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What happens to my SolarCity Stock?

Discussion in 'TSLA Investor Discussions' started by thelastdeadmouse, Nov 21, 2016.

  1. thelastdeadmouse

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    I have both SolarCity and Tesla stock. If I understand this correctly, my SolarCity stock will be replaced at some ratio with TSLA stock but the two things I don't know are

    1. What the ratio is, I assume this is something that moved based on stock price, but now that SCTY trading has halted is this set now or will it still change as TSLA shares fluctuate?

    2. What happens to fractional shares. My SCTY holding is pretty small, so whatever ratio they pick I'll almost certainly have a good portion of my holding that doesn't divide evenly.
     
  2. 3Victoria

    3Victoria Active Member

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    Its a fixed ratio: 1 SCTY = 0.11 TSLA. Partial shares are paid out in cash.
     
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  3. neroden

    neroden Happy Model S Owner

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    100 shares SCTY becomes 11 shares TSLA. 1 share SCTY becomes 0.11 shares TSLA.

    Conceptually, you receive fractional TSLA shares and they are immediately sold. So if you have 20 shares of SCTY, it would become 2.2 shares of TSLA. You get 2 actual shares of TSLA and the 0.2 shares of TSLA are immediately sold for cash.

    I do not know what price; probably Friday's TSLA closing price or today's TSLA closing price.

    Anyway, the sale of the 0.2 shares is treated as a capital gain (or loss), so be aware of that; it ends up on Schedule D of your tax return. The tax basis (purchase price) for your 20 shares of SCTY has to be divided proportionally between the 2 shares of TSLA you received and the 0.2 shares you sold. The brokerage normally does the calculations for you, nowadays.
     
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  4. Curt Renz

    Curt Renz Active Member

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    Every 100 SCTY shares will be converted to 11 TSLA shares, as implied by 3Victoria. The exchange ratio is fixed by number of shares, not dollars. So your former SCTY position today fluctuated with TSLA.
     
  5. dalalsid

    dalalsid Member

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    Has anyones SCTY actually turned to TSLA? My options all converted to TSLA1 options but stock is in wierd limbo this morning as some numeric entity. Maybe it happens at market open?
     
  6. Mario Kadastik

    Mario Kadastik Active Member

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    Stock is TSLA now, but the TSLA1 options are weird with no ask bid available and no trading...
     
  7. neroden

    neroden Happy Model S Owner

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    #7 neroden, Nov 22, 2016
    Last edited: Nov 22, 2016
    I'm getting quotes for the options (here in the US). Bid-ask spread has widened to *massive* levels (for my Jan 2019 $30 "lottery ticket" Call, the bid is 0.75 and the ask is 1.80; for my Jan 2017 $18 short put, the bid is 0.10 and the ask is 0.65). Confirms my belief that TSLA1 options are going to be hold-to-expiration options; the market makers are putting *huge* spreads on these.

    Unsurprisingly I'm not seeing any trading in TSLA1 today.

    Haven't gotten my shares converted yet though.
     
  8. ggr

    ggr Roadster R80 537, SigS P85 29

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    My shares converted overnight, but the cost basis wasn't adjusted, they still show the original cost of the SCTY shares. I complained... if this is not corrected the tax consequences will be severe.
     
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  9. Curt Renz

    Curt Renz Active Member

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    #9 Curt Renz, Nov 22, 2016
    Last edited: Nov 22, 2016
    You inspired me to check my TSLA cost basis and call TD Ameritrade. They had correctly eliminated my SCTY holding and added the correct amount of exchanged shares to my TSLA holding. But just as in your case, they showed the cost of my TSLA based on the share price I originally paid for my TSLA nearly four years ago. The TD Ameritrade agent told me this would have automatically been adjusted tomorrow to the correct cost basis. Nevertheless, he adjusted it for me today and indeed the cost now shown is correct.
     
  10. Mario Kadastik

    Mario Kadastik Active Member

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    Which broker? I'm on IB and it's not trading. There is no ask/bid spread at all.
     
  11. Ulmo

    Ulmo Active Member

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    #11 Ulmo, Nov 22, 2016
    Last edited: Nov 22, 2016
    I see bid/ask on my converted SCTY January 2018 strike 10 call options that has a quoted extrinsic value 96% of the similar native TSLA option (assuming TSLA January 2018 strike 90 is the similar option); there's even an implied extrinsic value of the converted options at $0.132, which is a lot less than the $0.50 - $1 I was seeing other times in the last week, but those were illiquid anyway. The bid-ask is 10.60 - 11.85 for an intrinsic value of 11.0386. This is at OptionsHouse "by E*Trade" (E*Trade bought OptionsHouse (!$&*#&@*#$)). I have no idea if anybody would actually buy any if I tried to sell at the intrinsic value (I'm not trying right now). I can always exersize them, and I would get an extrinsic value near 0 and near 100% of the intrinsic value (the only variances being brokerage fees). The bid-ask spread is $4.20 for the TSLA strike 90 options which at *.11 is $0.462, compared to the old converted option bid-ask spread of $1.25. So, the bid-ask spread for the converted option is 270% of the native option. Also, the native option is more liquid (not by much) than the converted option; I see one small trade today in the native option and none in the converted option (I haven't studied trends for a range of strikes in both converted and native).

