TSLA Market Action: 2018 Investor Roundtable

[Reality]

I assume it means if he was telling the truth or not. He doesn't have track record of lying so I'm not worried.

prob just tell the SEC he will get them the proof in 3 months maybe, 6 months definitely

 

[Unpilot]

Nice choice....I like that one!

 

[Reality]

SEC: "You tweeted that you are thinking about taking Tesla private. Is that true?"
EM: Yes, it is true. I am thinking about it. I think about many things. Don't you?
SEC: You also wrote "funding secured." What did you mean by that?
EM: Oh, damn autocorrect! I wrote: "FUDsters screwed."

SEC: Okay, thanks for clearing that up. Carry on.

Would be awesome!

 

[mmd]

To extend more on that.
The "quite" day suggest another outcome- ongoing negotiation between the Saudis and Elon. They are probably unwanted, but fighting them will lead to valuation that might be too much to handle. So the logical resolution will be to let them in.

I think I have a more likely scenario of what happened. Elon saw a dead bird on his way to work, and thought this is not a good week to disclose anything factual.

That also explains why no new information came today.

Some "new information" was disclosed. Elon has only discussed going private with the board, right after promising sustained profitability in Q3 and beyond and right when company focus should be fully on Model 3 production and delivery at > 5k a week, finally fulfilling the long promised "mass market" EV for "all" with 25% gross margin.
Crickets about the secured funding is also unsaid new news.

 

[lklundin]

cnbc's very existence is to serve as the propaganda slinger for wall st. they aren’t there to inform the public.

I thought I would check this out and found this CNBC discussion from today:
"Tesla short sellers are shorting the game of being public: Former TrueCar CEO"

- it seemed quite balanced if not pro-Musk, unless I missed something.

 

[GBleck]

We'd sue for damages.

Securities lawyers are already going for it: Tesla, Inc. (NASDAQ: TSLA) | Hagens Berman | National Class Action Litigation Firm based in Seattle, WA

It sure looks like Elon Musk made a materially false statement when he said "funding secured" at a 420/share price, with no majority investor (implying a consortium). The short investment thesis posits that Tesla has limited access to capital markets, which Elon blew away with this tweet.

If it's not true, then we were given materially false information and damaged by it.

Lying to damage shorts is still lying, and is still illegal.

The bulls will have a lawsuit, too. They'll say they saw his tweet and purchased at 370 believing that a 420 buyout was possible. If it turns out that the 420/share buyout was no where close, they'll have grounds to sue for damages as well.

This is why we have securities laws and procedures. It's why Musk should have filed an 8K detailing the plan instead of blabbing on Twitter.

Words matter. "Funding secured" was a huge, huge error for Elon Musk.

------------------------

The list of banks willing to do this is getting very small: Dan Primack on Twitter



Alex Sherman on Twitter

And if a frog had wings it wouldn’t bump it’s ass when it hopped.

 

[mrdoubleb]

Thoughts on SEC inquiry reported by WSJ?

"SEC Says Social Media OK for Company Announcements if Investors Are Alerted
FOR IMMEDIATE RELEASE
2013-51

Washington, D.C., April 2, 2013 —

The Securities and Exchange Commission today issued a report that makes clear that companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure (Regulation FD) so long as investors have been alerted about which social media will be used to disseminate such information..."

link to full PR here.

Now, one could maybe argue, that investors have not been notified that Elon's Twitter is a place where such information will be disseminated. However, I imagine that would be a hard sell to any judge.

1. This is not the first time Elon posts relevant Tesla information on his personal Twitter account. In fact, he has been doing this almost every day ever since he has his official account.
2. Elon tweeted at 12:48 PM. Within minutes, the internet exploded with the news and it was live on CNBC as all relevant financial media follows his Twitter, knowing point No. 1.

Now, whether they should have filed official documentation for this with the SEC at the time of the announcement, IDK. Not sure about the rules and deadlines on that. But with 22m Twitter followers, Elon's account has more eyeballs glued to it than most financial media.

 

[-=buzz=-]

I can see 4 basic szenarios:

1) There is no funding.
The stock and Elon will get destroyed.
But the company fundamentals wont be affected beyond financing, which shouldn't be a problem if Q3, Q4, ... are positive. So new Investors might be able to get in at a bargain after the bloodbath.

