Articles/megaposts by DaveT

[trils0n]

What if going private doesn’t stop the FUD attacks on Tesla?

I think it will reduce the certain kind of FUD attacks related to shortselling and the type of micro-event analysis that Wall St and the financial media love to promote. Both their business models rely on maximizing number of trades and turning ordinary events into "tradeable events" (wall st for commissions, media for more stories). Would probably help to have this type of nonsense curtailed.

It won't stop the well-documented, decades-long, multibillion dollar anti-renewables campaigns of the fossil fuel companies.

 

[DaveT]

I think it will reduce the certain kind of FUD attacks related to shortselling and the type of micro-event analysis that Wall St and the financial media love to promote. Both their business models rely on maximizing number of trades and turning ordinary events into "tradeable events" (wall st for commissions, media for more stories). Would probably help to have this type of nonsense curtailed.

It won't stop the well-documented, decades-long, multibillion dollar anti-renewables campaigns of the fossil fuel companies.

Well said. I think there's an assumption going on where if Tesla goes private the FUD will stop. But that's assuming we know 100% that the FUD is coming for short-sellers. But I don't know that 100%, and I don't think it's ever been confirmed. Only inferred.

Thus, it's entirely possible that the current FUD attacks on Tesla could be sponsored and paid for by non short-sellers. They could be someone vested in oil. Or could be someone with a personal vendetta against Tesla or Elon. Or could be a number of other possibilities. So, in those cases even if Tesla goes private it doesn't mean the FUD attacks against Tesla would stop. The FUD message might change but it's entirely possible that the FUD can actually increase as well. Likely? Probably not. But I think it's worthwhile to acknowledge the risk that all of this is a gamble. And to a large extent to exterminate the shorts, which we're all assuming is the enemy. But assumptions can suck until they are proven true.

My preference, at this point in time, is for Tesla to remain a public company and to properly defend itself against the negative propaganda. It just seems going private is backing off, and usually bullies don't give up that easy.

 

[The Blue Owl]

Well said. I think there's an assumption going on where if Tesla goes private the FUD will stop. But that's assuming we know 100% that the FUD is coming for short-sellers. But I don't know that 100%, and I don't think it's ever been confirmed. Only inferred.

Thus, it's entirely possible that the current FUD attacks on Tesla could be sponsored and paid for by non short-sellers. They could be someone vested in oil. Or could be someone with a personal vendetta against Tesla or Elon. Or could be a number of other possibilities. So, in those cases even if Tesla goes private it doesn't mean the FUD attacks against Tesla would stop. The FUD message might change but it's entirely possible that the FUD can actually increase as well. Likely? Probably not. But I think it's worthwhile to acknowledge the risk that all of this is a gamble. And to a large extent to exterminate the shorts, which we're all assuming is the enemy. But assumptions can suck until they are proven true.

My preference, at this point in time, is for Tesla to remain a public company and to properly defend itself against the negative propaganda. It just seems going private is backing off, and usually bullies don't give up that easy.

I am actually convinced that a lot of the FUD is indeed coming from vested interests other than short-sellers, but people like Chanos or Andrew Left coming every week on TV spouting nonsense tend to have outsized influence on the stock; eliminating that source of garbage will help. The same applies to 'analyst' nobodies like Gordon Johnson or the guy from 2 years ago who recommended buying Bed, Bath and Beyond and selling Tesla. Even if the FUD continues (as I assume it will), it will not have the same impact on the company. It's much easier for Tesla to go about its business without having to deal every single day with bogus stories about their financials, their weekly production rates, or Musk's grumpy tone on the conference calls.

No doubt WSJ and friends will be on the lookout for a new Theranos story, but even they won't be able to do much if there is nothing fishy going on there, which there isn't.

That said, I share your preference. I would rather they stayed in the octagon and K.O. the mofos by continuing their production ramp-up and increasing their margins, pushing the stock price into 4-digit territory in the process. Not to mention, as an all-in Canadian holding TSLA in registered accounts, I will not be able to keep it once it turns private. But it's been a great ride regardless, and if Musk thinks it's better this way, so be it.

 

[dondy]

Tesla's problem is not shorts only. I would think it's not shorts.

It is Moody, or Wall Street in general. Regular downgrading of Tesla means higher costs of existing debt and more expensive new.
Having bad rating Tesla is automatically excluded from computer trading and becomes special "case" for index funds. Not many managers would bother explaining their boards why B3 company "with bad" finances can be a save choice.
Being public they loose access to venture funds and don't get easy access to public money because of reasons...

