Wiki Selling TSLA Options - Be the House

[Max Plaid]

Originally, he had to sell to cover the basis and pay taxes due to exercising his 2012 CEO compensation package.
EDGAR Filing Documents for 0000899243-21-044060

Yup, but there's better ways of going about it...

And the thing everyone's missing here is that I blame the pathetic Tesla BoD for not being on top of the situation and insisting that Elon dispose of his shares in a more investor-friendly manner

Didn't hear a peep out of them back then. Come to think of it, haven't heard much from them since Elon bought Twitter and went mental - why aren't they out there talking up the company? We only see them now as they're shitting themselves at the thought of Elon's comp package being rejected by the current set of shareholders

That's my big problem, not so much Elon, we know how he is, but what do they do? What value does Murdoch bring to Tesla?? is there anyone out there that can give an answer to that, because I can't think of one, and the rest of the bunch too... only reason I saw their names popping-up over the years was for exercising TSLA options in the 100's of $millions

Elon runs Tesla and when he's "out of office" it's not good, the least they can do is guide their talisman

 

[Patrick66]

Yup, but there's better ways of going about it...

And the thing everyone's missing here is that I blame the pathetic Tesla BoD for not being on top of the situation and insisting that Elon dispose of his shares in a more investor-friendly manner

Didn't hear a peep out of them back then. Come to think of it, haven't heard much from them since Elon bought Twitter and went mental - why aren't they out there talking up the company?

...and this is why I can't support any of the board proposals. Address the reasons why the ruling against the compensation plan happened first, and then design a plan that is more transparent and investor-friendly.

 

[dl003]

Yeah, he thinks Tesla is worth Zero without FSD. He is telegraphing to you that if he didn't direct his team to work on FSD/AI/Robotics, Tesla is a 10 PE company like the rest. He also knows that there's a good portion of current valuation hinges on FSD/AI/Robotics and can disappear if he fails. There's a reason why it's TslaQ's wet dream to get FSD recalled and banned.

There was a time when we all thought he was crazy because the car business exceeded typical auto company metrics. But just he as has predicted, current auto business metrics are coming inline with industry average, reverting back to the mean. I honestly don't know how many ways he need to warn people against FOMOing into Tesla. How many "stock price is too high" comments should he televise. And if you listen to his bullish statement, it's aways a far into the future valuation. Think people are faulting him for not pumping the stock more or what?

Lets get something abundantly clear. We have no issue with stock manipulation. We have lived and will continue living with it. We have no issue with volatility. It comes with the territory. I dont know why you choose to ignore this crucial point. If ER is a miss, stock can go down for all I care. If FSD is a failure, fine.

What we have a problem with, is Elon doing things we assumed he was never gonna do. Remember short shorts? Burnt hair? Taunting shorts on TWTR? During its darkest days, we chose to stick by Elon because we believe in the mission. We are supposed to be a team. So when he sold his shares like a maniac with zero regards for us, enriching the shorts in the process, how were we supposed to feel? Buffett sold 13% of his AAPL, and yet nobody knew until today. Whats up with that? These people who are like Elon played 5D chest with the shorts, Elon beat them at their own game. like seriously? What are they smoking? TSLA only lost 2/3 of its value by the time hes done. Bravo.

 

[khill]

Lets get something abundantly clear. We have no issue with stock manipulation. We have lived and will continue living with it. We have no issue with volatility. It comes with the territory. I dont know why you choose to ignore this crucial point. If ER is a miss, stock can go down for all I care. If FSD is a failure, fine.

What we have a problem with, is Elon doing things we assumed he was never gonna do. Remember short shorts? Burnt hair? Taunting shorts on TWTR? During its darkest days, we chose to stick by Elon because we believe in the mission. We are supposed to be a team. So when he sold his shares like a maniac with zero regards for us, enriching the shorts in the process, how were we supposed to feel? Buffett sold 13% of his AAPL, and yet nobody knew until today. Whats up with that? These people who are like Elon played 5D chest with the shorts, Elon beat them at their own game. like seriously? What are they smoking? TSLA only lost 2/3 of its value by the time hes done. Bravo.

Perfectly said. Buffett literally sold 100M shares of Apple without anyone knowing and Apple stock is almost at ATH despite such a massive dump. There were many ways Elon could have sold the stock without sinking the stock. As much as I like him, he does some of the dumbest things.

