TSLA Market Action: 2018 Investor Roundtable

[pyromatter]

Bloomberg - Are you a robot?

Tesla Plans to Use Stock-Cash Mix to Pay Off March Debt

 

[EVMeister]

Interesting... Thoughts on the implications of this?

 

[Right_Said_Fred]

Will be paid 50/50 cash/stock.

Would that be viewed as positive or negative by the ‘market’?

 

[Fact Checking]

Realistically Tesla could double revenue from FY18 - FY19. Even if they miss a true doubling they should be awfully close.

Certainly, the reason I cited a no growth long term steady state estimate based on existing financials is because it's easier to calculate than a growth company and gives a lower bound for corporate value.

It also counters the "Tesla is overvalued due to a too high P/E ratio" thesis.

 

[AlexS]

Will be paid 50/50 cash/stock.

I personally like this 50/50, lets see tomorrow what market think about it.

Can somebody remind me at what price Tesla was hedged for these bonds?

 

[SOULPEDL]

(in other words estimate 12 month EPS first $2.90x4=$11.60 then $360/$11.60)

OMG, and I was good at Math! Shoulda been x1/4 duh...
Thanks, not a bad P/E given what's coming (and Amazon).

 

[MarcusMaximus]

Would that be viewed as positive or negative by the ‘market’?

Any cash mix suggests they have the cash available, which is good. More would be better in terms of market perception, but then they have less money for other things.

 

[Ellec]

The 50/50 is a great compromise, means they keep $450M to use for Model Y and they don't dilute the stock as much.

 

[mongo]

OT

Technically false. There will be some forward movement of any non-infinite-mass barrier from the collision. Momentum is always conserved.

Distance measurement would use the wall/earth as the frame of reference. With a solid concrete wall tightly coupled to the earth through footings into bedrock, the momentum transfer would be into the wall-earth system and result in a zero displacement measurement relative to that frame. It would also disturb a butterfly in Africa and make it rain on my picnic...

Alternatively, the car could have impacted an exactly identical car (mirror image, not rotated) going the opposite direction...

 

[Alphacrux]

The 50/50 is a great compromise, means they keep $450M to use for Model Y and they don't dilute the stock as much.

Perfectly stated. Shows confidence that they will be profitable and yet are investing for future growth.

 

[JoaoD]

Would that be viewed as positive or negative by the ‘market’?

It's a 50/50, half of the market will see it as negative the other half as positive.

 

[EVNow]

The 50/50 is a great compromise, means they keep $450M to use for Model Y and they don't dilute the stock as much.

Assuming $400 SP, that is about a million shares - or about 0.6% of the existing 171 million. This should reduce the SP just by $3 - which is just noise for TSLA.

Compare this 1 Million extra shares to the dilution caused by 28 Million shares sold short. Negligible.

 

[riverFox]

It's a 50/50, half of the market will see it as negative the other half as positive.

Institutional investors have been trading on this news since 11/30.

 

[wipster]

That reminded me of first semester high school physics class - last year or maybe the mid-Eocene, I don't remember - when the quiz question gave vehicle's weight, velocity and another variable or two and said to use the minimum stopping distance using First Principles only.
So I wigged out and wrote something like "...then hits a 40" thick concrete wall and stops in 0 cm."

If anyone wants the specifics I'm sure I still have that quiz around here somewhere. After all, most the times I've moved since then have been on the NoAm continent..

So did you get an A? Kinda sounds like Kirk's solution to the Kobayashi Maru...

 

[AlexS]

Institutional investors have been trading on this news since 11/30.

yep, that explains a lot

 

[M3Rider]

Now the situation changed fundamentally. People who buy in on this today levels are more driven from the hard fact data about revenue generation, profit and cash flow expectations and not to make quickly a few bucks and sell again. To be fair some of those are still within the investor group of course but the melange of investors changed more to sustainable investment given the promising outlook of Tesla. More investors are real long as we had before more casino investors and maybe even day traders.

Given the situation the float of people that get nervous and sell quickly if bad news appear decreased and decrease further. That makes it more difficult for shorts to manipulate the stock because they rely on their ability to make weak shorts nervous and sell out of emotions. You get the positive cycle we are in, right ?!

I think you could be over-simplifying about weak/strong "people". People hold 1/4 of what institutional investors hold. So, T Rowe Price being #1 institutional investor, their shares are likely in mutual funds, which belong to peoples 401Ks etc.
If people panic about macros in general and move their money into bonds concentrated funds, then TRowe has to sell enough stock to cover that amount. It could be manager's decision whether to sell stock of all companies in the fund equally or most appreciated or underperformers etc.
In any case, people who panic and sell may not know at all their fund contains TSLA and the act of selling has nothing to do with TSLA.
Yet, that could be the source of majority of TSLA trades that we see. In other words, there could be a lot more randomness to it than thoughts and considerations given specifically to TSLA.

 

[SteveG3]

Assuming $400 SP, that is about a million shares - or about 0.6% of the existing 171 million. This should reduce the SP just by $3 - which is just noise for TSLA.

Compare this 1 Million extra shares to the dilution caused by 28 Million shares sold short. Negligible.

I don't see it that way. If this (repaying 50/50 cash/shares) is how things do proceed, than, before the transaction, Tesla had a debt of ~$450 million which will be repaid by issued shares... we gain so to speak the value of that $450 million in debt being paid off in exchange for the loss so to speak of equal value of issuing more shares.

I believe the correct financial language for this would be to say that the Enterprise Value of Tesla remains unchanged with such a transaction without any reduction in the share price.

 

[AlexS]

Assuming $400 SP, that is about a million shares - or about 0.6% of the existing 171 million. This should reduce the SP just by $3 - which is just noise for TSLA.

Compare this 1 Million extra shares to the dilution caused by 28 Million shares sold short. Negligible.

Isn't the conversion rate 359,88 you have to use this price for your calculation. That's why bond holder are bidding stock price up now.

 

[MarcusMaximus]

OT

OT


Distance measurement would use the wall/earth as the frame of reference. With a solid concrete wall tightly coupled to the earth through footings into bedrock, the momentum transfer would be into the wall-earth system and result in a zero displacement measurement relative to that frame. It would also disturb a butterfly in Africa and make it rain on my picnic...

Alternatively, the car could have impacted an exactly identical car (mirror image, not rotated) going the opposite direction...

Strange condition when you have a reference frame whose motion is altered by an object you’re measuring in it... For the mirror car, your velocity won’t go to zero, it’ll just go negative(unless both perfectly crumple, but then the answer depends on which part of the car you’re measuring)

 

[MarcusMaximus]

Assuming $400 SP, that is about a million shares - or about 0.6% of the existing 171 million. This should reduce the SP just by $3 - which is just noise for TSLA.

Compare this 1 Million extra shares to the dilution caused by 28 Million shares sold short. Negligible.

Of course, shorts claim that dilution from them doesn’t exist because ????