Returning back and getting access to Silicon Valley liquid money pool is an obvious choice. If to add that it is actually bigger and more fluid than Wall Street the choice is no brainer.
Don't forget activist investors and the mess they bring with them.

 

[DaveT]

Here’s my thinking at this time. I don’t think taking Tesla is in the best interest of shareholders. Tesla has managed to reach the point of Model 3 5k/week production and is st the cusp of profitability. The toughest times are behind. The stock price should rise and be more stable than in the past when Tesla was “betting the company” (using Elon’s wording).

Further, more than the role of shorts I think that the Solarcity acquisition had a bigger negative on Tesla. The Solarcity acquisition bloated Tesla’s expenses and grew its debt. Prior to the acquisition Tesla was at the cusp of being profitable and all of that was pushed out as a result of the acquisition. As a result, Tesla became much more vulnerable during the Model 3 ramp. In other words, the Solarcity acquisition made Tesla a much easier target.

Just like I argued against the Solarcity acquisition when it was proposed, so I’m arguing against Tesla going private. (At this time of my thinking) I don’t think it’s the right move.

I’d much rather see Tesla defend itself against the negative propaganda and take control of their narrative, rather than hiding in a private company structure. Bring a public company helps investors like us see more transparency in finances and disclosures. It also allows us as investors to have more liquidity as well.

Recap:

Negative propaganda and shorts - fight them with profitability and strong defense

Suppressed stock price - recognize negative impact of SCTY acquisition and realize with profitability and revenue growth, stock will rise.

Short-term thinking - hire a stellar COO who will iron out operational efficiencies and can steer toward long-term thinking.

 

[oneday]

Here’s my thinking at this time. I don’t think taking Tesla is in the best interest of shareholders. Tesla has managed to reach the point of Model 3 5k/week production and is st the cusp of profitability. The toughest times are behind. The stock price should rise and be more stable than in the past when Tesla was “betting the company” (using Elon’s wording).

Further, more than the role of shorts I think that the Solarcity acquisition had a bigger negative on Tesla. The Solarcity acquisition bloated Tesla’s expenses and grew its debt. Prior to the acquisition Tesla was at the cusp of being profitable and all of that was pushed out as a result of the acquisition. As a result, Tesla became much more vulnerable during the Model 3 ramp. In other words, the Solarcity acquisition made Tesla a much easier target.

Just like I argued against the Solarcity acquisition when it was proposed, so I’m arguing against Tesla going private. (At this time of my thinking) I don’t think it’s the right move.

I’d much rather see Tesla defend itself against the negative propaganda and take control of their narrative, rather than hiding in a private company structure. Bring a public company helps investors like us see more transparency in finances and disclosures. It also allows us as investors to have more liquidity as well.

Recap:

Negative propaganda and shorts - fight them with profitability and strong defense

Suppressed stock price - recognize negative impact of SCTY acquisition and realize with profitability and revenue growth, stock will rise.

Short-term thinking - hire a stellar COO who will iron out operational efficiencies and can steer toward long-term thinking.

I think this is really easy to say from the bleachers. But if you're one of the players on the field, the "fans" on the other side of the stadium are literally throwing things at you. This is historical levels of opposition. Sure Elon has taken the brunt of it, but I guarantee you every employee has felt it too.

These people do not fight fair. This is the biggest problem. Going private won't get rid of all of them, but even shedding half will make a big difference.

What Elon has done with SpaceX is incredible. What he has done with The Boring Company in a year is incredible. If he thinks going private is the best move, I'm inclined to believe him.

 

[DaveT]

If he thinks going private is the best move, I'm inclined to believe him.

Elon has an amazing ability to take risk and also to think from first principles. But he is far from perfect and has erred many times.

Becoming profitable and asserting more earnest and smarter defense will go along way in battling the shorts, and will likely cut the noise by more than half, if not more. Taking Tesla private is an extreme and unnecessary measure in my opinion.

As long as Tesla becomes profitable and executes, they will have access to all the capital they want. The stock price will rise and escape it's doldrum. And if Tesla can keep public, then we will keep more transparency into Tesla which will help us monitor and manage our investment better (at least for most) and will allow us to keep our investment liquid.

