TSLA Market Action: 2018 Investor Roundtable

[brian45011]

It might not imply any dilution. If their hedges took the form of call options (or something equivalent), they can exercise the calls at ~$360 with cash and then deliver the higher valued shares to the bondholders. So to Tesla, it's all cash at $360ish plus some cash they spent to buy the hedge already, but to the bondholders it's half shares. No new shares issued, no dilution. To the hedge writers... well, they got paid already.

If the 50%/50% is accurate, Tesla will issue shares for the non-cash half--it appears the value of those shares will be set by the VWAP in February and deemed to be worth $460 million. General Discussion: 2018 Investor Roundtable

The IB hedge (call) writers appear to be exposed above $359.87 (up to $512.66) for 100% of the 2.56 million shares at the par conversion value.

The 2021 warrants have a strike at $560.64 and the IB hedge writers are exposed on that maturity for 3.83 million shares above $359.87

It's unclear how the IB hedge writers may have faded their risks or even if the hedges/warrants relating to the 2019 notes expire at note maturity on 3/1/19 or can be used in risk management of the 2021 notes. The 2019 note holders prefer the VWAP be as high as possible while the hedge writer likely have a preference that the SP stays below ~~$360 through March 1.

Even though both Elon and Deepak re-affirmred in the conference call six weeks ago that the principal would be redeemed by Cash from Operations, using all shares would have saved some underwriting commissions if the plan is for another follow-on equity offering in early 2019. Also, the $460 million in cash could be deployed now for new products R&D and CapEx.

 

[neroden]

OT

Amber Heard Says She and Ex Elon Musk 'Have a Beautiful Friendship Now' 10 Months After Split

Musk gets along with ALL his ex-wives and ex-girlfriends. Justine, Talulah, Amber. He's a decent guy. Probably will get along with Grimes too.

He's married to his job. He's unwilling to commit what it takes to have a permanent romantic relationship. His exes have all pretty much said the same thing.

 

[neroden]

I need "an advice"
I have most of my Tesla holding in my 401k IRA and some in my 401K Roth IRA. Since I have little doubt that the share price will increase. Would it not make sense to move as much as I can from the traditional IRA to the Roth and pay the tax hit now?

Absolutely makes sense IMO. I did something similar.

 

[HG Wells]

Absolutely makes sense IMO. I did something similar.

AND use that tax hit to get a full $7500 tax rebate if you get a tesla car by year end !

Double dipping is so much fun.

 

[mongo]

OT

I need "an advice"
I have most of my Tesla holding in my 401k IRA and some in my 401K Roth IRA. Since I have little doubt that the share price will increase. Would it not make sense to move as much as I can from the traditional IRA to the Roth and pay the tax hit now?

My timeline is roughly two years before I would start to cash out of any stock.

Depending on your tax rates.

In terms of dollars, you would pay less in taxes if you switch to Roth while the stock is low.
However, you need to look at total return. Say you have 10k, and Tesla grows by 5x:
If your current tax bracket is 30% (or higher due to the rollover), you will only have 70% as much in the Roth (ignoring SP movement during the transfer). So you have no taxes on 70% of the IRA based value.
10k - 3k in taxes at roll over = 7k in Roth * 5x, 35k in Roth at retirement, all post tax.
If you stay in the IRA, and your retirement tax rate is 20%, then you get 80% of your account value.
10k * 5x = 50k in IRA, * 20% in taxes = 10k, leaving 40k post tax.

So , in this case, you pay less dollars in taxes, but more percentage wise, and have less post-tax.

A large IRA roll over may bump you into a higher tax bracket, making things worse.

 

[LoveTSLA]

I'm hearing on Twitter that Jefferies have upgraded to BUY with $450 PT, but I can't find a link

Is this better than “420 funding secured”? I think so. Love it.
Cheers!

 

[NicoV]

Meanwhile, TSLA is still going up in pre-market.

 

[defc0n]

Macros are all down too. Million dollar question for me is what happens at $380. We could see a meaningful amount of shorts entering at that level as well as longs selling.

If it’s breached I’m certainly betting on seeing $420 soonish.

 

[tinm]

I’m thinking, wartime consigliere. Tesla’s federal case in Michigan goes to trial in 2019. There will be fireworks.

Tesla Replaces General Counsel With Seasoned Trial Lawyer Tesla Replaces General Counsel With Seasoned Trial Lawyer

What up with this? How will the market respond to this development?