 

[Jim Holder]

https://twitter.com/x/status/1786835240037536023

 

[Singuy]

Perfectly said. Buffett literally sold 100M shares of Apple without anyone knowing and Apple stock is almost at ATH despite such a massive dump. There were many ways Elon could have sold the stock without sinking the stock. As much as I like him, he does some of the dumbest things.

Appl is down YTD while qqq is up 7.5% and this is after a good ER. In fact it was down 11% before the ER YTD so besides Tsla, Apple is the only other mag 7 that sucked all year. So it's not as quiet as you think.

 

[Singuy]

Lets get something abundantly clear. We have no issue with stock manipulation. We have lived and will continue living with it. We have no issue with volatility. It comes with the territory. I dont know why you choose to ignore this crucial point. If ER is a miss, stock can go down for all I care. If FSD is a failure, fine.

What we have a problem with, is Elon doing things we assumed he was never gonna do. Remember short shorts? Burnt hair? Taunting shorts on TWTR? During its darkest days, we chose to stick by Elon because we believe in the mission. We are supposed to be a team. So when he sold his shares like a maniac with zero regards for us, enriching the shorts in the process, how were we supposed to feel? Buffett sold 13% of his AAPL, and yet nobody knew until today. Whats up with that? These people who are like Elon played 5D chest with the shorts, Elon beat them at their own game. like seriously? What are they smoking? TSLA only lost 2/3 of its value by the time hes done. Bravo.

I agree his the way he sold the stock was not friendly to shareholders and I think if this was a 1.5 years ago and people be complaining, no one can blame them. Hell we all did our complaint here, those were some dark times.

However eventually stock bounced back according to their fundamentals, but Def sucked for those on margins or who sold puts

 

[⚡️ELECTROMAN⚡️]

Yup, but there's better ways of going about it...

And the thing everyone's missing here is that I blame the pathetic Tesla BoD for not being on top of the situation and insisting that Elon dispose of his shares in a more investor-friendly manner

Didn't hear a peep out of them back then. Come to think of it, haven't heard much from them since Elon bought Twitter and went mental - why aren't they out there talking up the company? We only see them now as they're shitting themselves at the thought of Elon's comp package being rejected by the current set of shareholders

That's my big problem, not so much Elon, we know how he is, but what do they do? What value does Murdoch bring to Tesla?? is there anyone out there that can give an answer to that, because I can't think of one, and the rest of the bunch too... only reason I saw their names popping-up over the years was for exercising TSLA options in the 100's of $millions

Elon runs Tesla and when he's "out of office" it's not good, the least they can do is guide their talisman

Obviously Tesla isn't just Elon. That's crazy talk. I think if you would have been on the board of directors you wouldn't have done any better. As a board of directors member how would you have handled the situation? They're just people like you and I. Hopefully smarter than us, but be realistic.

 

[⚡️ELECTROMAN⚡️]

Appl is down YTD while qqq is up 7.5% and this is after a good ER. In fact it was down 11% before the ER YTD so besides Tsla, Apple is the only other mag 7 that sucked all year. So it's not as quiet as you think.

Oh great my two biggest holdings. Thanks for pissing in my rice krispies tonight.

 

[khill]

Appl is down YTD while qqq is up 7.5% and this is after a good ER. In fact it was down 11% before the ER YTD so besides Tsla, Apple is the only other mag 7 that sucked all year. So it's not as quiet as you think.

Apple stock was at 173 before ER and it was 193 at the end of 2023. So, YTD it was down just 10% from 193 to 173. And shorts had no clue so they couldn’t take advantage of Buffett selling 115M shares. This is not the same as TSLA being down almost 80% from $414 to $102…a big portion of this drop was because of Elon literally dumping the stock in open market and shorts piling to exaggerate the down side move. Tesla today has far far worse fundamentals than in late 2022 or early 2023 when the stock was near $100 and EPS estimates for 2024 at the beginning of 2023 were more than $7. We know EPS for this year is going to close to $2.

Clearly, there were many ways to sell his stock that shorts wouldn’t have been able to take advantage of.

 

[Max Plaid]

Obviously Tesla isn't just Elon. That's crazy talk. I think if you would have been on the board of directors you wouldn't have done any better. As a board of directors member how would you have handled the situation? They're just people like you and I. Hopefully smarter than us, but be realistic.

Thanks to everyone here for having a spirited, but civil off-topic discussion!