 

[Mario Kadastik]

Elon never wanted Tesla to be public and he's been thinking about taking it private many many times over the years. Tesla needed to be public to survive due to need to raise capital etc, but it doesn't need to do that anymore. It's pretty much the last moment he can take the company back private as going forward the stock price will appreciate too much for it to be viable (could you imagine taking AAPL private?).

 

[kbM3]

@AudubonB the problem with voluntarism is that Elon has a tendency to focus on getting out the good news...only... Has he ever told us : sorry I promised you this timeline but we will not make it because of this and this reason? No, he only acknowledges missed timelines long after the fact and then onky a rare few of them.

Yes many times. He is very honest about missteps and mistakes. Falcon wing doors, too much robotics, bad decisions on suppliers...

 

[kbM3]

Not having to focus on quarterly and short terms results will be a huge positive.

 

[DaveT]

Not having to focus on quarterly and short terms results will be a huge positive.

Bezos was able to navigate the public markets for years by emphasizing and sticking with long-term goals and building trust with his investors. Tesla can do a much better job in not playing the quarterly number game. They just need to guide low. But Elon always (or almost always) seems to guide high... and then he has try to game the quarter to meet that. Bring in a stellar COO and empower him/her, and they'll be able to fix this.

 

[Zhelko Dimic]

Here’s my thinking at this time. I don’t think taking Tesla is in the best interest of shareholders. Tesla has managed to reach the point of Model 3 5k/week production and is st the cusp of profitability. The toughest times are behind. The stock price should rise and be more stable than in the past when Tesla was “betting the company” (using Elon’s wording).

Further, more than the role of shorts I think that the Solarcity acquisition had a bigger negative on Tesla. The Solarcity acquisition bloated Tesla’s expenses and grew its debt. Prior to the acquisition Tesla was at the cusp of being profitable and all of that was pushed out as a result of the acquisition. As a result, Tesla became much more vulnerable during the Model 3 ramp. In other words, the Solarcity acquisition made Tesla a much easier target.

Just like I argued against the Solarcity acquisition when it was proposed, so I’m arguing against Tesla going private. (At this time of my thinking) I don’t think it’s the right move.

I’d much rather see Tesla defend itself against the negative propaganda and take control of their narrative, rather than hiding in a private company structure. Bring a public company helps investors like us see more transparency in finances and disclosures. It also allows us as investors to have more liquidity as well.

Recap:

Negative propaganda and shorts - fight them with profitability and strong defense

Suppressed stock price - recognize negative impact of SCTY acquisition and realize with profitability and revenue growth, stock will rise.

Short-term thinking - hire a stellar COO who will iron out operational efficiencies and can steer toward long-term thinking.

90% of my equity is in registered Canadian plans that can't hold private equity. All TSLA, with 1-2% of AMZN for diversification purposes
My wife was shocked to learn that we would need to sell TSLA (she works for National Conservancy of Canada), and is pushing me to figure out how to have 10% outside of registered plans work as if they were 100% I may do some serious leveraging with that 10% over next few days, with the view that if deal goes trough, this 10% will do really well and stay in TSLA, while rest will be liquidated. If deal fails I may lose good chunk of the 10%, but will stay fully invested in TSLA with other 90%. But, that's beside the point, just the colour of my conviction in current TSLA and Tesla, and my position.

Obviously, I'll hate going private, for reasons described above. And I get your arguments, I really get them...

And yet, if things are different, and I can hold private TSLA, I strongly believe it would be much more serene experience for me. And I feel that's the case for many people. Daily news stream and tracking, consideration, just isn't healthy. I've worked at TCX for over 15 years, where we achieved 60x SP appreciation, and we were able to sell only every 25 days in the quarter. And before that, for years stock options were worthless. And there was a great peace in knowing that you can't do anything about stock price or trading, you can stay focused on executing, and there is no need to check the ticker at all. And before you knew, we were at 3x, and then 5x, and 10x, 15x - and then, then I sold, well before 60x

 

[Zhelko Dimic]

Yes many times. He is very honest about missteps and mistakes. Falcon wing doors, too much robotics, bad decisions on suppliers...

I believe you remember destination, but not the journey. Yes, in the end he admitted failures, but never while it was happening.
That's my recollection, and my portfolio has deep scars to confirm my view of the story.

 

[mmd]

Here’s my thinking at this time. I don’t think taking Tesla is in the best interest of shareholders. Tesla has managed to reach the point of Model 3 5k/week production and is st the cusp of profitability. The toughest times are behind. The stock price should rise and be more stable than in the past when Tesla was “betting the company” (using Elon’s wording).

