TSLA Market Action: 2018 Investor Roundtable

[humbaba]

Man, I hope we get into the 250s tomorrow...

260s is a good buy, but 250s would be a *great* buy....

240s? *swoon*

Well, no one (other than maybe the shorts, press and SEC) knows just how low it will go. But given the high volume in after hours trading I'll be surprised if it doesn't drop a lot more in the morning. I'm expecting it to go below 250.

Keep in mind this will be in the financial news tonight and in the morning. The hilarity of the filing will be glossed over. The serious nature of the accusation will be highlighted. The imminent death of Tesla will be exaggerated.

IMO the *worst* case for investors is that stock drops very low and is finally delisted. Expect that to be presented as *best* case. The news thrives on negativity and stocks sell on it.

I would be happy to be wrong -- though I won't mind snagging as many undervalued shares as I can.

 

[CuriousSunbird]

Almost 4 million shares traded in the after-hours session. Is that a record?

 

[Oil4AsphaultOnly]

Actually, if what I suspected from today's price action is true ($TSLA went down with strong short sales pressure, despite the NASDAQ breaking to new highs all day and Tesla having had positive news this week), that someone at the SEC leaked the impending lawsuit to short traders and they traded on it, then that's multiple felonies, potential jail time and disbarment.

And yes, the SEC, as a government agency, can of course be sued in civil court as well, for example if evidence of foul play and fraud emerges.

The take away then is if we can find the evidence of foul play.

Frankly, I've seen enough "coincidence" to convince me that unless we do something about it, TSLA will get railroaded into the ground. So, as investors, how do we fight back against the SEC action?

 

[bhtooefr]

There would be zero political blow-back. EM has managed to anger both parties.

The parties are not monolithic, though. (Not even the Republican party, although they're certainly trying to make it monolithic.)

In particular, the Democratic party covers a range from pro-business (the former "moderate Republicans") all the way to socialists.

And, even if Musk angered some Democrats and people to the left of Democrats (he absolutely did), that doesn't mean that they're all supporting the death of Tesla.

 

[Quassinoid]

In the SEC filing, on page 22, part II, SEC wants: "permanently restraining and enjoining Defendant from, directly or indirectly, engaging in conduct in violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder"

I'm not a lawyer, but on Wikipedia, I found this informational regarding "SEC Rule 10b-5":

Language of the rule
"Rule 10b-5: Employment of Manipulative and Deceptive Practices":
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security."

Right below it, there is this section:

To establish a claim under Rule 10b-5, plaintiffs (including the SEC) must show (i) Manipulation or Deception (through misrepresentation and/or omission); (ii) Materiality; (iii) "In Connection With" the purchase or sale of securities, and (iv) Scienter. Private plaintiffs have the additional burden of establishing (v) Standing - Purchaser/Seller Requirement; (vi) Reliance (presumed if there was an omission); (vii) Loss Causation; and (viii) Damages.

and regarding "Scienter":

Negligence is not sufficient for a claim under 10b-5; plaintiffs or prosecutors must show at least recklessness, purpose, or knowledge.


Again, I'm not a laywer and I normally dont try to play one.. but my feeling is the SEC's case hinges on the whole premise that he was intentionally being fraudulent when he tweeted the things he did. Maybe I'm just dumb, but I just dont see Elon acting fraudulently.

source: SEC Rule 10b-5 - Wikipedia

I think if EM was going to engage in a fraudulent act, you would have seen a pattern of this over the years. And his good intentions/actions over the years should speak much louder than 'two words'. If they don't, then I have two words for the SEC!

 

[CuriousSunbird]

If Elon beats this, will this help to put an end to all of the other class action suits against Tesla? If so, this could be a good thing.

I don't think it would help in the suits against Tesla, but it would likely help in the suits against Musk personally.

 

[JRP3]

The 420 tweet appears to be fraudulent as no buyers of the company had ever existed at that point. This was plain for everyone to see.

Elon had good reason to believe that buyers did in fact exist. This is plain for anyone paying attention to see.

 

[CuriousSunbird]

Elon is finally killing his own company. This will be absolutely a killing day tomorrow. That *sugar* stock finally going to 0 and Musk to prison. At 230 this idiot needs to sell shares due to Margincalls .. Elon you're the biggest idiot I know of. God Damnit

Where do you get the $230 number? The last detailed analysis I remember suggested around $185.

