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

[Ameliorate]

Did you ask what, if anything, happens to the shorts?

Please tell me they used the word 'burn' somewhere in their response...

Haha afraid not, but they did see it as a bullish sign especially mixed in with the likely SP500 inclusion.

 

[Hock1]

I wonder if they debated doing a 10-1 split, but decided to do 5-1 now with the idea of doing another 2-1 in the next year or so

I wouldn't try to guess whether they debated it or not but, after a 5-for-1 spilt, we still have less than 1B shares outstanding. Apple, BEFORE their announcement of a 4-for-1 spilt had a little more than 4B shares outstanding. I.e., we have a long way to go and several splits in front of us. Buy and hold. As they say in golf, "don't try to get cute"...... I hate that expression!

 

[Hock1]

Investopedia: What Is a Stock Dividend?.

Excerpt: Stock dividends are not taxed until the shares granted are sold by their owner.

I.e.. Forward stock-splits are the same as stock-dividends.

 

[ninpb]

All I know is that for all the cheerful confusion we're experiencing right now, the shorts are experiencing panic.

I'm sure it'll just mean "no demand!" to them. They are ecstatic.

 

[smorgasbord]

You have to think too, a lot of employees hold options. I doubt Tesla would hurt them in any way.

Completely different type of options.

 

[dl003]

So here's my interpretation of this last move from Elon and how it is designed to screw the shorts. Please correct me if I'm wrong.
In a normal stock split, one share automatically becomes 5. Say, Chanos borrowed a share from me and sold it. Post split, it is automatically recorded that he borrowed from me 5 shares on a post-split basis. Whenever he chooses to cover, he can just buy 5 shares for the price of 1 and return those to me.
When it is done via a stock dividend, things become dark. Shareholders actually receive 4 new shares for every share they own. Post split, it is still recorded that Chanos owes me only 1 share. The sequence of this whole affair is as follow:
I owned my share
Chanos borrowed my share, now I'm no longer the holder on record
Chanos sold it to someone else, now neither Chanos nor I remained the holder on record
So on 8/21, neither one of us is entitled to the 4 new shares. Yet, Chanos still owes me only 1 share, which means he has to come up with those 4 shares to deposit in my account at the end of August. So, he is forced to cover.
Although that doesn't stop them from re-shorting the stock once it's all said and done, but a forced covering is still a thing of beauty.

 

[SpaceCash]

Not not not off topic

 

[Sofie]

So here's my interpretation of this last move from Elon and how it is designed to screw the shorts. Please correct me if I'm wrong.
In a normal stock split, one share automatically becomes 5. Say, Chanos borrowed a share from me and sold it. Post split, it is automatically recorded that he borrowed me 5 shares on a post-split basis. Whenever he chooses to cover, he can just buy 5 shares for the price of 1 and return that to me.
When it is done via a stock dividend, things become dark. Shareholders actually receive 4 new shares for every share they own. Post split, it is still recorded that Chanos owes me only 1 share. The sequence of this whole affair is as follow:
I owned my share
Chanos borrowed my share, now I'm no longer the holder on record
Chanos sold it to someone else, now neither Chanos nor I is the holder on record
So on 8/21, neither one of us is entitled to the 4 new shares. Yet, Chanos still owes me only 1 share, which means he has to come up with those 4 shares to deposit in my account at the end of August. So, he is forced to cover.
Although that doesn't stop them from re-shorting the stock once it's all said and done, but a forced covering is still a thing of beauty.

So the only difference is for the shorts not the long term investors holding basic stock

 

[vikings123]

Let me try to make this very simple:

Stock split absolutely does nothing in terms of valuation or how much percentage of TSLA you own. If you had 420 shares before you will have 2100 on Aug 31st. Same for options.

As for shorts I don't think this suddenly means that shorts will have to go find additional shares at the price they initially shorted TSLA. Their shorted price will be different when the stock split is effective, which is Aug 31st and they will have borrowed 5X shares.

This does not mean a short squeeze is not guaranteed. Shorts will be forced to cover early since the exuberance of this news will cause a lot of retail buying. So what you are seeing after hours is likely some of that. And then margin calls etc. The SP action AH is very similar to how TSLA has traded post ER or P&D reports.