Further, more than the role of shorts I think that the Solarcity acquisition had a bigger negative on Tesla. The Solarcity acquisition bloated Tesla’s expenses and grew its debt. Prior to the acquisition Tesla was at the cusp of being profitable and all of that was pushed out as a result of the acquisition. As a result, Tesla became much more vulnerable during the Model 3 ramp. In other words, the Solarcity acquisition made Tesla a much easier target.

Just like I argued against the Solarcity acquisition when it was proposed, so I’m arguing against Tesla going private. (At this time of my thinking) I don’t think it’s the right move.

I’d much rather see Tesla defend itself against the negative propaganda and take control of their narrative, rather than hiding in a private company structure. Bring a public company helps investors like us see more transparency in finances and disclosures. It also allows us as investors to have more liquidity as well.

Recap:

Negative propaganda and shorts - fight them with profitability and strong defense

Suppressed stock price - recognize negative impact of SCTY acquisition and realize with profitability and revenue growth, stock will rise.

Short-term thinking - hire a stellar COO who will iron out operational efficiencies and can steer toward long-term thinking.

Agreed with the last part, although I mostly find your posts full of confirmation bias, like the other 90% of comments on this forum. Have you assigned a non-zero probability to the following?
- You are wrong about Elon's goals.
- The FUD is actually fact.
- Tesla is way overvalued.

Do you think that shorts caused these ?
- Ugly quarterly reports quarter after quarter
- Declining service quality
- Sales plunge in Norway & Germany

When will Tesla sell the solar roofs that were ready and shown to investors in 2016?
When will the highway on ramp to off ramp be real, that was promised 4 years ago?
Where is FSD that was sold to customers for $5k apiece?
What happened to the much gloated alien dreadnought? Who ate the humble pie there?
Do you think shorts promised those or are holding back their development?

The way I see it, Elon's bold over promises are falling apart, and so is the Tesla story.
Going private is the last resort for Elon to save the terribly sick business that is Tesla. I don't see what choice longs have here.
You either go private or go broke, or raise billions more.

 

[generalenthu]

Elon never wanted Tesla to be public and he's been thinking about taking it private many many times over the years. Tesla needed to be public to survive due to need to raise capital etc, but it doesn't need to do that anymore. It's pretty much the last moment he can take the company back private as going forward the stock price will appreciate too much for it to be viable (could you imagine taking AAPL private?).

This More than anything else. It is obvious Elon has been mulling over going private for a number of years. As recently as last year, a deal with Softbank could not be consummated. He definitely has backing now, and he had a short window to announce the deal. Consider this.

1. The 10Q dropped Monday AM and the quarterly results were a couple of days before that. Imagine the nonsense in the media, announcing the deal before the earnings, would have created.
2. The Saudi news broke Monday and the stock was going up. He had to act quick as otherwise he'd be announcing an offer for a piddly premium
3. In the current situation, the deal economics work very well because at the deal price (420) any longs who want to sell would be offset by shorts looking to cover. This cannot happen if 3Q becomes profitable and shorts are naturally squeezed out. The outlay needs to be more because of higher SP and fewer offsetting shorts

In any case, the ramification is, this is stealing the stock from folks who do not have the ability to hold the SPV in a retirement account / foreign account / is leveraged long / not a accredited investor or some combination thereof. Personally It is not possible for me to have the same exposure to the SPV as I now have to TSLA. Additionally, there is no way h3ll i can avoid paying significant taxes, if this deal goes thru. I am seriously hoping for the price to jump significantly past 420, which would likely break the deal.

 

[DaveT]

90% of my equity is in registered Canadian plans that can't hold private equity. All TSLA, with 1-2% of AMZN for diversification purposes
My wife was shocked to learn that we would need to sell TSLA (she works for National Conservancy of Canada), and is pushing me to figure out how to have 10% outside of registered plans work as if they were 100% I may do some serious leveraging with that 10% over next few days, with the view that if deal goes trough, this 10% will do really well and stay in TSLA, while rest will be liquidated. If deal fails I may lose good chunk of the 10%, but will stay fully invested in TSLA with other 90%. But, that's beside the point, just the colour of my conviction in current TSLA and Tesla, and my position.

Obviously, I'll hate going private, for reasons described above. And I get your arguments, I really get them...