What are they doing on the BoD if they aren't on constant communication with the CEO and have the means to advise or overrule him??

I would make the assumption that the BoD of a $1trillion public company meets regularly, at minimum quarterly you would think, formally internally minuted.

I don't know the exact governance, but would imagine that Musk would have been required to flag in advance the exercise of the options and the sale of shares to facilitate - in fact as many have speculated, it was probably planned long in advance and Musk's Twitter antics purely served to give notice to the short sellers to get prepared

I could imagine during such a meeting, the point coming up and Larry saying, "Hey Elon, those huge options exercise and share selling to cover the overheads is coming up, what's your plan?"

Elon: "Well I've instructed my broker/bank to just relentlessly sell shares on the open market until they get enough cash to cover the lot"

Larry: "Really? You do realise that that will crash the stock price, damage shareholder value, plus you'll get a worse price for the shares as the stock falls and end up selling more than you need, reducing your %age of company ownership. Why not do this through dark pool trades or a share offering, keep it under the radar until you've completed the sales, then announce, will be much more beneficial to believers in Tesla"

Elon (after 5 minutes silence): "I don't care, they can go **** themselves"

So I see three main possibilities:
- the board wasn't aware
- board was aware, but did nothing
- the board advised Elon and he ignored it

First two cases the board are culpable, the third Musk is at fault - whichever way you look at it, the whole thing was a total failure by Tesla management

Maybe there's the fourth scenario, where they want to crash the stock as employees are getting too rich... but they ask Elon nicely to wait a couple of days as Kimbal has a big stock sell planned and he wants to get ATH price for it...

 

[Singuy]

Apple stock was at 173 before ER and it was 193 at the end of 2023. So, YTD it was down just 10% from 193 to 173. And shorts had no clue so they couldn’t take advantage of Buffett selling 115M shares. This is not the same as TSLA being down almost 80% from $414 to $102…a big portion of this drop was because of Elon literally dumping the stock in open market and shorts piling to exaggerate the down side move. Tesla today has far far worse fundamentals than in late 2022 or early 2023 when the stock was near $100 and EPS estimates for 2024 at the beginning of 2023 were more than $7. We know EPS for this year is going to close to $2.

Clearly, there were many ways to sell his stock that shorts wouldn’t have been able to take advantage of

Though true shorts made some difference, but let's not forget qqq was down over 25% during that same time frame. Meta and Netflix were down over 65% from highs.

Appl's current drop was during a very positive macro As I have pointed out. So Tesla given its beta wouldn't have been treated kindly even if Elon did nothing.

 

[joh01652]

Tesla loan or financing interest rate is really hurting their sales.
Just spoke to a medical rep yesterday who decided to go with a Mustang MachE because they’re offered 0% financing. That’s 3 person I work with who wanted Teslas because they preferred the supercharger network, the tech, the performance of the Tesla and the 2 nurses went with ID4 with 2.8% financing, Toyota bZ4x and a Mustang MachE with 0% financing. The 6-8% financing with Tesla and ridiculous insulting price they offer in trade ins is killing sales for the average income person. They have to do something if they want to get 40-50k cars inventory delivered to people living paycheck to paycheck and who can’t afford down payments or selling their old car privately to finance their Teslas. They just go with another EV even if it’s not their first choice.

They don’t give a crap about FSD or robotaxis capability, average salary workers are not visionaries, they pay their already too high mortgages with monthly cellphone plans, Netflix, Paramount+, Disney channel, HBO Kax, Amazon prime subscription and they want to trade in their old ICE cars and get a new car for the exact same monthly payments with low interest rates. That’s how indebted over consumers think.

Those buyers are very likely in a pretty sad state of financial affairs if they're buying a vehicle they don't want only for a lower monthly payment. I really do hope Tesla isn't trying to scrape the bottom of the consumer barrel, because when these folks run into difficult times they may not be able to make their monthly auto payment. Subprime borrowers are not what Tesla (or any company) needs right now. Yeah moving a vehicle might look good short term, but it might end up costing more than it's worth down the road when the borrower defaults and Tesla has to repossess a vehicle (which costs time and money) that has suffered damage/neglect, requiring even more time and money to get it sellable again, if it even can be resold.

Some customers simply aren't worth having and are best turned away. I'd rather Tesla not give out loans and cars to people who might default, which may be even more likely now considering the recent layoff and cost cutting announcements.