2) Board denies request.
Because they think staying public is the better path into the future.
Then we're back at the state prior to the announcement, minus the stock equivalent of a CEO getting reigned in by his board..
Company fundamentals are unaffected.

3) shareholders vote No
Because the majority thinks the stock is worth more than 420.-
And they can't hold private tsla due to broker constraints or liquidity concerns.
This should still put a confidence floor at 420.- because 50%+ think below that price is a good buy.

4) shareholders vote Yes
All shorts get a margin call.
35m shares (assuming no covering till vote) can get out above 420.-
Or tesla could raise up to 20% new equity (14B!) without needing a single new shareholder!!
If more want to get out, they'll do so at a guaranteed 420.-

Any guesses on the respective probabilities?

 

[Johan]

I can see 4 basic szenarios:

1) There is no funding.
The stock and Elon will get destroyed.
But the company fundamentals wont be affected beyond financing, which shouldn't be a problem if Q3, Q4, ... are positive. So new Investors might be able to get in at a bargain after the bloodbath.

2) Board denies request.
Because they think staying public is the better path into the future.
Then we're back at the state prior to the announcement, minus the stock equivalent of a CEO getting reigned in by his board..
Company fundamentals are unaffected.

3) shareholders vote No
Because the majority thinks the stock is worth more than 420.-
This should still put a confidence floor at 420.- because 50%+ think below that price is a good buy.

4) shareholders vote Yes
All shorts get a margin call.
35m shares (assuming no covering till vote) can get out above 420.-
Or tesla could raise up to 20% new equity without needing a single new shareholder!!
If more want to get out, they'll do so at a guaranteed 420.-

Any guesses on the respective probabilities?

1. 0%
2. 2%
3. 2%
4. 96%

 

[lklundin]

SEC Makes Inquiries To Tesla Over Musk's Tweet About Possibly Taking Co Private - CNBC, Citing DJ

Since I have no reason to believe that Elon Musk's "Funding secured" tweet was insincere, I see such an SEC inquiry as a plus.

I thus expect the regulator to confirm that funding is indeed secured - without having to name anyone - so that whole question should be cleared up, removing some (real or perceived) uncertainty from the market.

PS. Edited for clarity

 

[Unpilot]

I thought I would check this out and found this CNBC discussion from today:
"Tesla short sellers are shorting the game of being public: Former TrueCar CEO"

- it seemed quite balanced if not pro-Musk, unless I missed something.

Watching that clip...it is so obvious that the paid talking heads are anti Tesla.

 

[Reality]

I can see 4 basic szenarios:

1) There is no funding.
The stock and Elon will get destroyed.
But the company fundamentals wont be affected beyond financing, which shouldn't be a problem if Q3, Q4, ... are positive. So new Investors might be able to get in at a bargain after the bloodbath.

2) Board denies request.
Because they think staying public is the better path into the future.
Then we're back at the state prior to the announcement, minus the stock equivalent of a CEO getting reigned in by his board..
Company fundamentals are unaffected.

3) shareholders vote No
Because the majority thinks the stock is worth more than 420.-
This should still put a confidence floor at 420.- because 50%+ think below that price is a good buy.

4) shareholders vote Yes
All shorts get a margin call.
35m shares (assuming no covering till vote) can get out above 420.-
Or tesla could raise up to 20% new equity without needing a single new shareholder!!
If more want to get out, they'll do so at a guaranteed 420.-

Any guesses on the respective probabilities?

1)40%

2/3) 15% - likely due to disclosure requirements

4) 45%

 

[Johan]

1)40%

2/3) 15% - likely due to disclosure requirements

4) 45%

Do you honestly place 40% probability on Elon having flat out lied in his Tweet? I mean it's not like there is much wiggle room for interpretation when he says "funding is secured". It's not like he said "I spoke with some people and now they are thinking about maybe funding the deal". He said "funding is secured". If you're not just kidding around but you actually have this level of incredulity toward Musk and let that sentiment guide your investment in Tesla then you stand to lose a lot of money.