    I still see some pending activity on my Fidelity account for some shares I bought before the ticker symbol merge that settled/are settling after the ticker symbol merge, as well as pending fractional share activities for both the settled and unsettled SCTY stocks. This will probably take a few days to sort out. My account balance is wrong by about the amount of unsettled conversion fractional shares and settled fractional share pending activities right now. I have access to my settled converted SCTY shares under TSLA, but I see my unsettled SCTY shares still listed under the SCTY CUSIP 83416T100 (not the ticker symbol any more), with the conversion rate notated (this is a fractional amount only, being under 10 shares). But, the rest of it is better than it was yesterday.

    All my accounts seem to slowly convert from SCTY to TSLA one day at a time: the stop trading, the notation that the SCTY CUSIP is to be converted to what proportion of TSLA CUSIP, the conversion of shares, the selling of partial shares, the basis cost, etc., each seems to take a day (more or less) on its own, and it gets all the more confusing with shares settling across the conversion (of which I have a few). Today is the first day that it looks halfway manageable, and that most of my shares are available and showing up in halfway sensible areas, looking like they are ready for trading (I couldn't trade my SCTY (being converted to TSLA) shares yesterday without calling in; I'm not even sure if I could have traded them if I called). The settlement and accounting will probably take a few more business days (so, Tuesday-Friday next week?).

    The only one I bothered to call in and bug them about is confirming that everything was hunky dory with a rather sizable former SCTY (now TSLA1) call option balance that is a huge percent of my holdings, and that is just fine right now. It was a bit alarming yesterday to see a huge chunk of my balance gone from the regular computer screen balance (marked as a "loss" in the summary, completely fake), and equally silly to see a "gain" of that amount this morning. It's just paperwork, though.

    I was trying to get a round number of SCTY shares in every account for the conversion, but it was hard for some of my tiny starter accounts because I would have had to get 100 SCTY shares (and for some reason, I didn't realize that that was the fewest number of shares to have a non-fractional conversion). For my larger accounts, they all had non-fractional conversions because they were all multiples of 100 SCTY shares. Paradoxically, this made my larger accounts easier to convert than my smaller accounts.

    Thanks for this thread. In two calendar weeks (when they should have settled and calculated everything correctly), I'll sit down and calculate the proper basis cost for each one, so that my taxes come out correctly. I would not be surprised if there's some level of muck-up, or special notations and record keeping, to be done, given the manual-looking methods all these brokerages seem to use to do the paperwork, and what others have posted in this thread.
     
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  12. Mario Kadastik

    Mario Kadastik Active Member

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    And of course the moment the market closed the B/A spread appeared + trades + volume etc. So IB just locked away those TSLA1 options for one day causing me to freak out :) Let's see if they are traded tomorrow, then I'm ok as it means I can shift around my positions still. Though idiotic that I couldn't sell two covered calls today ;)
     
  13. neroden

    neroden Happy Model S Owner

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    If you bought SCTY shares on Friday (perhaps through execution of options), they wouldn't settle until Wednesday (today), and they'd be settled in TSLA shares, and if they were fractional, they'd be settled in cash. The delivery of the TSLA shares could be delayed until the next business day (Friday), as could the delivery of the cash. I think everything should be sorted out for almost everyone by Monday, but things will be choppy until then.
     
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  14. Mario Kadastik

    Mario Kadastik Active Member

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    Well at least I can confirm that IB confirmed that yesterday the TSLA1 options weren't trading and they are today. I was able to close out some of the more speculative positions and initiate them in pure TSLA options and now have orders in for the positive ones that I want to sell and plan to wait until December where most of my TSLA1 options expire either ITM or OTM making nice profits (still love that I gambled when the arb gap widened and SCTY was 16, still have calls from that time). As I had no fractional shares then for me it's mostly over though it's a bit PITA to trade the TSLA1 options as their strikes are old SCTY based ;) So loads of 0.11 calculations to do before every order to make sure current share price is known etc :)
     
  15. darkogolic

    darkogolic New Member

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    Hello, I have a question regarding the TSLA and SCTY merger. If i understand this correctly, investors that bought SCTY when it was lets say in the $50/share range, they lost money on this deal?
    Also basically all that TSLA is doing is converting the Solarcity stocks into TSLA stocks for $.11 per share?
     
  16. MP3Mike

    MP3Mike Active Member

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    SCTY was at $21.88 before Tesla announced the merger offer, so they had already lost money on paper. (Technically nobody has lost money until they sell the shares.)

    The conversion is that you get 11 shares of Tesla for every 100 shares of Solar City you owned. (Partial shares are cashed out.)

    So somebody that bought 100 shares of Solar City at $50, would have 11 shares of Tesla with a cost basis of $454.55.
     
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  17. darkogolic

    darkogolic New Member

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    Damn thats a pretty shitty deal for those people that dont fall in the $24 category then.

    but also now that its all been converted, how do one know at what dollar amount the tesla shares were bought?
     
  18. ggr

    ggr Roadster R80 537, SigS P85 29

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    You didn't buy Tesla shares, you traded your SCTY shares for them. The total cost basis is still whatever dollar amount you paid for them, and the purchase date is still the date you bought them. No taxable event has occurred (at least in the US, I assume the same in Canada).
     
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  19. MP3Mike

    MP3Mike Active Member

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    Is it really a bad deal? How would it have been if the merger never happened and they were still holding SCTY shares? (They had already lost 56% of the original purchase price at the time of the merger offer.)

    You take the price you paid for SCTY and divide by 0.11. (In your example: $50/0.11 = $454.55)
     
  20. darkogolic

    darkogolic New Member

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    okay I understand, Thanks Guys
     

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