Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[ggr]

Also bear in mind that Telsa has IIRC 1-2 periods a year where employees can purchase shares at a discount via the SPP (15% sticks out in my head for some reason, but someone here will know for sure).

I believe it's twice a year. And it's a minimum of 15% discount. The price is based on whichever is lower of the stock price at the beginning and end of the period in question. So if the stock is (on average) rising, the discount is based on the price six (assuming twice per year) months ago, and will be more than 15%. Yes, you can sell immediately, but if you hold, there are special rules about when you can claim long term capital gains. From memory so don't trust me on this, it's two years + 1 day from the opening of the period.

 

[Artful Dodger]

I know most of us are in touch with how the stock has moved over the last few years, but consider the 2-year chart below. Tesla has, thus far, been successful at preventing their workforce from unionizing.

Yeah, you're looking at the wrong chart, that's the one for use retail slugs. Tesla employees however have the ability to buy TSLA stock twice a year at the minimum price of the stock over the period in question, and they can do that retroatively (ie: Sep is the end of period).

So Tesla employees don't to have to time the market to get substantial gains from their company stock option compensation (unlike retail slugs).

 

[Blue horseshoe]

Yeah, you're looking at the wrong chart, that's the one for use retail slugs. Tesla employees however have the ability to buy TSLA stock twice a year at the minimum price of the stock over the period in question, and they can do that retroatively (ie: Sep 30 is the next period end).

So Tesla employees don't to have to time the market to get substantial gains from their company stock option compensation (unlike retail slugs).

Here is what I found regarding the employee stock purchase program last year:

Here is the relevant excerpt from Teslas employee stock purchase program:
View attachment 832084

The employee stock purchase program is divided into six month time periods with two purchase dates: Feb 26th and Aug 31st.

First period is Sept 1 - Feb 26th
Second period is March 1st - Aug 31st

What is interesting is how Tesla determines the price for the shares.

Tesla looks at the closing price on the first and last trading days of the period. For the Feb purchase this could be Sept 1 and Feb 26th assuming both days are trading days.

Tesla then takes the lower of the two closing prices, applies a 15% discount on the lower price, and applies this share price as the purchase price for employees.

So the important dates are Sept 1st and Feb 26th, and also March 1st and Aug 31st. Since the dates are adjoining at the beginning and end of each period we can just focus on the purchase dates: Feb 26th and Aug 31st.

Tl;dr:
Feb 26th: lowest closing price on Feb 26th or Sept 1. Apply 15% discount and that's the purchase price for employees

Process repeats Aug 31st. Lowest price on Aug 31 or March 1.

Edit: so for this Sept 1st purchase date employees would have seen the following:
Feb 24th: $196.88
Sep 1st: $245.01
Employees would purchase shares in this period at $196.88 * 0.85 (15% discount)= $167.35
A 63.96% return on those recently purchased shares

 

[Artful Dodger]

I make this my first post in about three weeks. During that time I have been busy, being asked to drive a 'new' 2023 Kia Niro for more than a week in Corfu, then was induced to hold discussions regarding several related issues; 1. Solar and wind power, 2. reusable rockets and space exploration, 3. labor policy for EV production, 4. EV technology evolution, 5. winners and losers in each.

Oh, you were in Corfu last weekend too? Too bad I didn't no, wood have been fun to hang out!



Cheers to the Resilient!

 

[Cosmacelf]

Also don’t forget that people may want to live around Fremont or Austin rather than Detroit.

 

[MC3OZ]

Ok, not what I was expecting, which would be a simple switch to 4680 V2 to help with Cybertruck ramp

Inside source saying that Kato Rd will shut down in November for 3 months for complete revamp of the production line

John speculates that this means it will be a third generation equipment and cell, including silicon this time

It makes sense since the cathode plant at Giga Texas should come online early next year, and also, makes no sense to make one small 10 GWh 4680 V2 line there while Texas already have four 25 GWh lines, some working, some commissioning

Thanks, I was going to post this.

They are completely doing Kato Rd some parts where the cells go up the ramp against gravity have cause problems.

If they are using the new (leased) Fremont building for anything production related they might be shifting Formation out of Kato road to that new location. That could allow for increased production volumes at Kato road, they need to transport the cells a small distance, but that would not be a problem.

Austin is in the process of cutting over to the new permanent electrical switch yard with all lines stopped. The 2170 Model Y line will obviously be started again ASAP. For the 4680 line, they need to use the new higher energy density V2 cells. I'm not sure what tother changes in pack of the specs of the car that will entail. Some regulatory approvals for the new configuration might be required.

When towing long distances the Cybertruck will need fast charging at a good rate, Tesla knows that. We should find out about that at the CT delivery event.

IMO Tesla is working to a predetermined plan, in 2-3 years time everyone will be saying 4680 production was a great decision.

 

[AndrewZ]

Here is what I found regarding the employee stock purchase program last year:


Tl;dr:
Feb 26th: lowest closing price on Feb 26th or Sept 1. Apply 15% discount and that's the purchase price for employees

Process repeats Aug 31st. Lowest price on Aug 31 or March 1.

Edit: so for this Sept 1st purchase date employees would have seen the following:
Feb 24th: $196.88
Sep 1st: $245.01
Employees would purchase shares in this period at $196.88 * 0.85 (15% discount)= $167.35
A 63.96% return on those recently purchased shares

Might be a stupid question, but where do these shares come from?