 

[mongo]

3) shareholders vote No
Because the majority thinks the stock is worth more than 420.-
This should still put a confidence floor at 420.- because 50%+ think below that price is a good buy.

Zero: Longs can think it is worth more than 420 and stay with the private Tesla (if possible). Or they vote no because they cannot convert to the private shares.

 

[MarcusMaximus]

Do you honestly place 40% probability on Elon having flat out lied in his Tweet? I mean it's not like there is much wiggle room for interpretation when he says "funding is secured". It's not like he said "I spoke with some people and now they are thinking about maybe funding the deal". He said "funding is secured". If you're not just kidding around but you actually have this level of incredulity toward Musk and let that sentiment guide your investment in Tesla then you stand to lose a lot of money.

The entire short thesis at this point is riding on #1. Any other possibility = massive losses for shorts.

 

[mrwuffles]

For those anticipating a stock price higher than the 420 offer, can you show any examples of this happening in history?

From what I have read, most stocks trader at below the price of the offer, based on uncertainty that it will fall through. Amazon and Whole Foods being one example otherwise.

Not so much an offer, but look at Porsche's attempted takeover of VW. In October 2008. They released the info that they'd taken a large stake. The resulting short squeeze drove prices from $250-$1,250 within a couple of days. If and when it comes out who might be bankrolling this buyout, you could see that happen as shorts rush to cover their positions and no one wants to sell to them unless it's over $420. Especially if they plan on rolling into TSLAP.

 

[Unpilot]

The entire short thesis at this point is riding on #1. Any other possibility = massive losses for shorts.

This irrational hate/distrust of EM is weird.
I actually feel sort of sorry for folks that can't see him any other way.

 

[jelloslug]

1)40%

2/3) 15% - likely due to disclosure requirements

4) 45%

Are you seriously saying that you have a 40% chance that Musk flat out lied?

 

[erthquake]

I can see 4 basic szenarios:

1) There is no funding.
The stock and Elon will get destroyed.
But the company fundamentals wont be affected beyond financing, which shouldn't be a problem if Q3, Q4, ... are positive. So new Investors might be able to get in at a bargain after the bloodbath.

2) Board denies request.
Because they think staying public is the better path into the future.
Then we're back at the state prior to the announcement, minus the stock equivalent of a CEO getting reigned in by his board..
Company fundamentals are unaffected.

3) shareholders vote No
Because the majority thinks the stock is worth more than 420.-
This should still put a confidence floor at 420.- because 50%+ think below that price is a good buy.

4) shareholders vote Yes
All shorts get a margin call.
35m shares (assuming no covering till vote) can get out above 420.-
Or tesla could raise up to 20% new equity without needing a single new shareholder!!
If more want to get out, they'll do so at a guaranteed 420.-

Any guesses on the respective probabilities?

1. 0%
2. 0%
3. 20%
4. 80%

Shorts will have to cover prior to the vote because shares will be recalled. Then, unlike the SCTY vote, shareholders won't release their shares because they need to hold onto them to convert to private. Relatively few shares will be available to cover. Also during the SCTY recall, shorts were allowed to be naked and not have their shorts backed by shares for the couple days they were unavailable. This won't be an option for the shorts this time.

 

[sundaymorning]

Price is a blend of what the market estimates as possible outcomes. Let's say you think there is 90% chance the deal goes through and 10% it falls flat to bwank then the expected price is 90% of $420 plus 10% of $0. Total = $378

Overall I think Elon made a smart move by announcing that he’s “thinking” about taking Tesla private. It sets in motion the anticipated price of $420, which likely is achievable once Tesla shows that its cash flow positive. This then could put a floor on Tesla’s new ATH, effectively boxing in the shorts during a time of strength and erasing any uncertainty that the price will dip below 420, building more confidence for a breakout going further upward. I don’t think we break 400 until numbers are released end of Q3. The squeeze is on hold until then imo. In the short term I see a new floor at $350s moving forward and possibly $385-390 until end of Q3.

Things are looking solid for us right now imo, Bloomberg has us at about 5,500 Model 3s a week now. On our way to 6k

We Set Out to Crack Tesla's Biggest Mystery: How Many Model 3s It's Making