I'm sorry to hear about having to liquidate TSLA. I wouldn't be a happy at all in that situation. I hope you can work something out. Or better yet, Tesla remains public.

And yet, if things are different, and I can hold private TSLA, I strongly believe it would be much more serene experience for me. And I feel that's the case for many people. Daily news stream and tracking, consideration, just isn't healthy. I've worked at TCX for over 15 years, where we achieved 60x SP appreciation, and we were able to sell only every 25 days in the quarter. And before that, for years stock options were worthless. And there was a great peace in knowing that you can't do anything about stock price or trading, you can stay focused on executing, and there is no need to check the ticker at all. And before you knew, we were at 3x, and then 5x, and 10x, 15x - and then, then I sold, well before 60x

I agree that it will save a lot of time and anxiety for a lot people. No more checking the TSLA ticker multiple times a day. Or needing to be glued to TSLA news.

However, what I don't like is the loss of power and choice. Currently, we have the choice to check the TSLA ticker and read TSLA news, and we can sell and buy whatever amount of stock we choose to. That's the power to choose we have right now. And it allows us and motivates many of us to be well-read and to be well-informed on the company's endeavors and financial condition. However, if you take away the choice to be able to buy/sell any amount during any trading day, and you take away public financial filings, then we are left with a lot less choice. We don't know as much and we aren't as empowered with our own investments. It's more of a "trust and invest" kind of approach. And that's not the type of investing I feel confident going "all-in" for. I can do a significant investment in that, but it's more moderate than an investment opportunity that has more transparency and liquidity. I think a lot of people here take for granted what they have. When Tesla goes private, that transparency and liquidity that we enjoy now will be largely taken away and replaced with something more akin to an autocratic regime who tells its citizens what to think and believe. Why give away freedom so easily I don't understand.

 

[generalenthu]

and you take away public financial filings,

Nope, financials will be filed quarterly. Delisting doesn't help and these requirements are driven by the number of shareholders.

 

[oneday]

And if Tesla can keep public, then we will keep more transparency into Tesla which will help us monitor and manage our investment better (at least for most) and will allow us to keep our investment liquid.

For selfish reasons, my ability to retain as much TSLA as possible, I agree. Liquidity is going to be huge for me, I am relatively young and starting a new business. I may need this capital.

And I get your other points too. After 4+ years of owning TSLA personally, and it wasn't easy, I was down for almost half of it by adding more on highs, but I believed in the company and vision so I held. And to your point, I have never felt better about Tesla, we are almost to the promised land----profitability. So maybe you're right. This will crush the FUDsters.

I just can't vote against Elon, even if it might not be perfect for me personally. Obviously, this could change as news develops. But for now, Elon has consistently given a better future roadmap than anyone else.

 

[DaveT]

Nope, financials will be filed quarterly. Delisting doesn't help and these requirements are driven by the number of shareholders.

I'm not an expert on this, but I'm guessing that the filing requirements for a private Tesla will be radically different than as a public company. Also, the special purpose fund will likely count as one investor in the private Tesla company.

 

[DaveT]

For selfish reasons, my ability to retain as much TSLA as possible, I agree. Liquidity is going to be huge for me, I am relatively young and starting a new business. I may need this capital.

And I get your other points too. After 4+ years of owning TSLA personally, and it wasn't easy, I was down for almost half of it by adding more on highs, but I believed in the company and vision so I held. And to your point, I have never felt better about Tesla, we are almost to the promised land----profitability. So maybe you're right. This will crush the FUDsters.

I just can't vote against Elon, even if it might not be perfect for me personally. Obviously, this could change as news develops. But for now, Elon has consistently given a better future roadmap than anyone else.

I can understand your position. It appears that most of Tesla's shareholders feel the same way in that they can't/won't vote against Elon and they trust the "Elon knows best". I always try to think rationally and critically. And there have been many times I've disagreed with Elon's decisions or his publicly stated timelines, and that's ok. I've been attacked personally many times here on TMC by people saying, "how can you criticize Elon's decisions? he's smarter than you!" Well, yeah sure. But he's also prone to making mistakes, as all people are. Especially when they have assumptions that aren't true. Thus, I feel like we should question assumptions and be investors that don't just blindly follow. The power to make your own choice and to be able to buy/sell on your own terms is an amazing thing. And we will be giving that largely up when Tesla goes private. I don't know what's more sad... that Tesla is likely to go private or that people largely don't question it.