 

[bdy0627]

Options for Elon:

1) Settle with the SEC.
2) Win in court
3) Drag it out for years, and in the meantime, that's years more of Tesla growth under his management.

I'm not so sure dragging it out for years is a positive approach. These cases can be exhausting and extremely distracting. In some ways I would like to see him fight it, but I think the best way forward for Tesla is to try to get it settled as quickly as possible and move on.

 

[Open Interest]

They're going to be delivering Model 3's until 9pm or later on Sunday evening.

How do you know this?

 

[MarcusMaximus]

Elon had good reason to believe that buyers did in fact exist. This is plain for anyone paying attention to see.

More importantly, even the SEC doesn’t say no buyer existed to that point. They note that the Saudis did, indeed, meet with Musk and stated they were able to and willing to fund a go-private deal given any reasonable terms. The SEC’s objection seems to be to the fact that Elon assumed his terms would be reasonable to them, such that it was a sure thing.

 

[Artful Dodger]

Isn't it ironic, that under the claim of protecting shareholders and the main charge being Elon causing a 6% temporary rise in SP, the SEC has just tanked the stock by 10% or more?

Open 312.90 current 268.60 = -14.2% as of 7:30 pm EDT

 

[mltv]

It would be sad if Elon is barred from saving the human race.

 

[Oil4AsphaultOnly]

"Now the SEC pulls this to subdue the stock price even further, playing into the shorts hands and in effect defrauding real investors for the benefit of the shorts."

The SEC could care less about short sellers. What I pay for derivatives ( puts) is irrelevant to how they operate as an organization. As someone who has worked in govn't once upon a time ago, I can tell you what they do care about - reputation. The fact is they moved very quickly on this ongoing investigation. The 420 tweet appears to be fraudulent as no buyers of the company had ever existed at that point. This was plain for everyone to see.

With something in plain sight, what do you think happens to the SEC's reputation if they do nothing? Moreover, I promise you their investigation's scope will not be limited to tweets. If there is anything else, they will find it. For anyone who is long the stock, I urge you to take pause and understand that this is serious.

This, and possibly other investigations will make it difficult or impossible for tesla to raise outside capital, should they need it. The current portion of their long term debt due within a year, plus what they owe suppliers is already meaningful. Many shorts like myself always took pause understanding that a raise could happen, and that the company might turn the corner like in q3. But the pressure is really on now to sustainably produce profit and maintain a share price so as to allow conversion for march debt.

But there were buyers. Saudi Arabia bought a 5% stake in the company right before Elon's tweet. As Artful Dodger pointed out, that was what really spiked the stock price that day.

Maybe this SEC action was about saving face, but it most definitely isn't grounds to worry about the value of TSLA. Not when the company's so close to profitability and thus negating any concern about paying off the long-term debt.

 

[Scuttlebutt]

Elon may have screwed up, but not intentionally to cause harm or profit for himself. This SEC move stinks of Trump Administration involvement backed by PetroDollars. This needs to be looked into.

 

[dmckinstry]

Maybe it is time for a class action lawsuit from all tesla longs against the SEC and the deceptive players behind the scenes, a strong legal move in support of real investors.

IMHO, if a jury trial is required by a jury of his peers that's impossible, unless fellow true investors (not traders) would fit that category.

 

[tivoboy]

If Elon beats this, will this help to put an end to all of the other class action suits against Tesla? If so, this could be a good thing.

No it wouldn’t put an end to those

 

[CuriousSunbird]

More importantly, even the SEC doesn’t say no buyer existed to that point. They note that the Saudis did, indeed, meet with Musk and stated they were able to and willing to fund a go-private deal given any reasonable terms. The SEC’s objection seems to be to the fact that Elon assumed his terms would be reasonable to them, such that it was a sure thing.

Actually the SEC doesn't say that. If you read the relevant sections of the complaint (para 17 onward) you will see that all discussion of the Saudi position is qualified by "according to Musk".

 

[Artful Dodger]

Good point, are they Outversers? Divesters? Devesters? Maybe a contraction, sinvestors?

Barnacles.

 

[JRP3]

Actually the SEC doesn't say that. If you read the relevant sections of the complaint (para 17 onward) you will see that all discussion of the Saudi position is qualified by "according to Musk".

Right, which means Elon realistically believed he had willing buyers. No intent to defraud investors, case closed.