his mind?

 

[Fact Checking]

Folks like Chanos may be breathing a sigh of relief at the moment, since he can still screw with the value of TSLA via the court of public opinion

OTOH their "institutional investors will be forced to sell to us at $420!" bail-out dream just went up in flames.

Who is going to sell 33 million shares to shorts among improving Tesla fundamentals, should TSLA break through the $389 all time high price level in the weeks/months to come?

$420 is not a ceiling for short losses anymore ...

 

[Marsnaut]

The stock has already been priced with the expectation the deal would not occur for the past week.

Everyone should just put this behind instead of talking about it incessantly. Focus on TSLA and if you see the big picture, you will understand that Tesla has interesting quarters ahead in Q3 and Q4. The company that existed before this whole shebang hasn't changed except for the fact that they keep making more and more cars each week.

People tell Elon to take a break with Twitter and the shorts but we're doing the exact same thing: worrying about shorts.

 

[MartinAustin]

RE: SEC investigation -

Never did hear any confirmation from the SEC that they were investigating Tesla. No-one from the SEC has said anything about Tesla lately.

All we hear are the Fox Business tweets from Charles Gasparino, citing anonymous sources. And everyone else bases their reports off of this.

Does the SEC investigate in secret? Does it ever let on that it is investigating? Is it possible to call up the SEC and ask them if they're investigating - or not? Would the SEC ever put out a press release saying "contrary to recent reports, we are not investigating Company X"?

Maybe the SEC investigation will stop, or alternatively, "step up" according to those anonymous sources.

You know, it would be great to put out an article saying "the SEC has decided to end their investigation into Tesla - according to sources familiar with the matter." It would be he said, she said.

 

[Cosmacelf]

The bad side is the class actions just got a whole lot stronger for both longs and shorts. If the deal is dead this soon it means there never was a deal at all.

MP3Mike..why do you disagree? Share.

It is way too early to see if the class action suits will have any merit. 16 days of price fluctuation does not make a class action suit. If the stock declines from here for the next 6+ months, then, yes, it’ll have validity, but not until and if, then.

 

[SebastianR]

Well, consider the Q2 bombshell that Tesla dropped on us in the August 1 conference call:

• They indicated that they want Tesla profitable and cash flow positive for every quarter in the future: i.e. they want to follow the Amazon path,
• They indicated that they don't want to raise capital in a dillutive fashion ever,
• They indicated that they want to pay back all the convertible notes in cash generated, i.e. not convert to shares and dilute (this is actually an option they have, even if note holders elect to convert)

This news was faded by the going-private distraction, but should come to the forefront again IMO.

Yes, that’s my point exactly: I see some FUD coming up questioning this commitment. It was not believed before, the go private discussion made it clear a raise is off the table, now watch the shorts to revive this argument...

 

[Cosmacelf]

The question everyone is going to be asking is WHY did he change his mind?

He gave his reasons in the note he posted tonight. Please read it.

 

[Fact Checking]

The question everyone unable to access and read Elon's blog post from today is going to be asking is WHY did he change his mind?

Fixed that for you.

Smarter short arguments please! 2019 will be very boring if you all get wiped out due to ill considered bets in the stock market.

 

[sundaymorning]

My favorite part of Tesla the IR letter:

We’ve shown that we can make great sustainable energy products, and we now need to show that we can be sustainably profitable. With all the progress we’ve made on Model 3, we’re positioned to do this, and that’s what the team and I are going to be putting all of our efforts toward.

 

[beachbum77]

Fixed that for you.

Smarter short arguments please! 2019 will be very boring if you all get wiped out due to ill considered bets in the stock market.

LOL... Okay how about a link? Never mind. Found it. Joele Frank did a nice job on it.

 

[Remus]

We saw a much restraint Elon on Twitter recently. I really wish he will continue to show will power for self control going forward

Think institutional investors are the cause of the reversal. There should be good support come Monday, big investors will be buying. Shorts will be relieved, and then they won't be relieved. Squeeze on news of production and profits. Lots of buyers next couple of months, fud will lighten a bit. Elon being Elon. Ride, captain ride upon your mystery ship.

 

[Fact Checking]

Yes, that’s my point exactly: I see some FUD coming up questioning this commitment. It was not believed before,

The news was well received by shareholders - just preempted by the going-private effort.

Tesla already has the cash to pay back the 2018 and 2019 notes. If they continue with the Model 3 ramp 2019 is going to generate 30 billion dollars of revenue...

I believe August 24 will be marked as the beginning of the end for Jim Chanos: going-private offered a last glimpse of hope to be bailed out at $420 - that ceiling for losses now disappeared.