 

[Unpilot]

My 375 calls are looking pretty good

 

[UncaNed]

So, knowing elders... does this likely mean:

-we should not expect a huge Mid Morning Dip today?
-and hopes of adding shares in the 340's are looking pretty slim?

Many thanks for distilling all this data to the level that a pimply-faced investing youth such as myself might understand...

 

[gora321]

A Christmas wish: Dear SP, please do not explode yet. I would like to put my bonus in. Please

 

[AWDtsla]

I need "an advice"
I have most of my Tesla holding in my 401k IRA and some in my 401K Roth IRA. Since I have little doubt that the share price will increase. Would it not make sense to move as much as I can from the traditional IRA to the Roth and pay the tax hit now?

My timeline is roughly two years before I would start to cash out of any stock.

As far as I can tell there is no way to get your money out intact of the IRA jail. Assuming you are in a higher tax bracket, and if you are not the IRA conversion will put you there - if you have the money to pay the tax on the the conversion, you'd be better off just buying more TSLA outside the IRA with the same money than doing the conversion.

 

[printf42]

He almost certainly joined Tesla not primarily for money and stock, but for the Tesla mission:

“After 30 years as a trial lawyer at Williams & Connolly, I would have never imagined joining a company in-house. But Tesla presents a unique and inspiring opportunity. Tesla’s mission is bigger than Tesla – one that is critical to the future of our planet. It’s hard to identify a mission more timely, more essential, or more worth fighting for.”​

​

I always say mission is the ultimate attribute of a company to attract top talents, especially true for silicon valley software engineers, most of the best ones does not work for money anymore. Didn't expect it works for lawyers too.

looking at hot companies, no other company has more sexy mission than Tesla (except Elon's other companies), so in the coming years, Elon will be competing with himself on talents market.
And we'v seen him moving people from one to another when he sees fit.

This is one of my strongest bull thesis, that nowadays all competition comes down to software, then in turn depends on who can retain the top people.
In this sense, other OEM in automobile business doesn't stand any chance of catching up on Tesla.
Also in broader view, this is why I believe Tesla will become Trillion dollar company eventually.

 

[JoaoD]

Donald J. Trump on Twitter
Donald J Trump: "China talks are going very well!"

 

[mongo]

OT

I’m thinking, wartime consigliere. Tesla’s federal case in Michigan goes to trial in 2019. There will be fireworks.

Or the new administration in Michigan will reverse the route the previous Governor, Attorney General, and Secretary or State were taking (defendants in the Tesla lawsuit).
No breath holding though...

 

[Unpilot]

Donald J. Trump on Twitter
Donald J Trump: "China talks are going very well!"

Must not be going well....remember it's always opposite day with OI

 

[anthonyj]

How is Anton Wahlman going to afford his twinkies?

 

[tivoboy]

So, knowing elders... does this likely mean:

-we should not expect a huge Mid Morning Dip today?
-and hopes of adding shares in the 340's are looking pretty slim?

Many thanks for distilling all this data to the level that a pimply-faced investing youth such as myself might understand...

We’ll probably get some selling into this pre market pop and an open over 370. Mid 36x during the day is highly likely. But this pre 371$. I’m loving it.

 

[avoigt]

"Tesla price target raised to $430 from $410 at Wolfe Research Wolfe Research analyst Rod Lache raised Outperform rated Tesla's price target to $430 from $410 saying if the $4B+ of annualized EBITDA generated in Q3 is sustainable, than ROIC north of 25%, and substantially lower debt leverage becomes very clear, leading to a major expansion in the investor base and valuation upside."

Tesla price target raised to $430 from $410 at Wolfe Research TSLA - The Fly

Vincent on Twitter

More details:

"In a note to clients on Friday, Jefferies analyst Philippe Houchois stated that Tesla’s strengthening balance sheet, its resilient growth relative to the rest of the auto industry, as well as the company’s improving productivity, bodes well for the electric car maker as a whole. Houchois noted that among the carmakers in the industry today, Tesla might be the only one that would avoid a “volume zero-sum game” or “negative margin trade-off in EVs.”

“Tesla should continue to stand out with broader price points, battery security of supply, product edge and a brand that transcends the volume/premium divide. In short, in the year ahead we think only Tesla will avoid a volume zero-sum-game or negative margin trade-off in EVs,”
Tesla (TSLA) receives "Buy" rating, $450 price target from Jefferies Financial Group