All markets are cyclical. The entire auto industry is in a bit of a lull right now. It's also not a good look for Ford or Toyota or VW etc to be giving out 0% loans when interest rates are as high as they are. Clearly their sales are hurting, too, otherwise they wouldn't need 0% loans to move vehicles.

 

[InTheMiddle]

Those buyers are very likely in a pretty sad state of financial affairs if they're buying a vehicle they don't want only for a lower monthly payment.

Perhaps, but perhaps not, especially given the careers attributed to these particular buyers.

Most people have things which they care about enough to "pay the most (if needed) to get what they want" and those things which they have a preference on but are happy to "pay less for something that is good enough". Many may want a top-end Samsung TV, for example, but walk into a store and see others (either lower-end Samsung models or even other brands) which look 'good enough' to them (however they define 'good enough' in their own mind) at lower prices, and walk out with those other TVs. Same holds for many products, including vehicles. Those of us on this site are probabilistically more likely to really care about what vehicle we drive, but we are not necessarily representative of the general public.

This is a standard challenge going from "Early Adopters" to "Early Majority" buyers. The former is more likely to pay more, live with (perceived) shortcomings, learn to do things differently, etc because their "want" of the product is very strong. The latter may want the product, but is less likely to pay more for it, learn new ways to do things / think about things, etc, because their "want" of the product (vs other similar products) is there, but not as strong.

Some customers simply aren't worth having and are best turned away.

True statement, and I've declined / "fired" customers before. It is not something to take lightly, especially in times where the customers are already fewer than the production of the product. I do not believe Tesla is currently at a place where they should be making such choices, especially since in most (nearly all?) cases Tesla is not the one holding the note for very long (if at all).

 

[Oil4AsphaultOnly]

Thanks to everyone here for having a spirited, but civil off-topic discussion!

What are they doing on the BoD if they aren't on constant communication with the CEO and have the means to advise or overrule him??

I would make the assumption that the BoD of a $1trillion public company meets regularly, at minimum quarterly you would think, formally internally minuted.

I don't know the exact governance, but would imagine that Musk would have been required to flag in advance the exercise of the options and the sale of shares to facilitate - in fact as many have speculated, it was probably planned long in advance and Musk's Twitter antics purely served to give notice to the short sellers to get prepared

I could imagine during such a meeting, the point coming up and Larry saying, "Hey Elon, those huge options exercise and share selling to cover the overheads is coming up, what's your plan?"

Elon: "Well I've instructed my broker/bank to just relentlessly sell shares on the open market until they get enough cash to cover the lot"

Larry: "Really? You do realise that that will crash the stock price, damage shareholder value, plus you'll get a worse price for the shares as the stock falls and end up selling more than you need, reducing your %age of company ownership. Why not do this through dark pool trades or a share offering, keep it under the radar until you've completed the sales, then announce, will be much more beneficial to believers in Tesla"

Elon (after 5 minutes silence): "I don't care, they can go **** themselves"

So I see three main possibilities:
- the board wasn't aware
- board was aware, but did nothing
- the board advised Elon and he ignored it

First two cases the board are culpable, the third Musk is at fault - whichever way you look at it, the whole thing was a total failure by Tesla management

Maybe there's the fourth scenario, where they want to crash the stock as employees are getting too rich... but they ask Elon nicely to wait a couple of days as Kimbal has a big stock sell planned and he wants to get ATH price for it...

Well, all those scenarios breaks the "I'll be the last to sell my shares" pledge. By announcing the sale before he actually sells, he gave himself a reason to break the promise. And then if you're going to publicly announce that you're selling shares, then doing it as quickly as possible was the only way to maximize value of the share sale (otherwise you'll get front-runned by everyone).

I proffer option 4: Elon should've given himself an out by rescinding the pledge in order "to pay for daily expenses" a long time ago. That would make your scenarios available.

I see his shitty move (publicly asking about the twitter purchase) as a way to preserve his credibility. I thought he would've learned his lesson (SEC lawsuit, calling the thai diver a pedophile, etc), but these past few years have shown that he'll always put his foot in his mouth, and those are the events that will hurt TSLA.

Edit: I forgot that he already broke the pledge to pay for his earlier options grant! Scratch all the above!

 

[tivoboy]

All markets are cyclical. The entire auto industry is in a bit of a lull right now. It's also not a good look for Ford or Toyota or VW etc to be giving out 0% loans when interest rates are as high as they are. Clearly their sales are hurting, too, otherwise they wouldn't need 0% loans to move vehicles.