I will also add that post split we will see a new army of short sellers join the party. As far as I know you cannot short fractional shares. TSLA will become even more volatile IMO.

 

[jerry33]

No, your math is wrong! If you had 5 shares, you will now have 25, not 20! It's 5 to 1, 4 dividend shares and you still have the original.

You're right.

 

[M|S|M MYP]

Credit: WSB on reddit

 

[ByeByeJohnny]

Just to avoid confusion I would think S&P inclusion will either happen before August 21 or after Sept 1.

 

[Stretch2727]

All I know is that for all the cheerful confusion we're experiencing right now, the shorts are experiencing panic.

But I theoretically it is the same for the shorts as the price drops with the split.

Let's say they sold short 1 share recently at $1500. They have those funds.

After the dividend they will need to buy back 5 shares to close the trade but they will now be $300. (In Theory.)

Yes they will be hurt buy the rise that occurs with the split, but they don't own shares.

They have the cash from the original sale to buy back the shares.

 

[Highway2Heel]

This board...a few minutes into after hours...

 

[SoGA Fan Club]

SpaceX's factory is in CA, at Hawthorne Airport. About 6 miles from LAX. Please check the facts you are stating.

So SpaceX built that factory in Hawthorne? Re-read my post and try again.

 

[Driver Dave]

Funny watching CNBC pretending they don’t get why a stock has a pop when a split happens.

I mean cmon. You really dislike TSLA that much that you have to act clueless?

I guess so...

 

[Hock1]

So here's my interpretation of this last move from Elon and how it is designed to screw the shorts. Please correct me if I'm wrong.
In a normal stock split, one share automatically becomes 5. Say, Chanos borrowed a share from me and sold it. Post split, it is automatically recorded that he borrowed me 5 shares on a post-split basis. Whenever he chooses to cover, he can just buy 5 shares for the price of 1 and return that to me.
When it is done via a stock dividend, things become dark. Shareholders actually receive 4 new shares for every share they own. Post split, it is still recorded that Chanos owes me only 1 share. The sequence of this whole affair is as follow:
I owned my share
Chanos borrowed my share, now I'm no longer the holder on record
Chanos sold it to someone else, now neither Chanos nor I is the holder on record
So on 8/21, neither one of us is entitled to the 4 new shares. Yet, Chanos still owes me only 1 share, which means he has to come up with those 4 shares to deposit in my account at the end of August. So, he is forced to cover.
Although that doesn't stop them from re-shorting the stock once it's all said and done, but a forced covering is still a thing of beauty.

The confusion ensuing on this board from a simple stock split, is very telling. Most participants here do not have a clue. Let me put it simply: there is no way for anyone to game the system here. With the effective date declared, there is no way for anybody to get screwed. Even if you're really stupid. If you sell before the effective date you will sell the amount of shares you NOW own. If you sell on, or after, the effective date, you will be selling 5x shares, at 1/5 the price. If you are an options jockey, divide or multiply everything by 5, with those dates in mind.

 

[M|S|M MYP]

The confusion ensuing on this board from a simple stock split, is very telling. Most participants here do not have a clue. Let me put it simply: there is no way for anyone to game the system here. With the effective date declared, there is no way for anybody to get screwed. Even if you're really stupid. If you sell before the effective date you will sell the amount of shares you NOW own. If you sell on, or after, the effective date, you will be selling 5x shares, at 1/5 the price. If you are an options jockey, divide or multiply everything by 5, with those dates in mind.

Unfortunately...some on this board can't divide or multiply by 5

 

[woodisgood]

The confusion ensuing on this board from a simple stock split, is very telling. Most participants here do not have a clue. Let me put it simply: there is no way for anyone to game the system here. With the effective date declared, there is no way for anybody to get screwed. Even if you're really stupid. If you sell before the effective date you will sell the amount of shares you NOW own. If you sell on, or after, the effective date, you will be selling 5x shares, at 1/5 the price. If you are an options jockey, divide or multiply everything by 5, with those dates in mind.

The confusion seems to be more about how this affects shorts.

 

[Krugerrand]

Philanthropy

No, that can’t be right. That sounds boring.