Short-Term TSLA Price Movements - 2016

[Ulmo]

424B5

It's on the SEC web site, as usual. It reads pretty close to what reporters are saying.

 

[The Blue Owl]

I think it should be read as 1.4 sold by tsla, 0.6b sold by Elon to fund his excercising of 5.5m shares (options)

Yes, that's how I read it, too.

 

[The Blue Owl]

Phil LeBeau is saying that 9.5m shares "are part of the offering", but only 6.8m is the relevant portion for Tesla. From the prospectus:

We are offering 6,800,000 of the shares to be sold in the offering. The selling stockholder identified in this prospectus supplement is offering an additional 2,777,901 shares. We will not receive any of the proceeds from the sale of the shares being sold by the selling stockholder.​

 

[NOLA_Mike]

$208.81 is Phil Lebeau's "back of the napkin" offering price per share

 

[MartinAustin]

It's rising up... pretty much where it began today now / ended yesterday.

 

[FredTMC]

$2B is about 7% dilution, we might see 195 tomorrow IMO.

The execution Derisking benefits of tesla's strong cash position outweigh the Dillution. Tesla moves one big step closer to accelerating the Model 3 ramp.

The market WILL come around to this. First move down is in response to the dillution. Algo induced. Then the human investors get in.

 

[Gerardf]

Started the day at 204. Now at 207 moving up.. , plus we have financing for production increase secured.
Not bad really (assuming things do not change at opening tomorrow)

 

[hoang51]

Don't jump the gun. A lot of shares being bought up by the market at a given price point, likely somewhere between $200-210 (the narrow band we've been trading in for a while now) should create a pretty solid floor for the price? We've seen that phenomenon before when they've issued shares and sold debt.

I'm just throwing the question out there to see who is brave enough to do so. I'm definitely not touching options now, too volatile.

 

[Jayjs20]

Hmm, delicious. It's unfortunate that I don't have any funds available at the moment, would have loved to hop back in.

 

[Papafox]

$208.81 is Phil Lebeau's "back of the napkin" offering price per share

So, there should be a tendency in after-hours trading to gravitate towards this $208.81 number until the discussion gets underway about what's good and what's bad about the raise.

 

[FredTMC]

From electrek.co:

Full press release:

PALO ALTO, CA — (Marketwired) — 05/18/16 — Tesla today announced an underwritten registered public offering of about $2 billion of common stock. Tesla is offering about $1.4 billion of shares with the remaining shares to be sold by Elon Musk to cover tax obligations associated with his concurrent exercise of more than 5.5 million stock options. On a net basis, Mr. Musk will increase his overall Tesla shareholdings through these transactions.

Capital supports accelerated ramp of Model 3 Because of the overwhelming demand that it has received for Model 3, Tesla intends to use the net proceeds from this offering to accelerate the ramp of Model 3. As noted in the Company’s first quarter shareholder letter, Tesla intends to start volume production and deliveries of Model 3 in late 2017 and to accelerate its 500,000 unit build plan from 2020 to 2018. Proceeds may be used for working capital and other general corporate purposes as well.

Elon Musk increases his shareholdings in Tesla In connection with this offering, Elon Musk, Tesla’s CEO, will also be exercising stock options to acquire 5,503,972 shares of Tesla stock. These stock options were granted to Mr. Musk in 2009 and are due to expire in December 2016. Because the value of Tesla stock has increased considerably since 2009, Mr. Musk will owe a significant amount of taxes from exercising these stock options and will fund this tax obligation by selling only the amount of shares needed to do so. To be clear, all cash proceeds from the sale of stock by Mr. Musk will go to the federal and state governments to satisfy the 52% tax withholding on his stock option exercise. In addition, Mr. Musk will be donating 1.2 million shares of his Tesla stock to charity. Mr. Musk is a net buyer of Tesla stock in these transactions.

Morgan Stanley and Goldman, Sachs & Co. are acting as lead joint book-running managers for the offering, with Deutsche Bank Securities, Citibank, and BofA Merrill Lynch acting as additional book-running managers.

Wow. Musk donating 1.2 million shares to charity.
I'm sure there's some good tax benefit to that. That's a huge donation.

 

[drinkerofkoolaid]

This is proof that Tesla is very serious about 500,000 vehicles in 2018. It's not dilution since the capital raised is invested in assets that will benefit the company and therefore benefit shareholders.

Additionally, I think this means Elon now owns around 35% of Tesla shares. I think this is significant if Elon is planning on establishing a parent company.

 

[The Blue Owl]

Just to recap:

• the public offering is $2B
• the Tesla cap raise is $1.4B

 

[Tenable]

So, there should be a tendency in after-hours trading to gravitate towards this $208.81 number until the discussion gets underway about what's good and what's bad about the raise.

From my perspective its all good. The ramp is derisked and TSLA has a clear path forward. The bears will use this as additional proof that TSLA is a cash burning machine and will continue to believe the model is completely unsustainable. Perhaps the only bad is the potential for short term losses for those in options as the market digests the information. For the longs, it may present additional buying opportunities. I'm stoked.

 

[Papafox]

Wow. Musk donating 1.2 million shares to charity.
I'm sure there's some good tax benefit to that. That's a huge donation.

Since he has just incurred a huge tax liability with exercising the options, he takes care of some of that liability through the donation to charity. Still, it's a very generous donation. Hopefully it is to the Elon Musk foundation or something similar so that the good can be spread out over time.

 

[Tenable]

Since he has just incurred a huge tax liability with exercising the options, he takes care of some of that liability through the donation to charity. Still, it's a very generous donation. Hopefully it is to the Elon Musk foundation or something similar so that the good can be spread out over time.

I'd love it if it was a charitable donation to give low income homes free solar. Net good all around. ;-)

Edit: Minus perhaps the nominal temporary harm of the liquidation.

 

[Johan]

So for a potential big investor who wants in on a big stock position buying this secondary at a fixed price would be a good idea, rather than buying shares on the open market and "risking" sparking a rally while trying to build a large position?

 

[Spidy]

Wow. Musk donating 1.2 million shares to charity.
I'm sure there's some good tax benefit to that. That's a huge donation.

Any chance it's this one? Is that even a charity?
Nonprofit | The Kitchen

 

[electracity]

From my perspective its all good. The ramp is derisked and TSLA has a clear path forward. The bears will use this as additional proof that TSLA is a cash burning machine and will continue to believe the model is completely unsustainable. Perhaps the only bad is the potential for short term losses for those in options as the market digests the information. For the longs, it may present additional buying opportunities. I'm stoked.

How is the ramp derisked? Slower is more likely to meet goals.

What is derisked is the acquiring the capital at a later date. Perhaps that is what you mean. The next six quarters could be great, or could be terrible. With capital secured, it doesn't much matter.

 

[Johan]

Since he has just incurred a huge tax liability with exercising the options, he takes care of some of that liability through the donation to charity. Still, it's a very generous donation. Hopefully it is to the Elon Musk foundation or something similar so that the good can be spread out over time.

I have a hunch Elon's donation may be going to this charity:

http://www.freethebears.org/

"Our Mission: To protect, preserve and enrich the lives of bears throughout the world"

I'm sure $250 million could make a difference.