Technically the auto market is doing pretty well. Last year was 15.6 million total. This year we’re at a current run rate higher than that. Nearly 5.5m just in the first four months of the year. So something is working

I doubt we’ll ever see the 17m years from half a decade ago but 15.5-16m should be considered a win

 

[adiggs]

I would guess that a large majority of reservation holders are waiting to be able to order what they reserved, rather than the founder's edition or whatever it is called.

I reserved first day and have been invited to order. We're waiting to actually order - not in a rush to proceed.

 

[Jim Holder]

 

[dc_h]

In hindsight, the stock sales to pay taxes was he getting some good will from the Dems but secretly he wanted to buy Twitter, and have purchased 11% of the company with that money.

Also yes, his stock selling did create some volatility but in the long run, Tesla will still be exactly where it is because last time I checked, it wasn't his stock sales that caused Tesla's operating margin to be 5% today.

The margin compression is due to delays for new products. Delayed semi, delayed batteries, delayed Model 2, delayed Y refresh. Tesla got a boost managing though covid, but gave up the edge in not maintaining the pace of innovation. That is due, at least in part, on Elon being the Twitter sitter. Another cause in margin compression is him scaring off potential customers who think he’s a jerk.
Anyhow, I stopped by my local Tesla shop. Lot of cars in stock, but foot traffic was heavy and they are selling a lot of cars.

 

[joh01652]

Perhaps, but perhaps not, especially given the careers attributed to these particular buyers.

Most people have things which they care about enough to "pay the most (if needed) to get what they want" and those things which they have a preference on but are happy to "pay less for something that is good enough". Many may want a top-end Samsung TV, for example, but walk into a store and see others (either lower-end Samsung models or even other brands) which look 'good enough' to them (however they define 'good enough' in their own mind) at lower prices, and walk out with those other TVs. Same holds for many products, including vehicles. Those of us on this site are probabilistically more likely to really care about what vehicle we drive, but we are not necessarily representative of the general public.

This is a standard challenge going from "Early Adopters" to "Early Majority" buyers. The former is more likely to pay more, live with (perceived) shortcomings, learn to do things differently, etc because their "want" of the product is very strong. The latter may want the product, but is less likely to pay more for it, learn new ways to do things / think about things, etc, because their "want" of the product (vs other similar products) is there, but not as strong.


True statement, and I've declined / "fired" customers before. It is not something to take lightly, especially in times where the customers are already fewer than the production of the product. I do not believe Tesla is currently at a place where they should be making such choices, especially since in most (nearly all?) cases Tesla is not the one holding the note for very long (if at all).

Agree with everything you said.

My broader point though is not on the consumer but on Tesla. Perhaps Tesla and their finance partner(s) see too much risk in giving people 0% loans at the moment? I don't know, just speculating. And it's not like Tesla has a broad service and parts network, at least not like legacy auto. Legacy auto can probably make decent money dumping new cars on indebted over-consumers, locally repossessing them, and have the parts/service techs to patch up damaged repos and put them back onto lots; Tesla doesn't have this luxury, being as relatively small and lean as they are.

With regard to poor trade-in values, I like how Tesla doesn't give people much trade-in value for used vehicles. Used car business is hard, growing up in an auto mechanic family myself, we've flipped plenty of cars; it's fairly profitable when you can inspect each vehicle personally and know what you're getting into before purchasing a used vehicle, but Tesla doesn't do this. The customer takes pictures of their car, emails them to Tesla along with the VIN, and then Tesla supplies a quote. This is pretty risky because superficial pictures don't tell you if rodents have chewed through wiring/insulation, don't tell you if there's smoke damage, if the car has been flooded, extensively off-roaded, if the timing belt or water pump is about to fail, etc. They just take your car without looking into it at all. And this is fine if you pay well below fair market value for the vehicle, but paying fair market value won't leave you with much profit, if any. Personally I like seeing the consumer assume the risks and hard work of selling their own vehicle. Give it to Tesla cheap so they at least stand a chance to make a bit of profit, or do it yourself.

All things considered, I like Tesla's high loan rates and poor trade-in values because that's how I'd do it. Even if that means losing a few customers. Running a business is hard work, I don't care what industry you work in. Sometimes the money comes easy, sometimes not so easy.