Like in an open market trade you have a seller and a buyer, to purchase shares at $167.35 you would need someone who is selling at $167.35.

 

[mongo]

Might be a stupid question, but where do these shares come from?

Like in an open market trade you have a seller and a buyer, to purchase shares at $167.35 you would need someone who is selling at $167.35.

Tesla prints them (they are newly issued)

 

[Stretch2727]

Might be a stupid question, but where do these shares come from?

Like in an open market trade you have a seller and a buyer, to purchase shares at $167.35 you would need someone who is selling at $167.35.

Tesla prints them (they are newly issued)

yep. They do get some capital though so not a complete give away.

This along with exercised employee issued stock options causes a slow increasing share count.

 

[AndrewZ]

Tesla prints them (they are newly issued)

So wait, you’re buying those shares from the company with the money they just paid you? And it’s diluting (marginally of course) the stock?

Tesla is effectively getting your salary back in their coffers, and without a share buyback you’re being compensated on the open market by other people who would be buying your shares?

This setup is blowing my mind right now, this is effectively taking their labour cost burden and shoving it onto the stock market.

 

[mongo]

So wait, you’re buying those shares from the company with the money they just paid you? And it’s diluting (marginally of course) the stock?

Tesla is effectively getting your salary back in their coffers, and without a share buyback you’re being compensated on the open market by other people who would be buying your shares?

This setup is blowing my mind right now, this is effectively taking their labour cost burden and shoving it onto the stock market.

Wait until you hear about the 2018 CEO Compensation Plan...


But yeah, it's like mini stock offerings. Also how directors are compensated.

 

[AndrewZ]

Wait until you hear about the 2018 CEO Compensation Plan...


But yeah, it's like mini stock offerings. Also how directors are compensated.

I’m guessing this isn’t a new concept but wow, legitimately flabbergasted at the realization of how this works and the genius of it

 

[wws]

Might be a stupid question, but where do these shares come from?

Like in an open market trade you have a seller and a buyer, to purchase shares at $167.35 you would need someone who is selling at $167.35.

"Treasury stock". Tesla, like most corporations, is authorized by their shareholders to issue some high number of shares, but have only issued some fraction of that. They can then issue more to the market to raise cash. Or use some to compensate their employees.

 

[Blue horseshoe]

Wait until you hear about the 2018 CEO Compensation Plan...


But yeah, it's like mini stock offerings. Also how directors are compensated.

I’m guessing this isn’t a new concept but wow, legitimately flabbergasted at the realization of how this works and the genius of it

Stock based compensation is accounted for. It's an operating expense

 

[AndrewZ]

Stock based compensation is accounted for. It's an operating expense

Accounting is just numbers in buckets, but in the realest of terms this is a company getting its own labour costs back and effectively using the equity market to compensate employees on a continuing basis.

Thats wild, I had no idea.

 

[Artful Dodger]

Edit: so for this Sept 1st purchase date employees would have seen the following:
Feb 24th: $196.88
Sep 1st: $245.01
Employees would purchase shares in this period at $196.88 * 0.85 (15% discount)= $167.35
A 63.96% return on those recently purchased shares

Yes, exactly. I've heard separately that employees can purchase a maximum of $10K through this plan, so at $167.35/sh that's exactly 50 shares maximum. Then assuming they sold those shares on Aug 31 at the Closing price, they'd gain $90/sh for a total option value of $4,500 (or about $750/mth for the 6-mth period). Not a bad profit sharing scheme, likely about a 15% bonus on their hard-earned wages.

Fun Fact: if all Tesla employees took maximum advantage of their stock options in H1 2023, that would only be about 8 million shares dilution. That won't even raise a cat's whisker!

Cheers to the Kool Kats!

 

[GhostSkater]

Here is what I found regarding the employee stock purchase program last year:


Tl;dr:
Feb 26th: lowest closing price on Feb 26th or Sept 1. Apply 15% discount and that's the purchase price for employees

Process repeats Aug 31st. Lowest price on Aug 31 or March 1.

Edit: so for this Sept 1st purchase date employees would have seen the following:
Feb 24th: $196.88
Sep 1st: $245.01
Employees would purchase shares in this period at $196.88 * 0.85 (15% discount)= $167.35
A 63.96% return on those recently purchased shares

This seems amazing for the employees

Hope to take advantage of it myself , will be sending my resume soon but honestly not expecting anything with the huge volume of applications they have, won't hurt to try

 

[AudubonB]

So wait, you’re buying those shares from the company with the money they just paid you? And it’s diluting (marginally of course) the stock?

Tesla is effectively getting your salary back in their coffers, and without a share buyback you’re being compensated on the open market by other people who would be buying your shares?

This setup is blowing my mind right now, this is effectively taking their labour cost burden and shoving it onto the stock market.

And now you're getting a lesson as to why I - to the great disapprobation of some vocalists here - referred earlier to Mr Musk's immense options grant as having been a gift from the stockholders. I normally eschew abbreviations, but here we have a sublime example of TANSTAAFL.

 

[SPadival]

#11,500 (June 18, 2018) One TMC'er had family working on the new GA4 line. Great story of triumph over adversity.

And Elon replied when I posted this on X

https://twitter.com/x/status/1009970334592716801

 

[mongo]

Stock based compensation is accounted for. It's an operating expense

Q2 saw stock compensation contribute $445 million to Tesla's net cash from operating activities.
The expense line is due to GAAP vs non-GAAP accounting.