TSLA Market Action: 2018 Investor Roundtable

[dondy]

key news is this:
"Saudi wealth fund builds $2B stake in Tesla: FT"
in the interview with CNBC Arash Massoudi (FT journalist) claimed that Saudy prinse when visiting USA had offered to buy primary shares in Tesla, "but for whatever reason Elon Musk didn't act on their interests", so Saudis fund went to open market and bought during last half years around 2bln of available Tesla shares.

BTW compare this original news with all those reprints and poor copies of FT news in all MM mass-media about "Saudis investing 3 bln in Tesla"....

About going private. Obviously it is serious and is going to happen very quick. It will be executed with "Elon" speed.
The most obvious choice for venture investor is Google.
Alphabet was investing in Tesla, they like Musk. But they do venture investments mostly for very many good reasons. Hence paying for going private could be important for them.
On the other hand public company is difficult to shield against undesirable attention.

I would like to add that Google and Tesla autonomous driving systems are complimentary and a deal in technology exchange would lead to groundbreaking results.
Musk waited a week after Q2 to remove any possible "insider" claims and has made his move. It's interesting for how long the shorts will sing their "SEC investigation" song.
It's a pity that such interesting things happen during vacation time, no time to dig properly.

 

[TintDepot.com]

Wow, Elon helped push the burn on the short sellers. It not yet posted, here is his letter to employees.

Elon Email To Tesla To Go Private

• TintDepot.com
• Aug 7, 2018
• 1

 

[Cosmacelf]

You have the scty deal discussion for that already. You could have driven a Tesla semi thru that arb spread.Good times. Looks like it's happening again.

Yes, history repeats. I made low risk money on SCTY by buying their bonds. This time around, just buy stock. It isn't hard.

 

[Robocop]

Eliminate day trading and options. All you people doing that should convert to common shares as quickly as possible.
An Advise?

The bid/ask spread was a mile wide and I couldn't get filled on any orders. So I agree and WANT common shares before the privatization, but us options folks have some work to do. Especially if you're DOTM like me. Today was the most insane price jumps I've ever seen on an option.

In one account my options were worth $0,005.00 today, and $96,000 today. I have no idea what will happen tomorrow.

 

[ZachShahan]

Yep, we need a catalyst to stop this steady drip, drip, haemorrhage/erosion of the SP.

Hmm, what kind of catalyst would you like?

 

[AudubonB]

You're thinking actively-managed funds, though.

I would say that nearly every index fund will be forced to sell TSLA because I can't think of a single index which contains private equity. Powershares QQQ for instance will have to cash out if the deal goes through.

That is correct.

And for the first time since (checking.....Ah, yes. Here it is:) the mid-Pliocene I am extremely happy that TSLA had not yet been added to the S&P500. Now, that would have caused a humpetywrinkle.

 

[Cosmacelf]

Larry Page

Yes, wouldn't it be hilarious watching the heads spin when Google announces that they are partnering with Tesla, merging their autonomous driving teams, and having all Tesla cars using Waymo technology going forward? Yeah, I know, LIDAR, but technology has a way of getting better over time...

 

[Moderatefan]

I have to admit Elon caught me off guard both times. The Q2 results/ SP take off (I though I had time till Q3 to buy in) and today. I was considering expanding my position after selling more index funds and now this. Takes until next day for funds proceeds to settle. Watching action and biting my elbows... Lets see if I can catch the last carriage of the train tomorrow.

 

[MXWing]

The fact that Tesla backers will buy the share for $420 has no bearing on what a short will have to pay to buy the share. They are competing for the same purchase! All it does is establish a floor price.

I'm amazed that we're still $40 below that floor at this instant. Hmmm... need spreadsheet...

Absolutely. I was responding to someone who thought 420 was the BTC ceiling price and damage cap to the shorts. It’s not. A private Tesla share could be worth more than 420.

You would just not sell at 420 or higher but hold on to it.

It’s going to take time for the market to digest.

Tomorrow should be an interesting day. Previous ATH is going to be a resistance level.

Can’t give the stock the full 420 premium because the deal is not locked in - therefor no guaranteed arbitrage opportunity.

Forward thinking investors however should look at selling out of Tesla at 420 could be the same as selling out of Amazon at the same price.

Tesla is significantly derisked. I wonder why this was not proposed say after Q3 for maximum valuation.
....

Unless the idea was to announce it at a regional low..

 

[TintDepot.com]

key news is this:
"Saudi wealth fund builds $2B stake in Tesla: FT"
in the interview with CNBC Arash Massoudi (FT journalist) claimed that Saudy prinse when visiting USA had offered to buy primary shares in Tesla, "but for whatever reason Elon Musk didn't act on their interests", so Saudis fund went to open market and bought during last half years around 2bln of available Tesla shares.

BTW compare this original news with all those reprints and poor copies of FT news in all MM mass-media about "Saudis investing 3 bln in Tesla"....

About going private. Obviously it is serious and is going to happen very quick. It will be executed with "Elon" speed.
The most obvious choice for venture investor is Google.
Alphabet was investing in Tesla, they like Musk. But they do venture investments mostly for very many good reasons. Hence paying for going private could be important for them.
On the other hand public company is difficult to shield against undesirable attention.

I would like to add that Google and Tesla autonomous driving systems are complimentary and a deal in technology exchange would lead to groundbreaking results.
Musk waited a week after Q2 to remove any possible "insider" claims and has made his move. It's interesting for how long the shorts will sing their "SEC investigation" song.
It's a pity that such interesting things happen during vacation time, no time to dig properly.

Thanks for info, looks like it could be Saudi money.

 

[Cosmacelf]

This was an insane day. I did not expect this turn of events at all.

With Elon, you must expect the unexpected. Of course, trading on that isn't easy

 

[Richgoogol]

Does this mean profitability won’t happen starting in Q3 as Elon promised? I don’t see the point of this all of sudden if Tesla can actually start delivering profitability and have the shares skyrocket much higher than $420. I’m a long time bull btw.

 

[anticitizen13.7]

I don't remember, but were there rumors to the mobile-eye acquisition before it was announced?

I don't remember either. My only recollection was that I was caught off guard, but not surprised, by the Intel acquisition announcement. I am pretty sure that a rumored deal had not been priced into MBLY shares at the time (I held a very small stake in the company back then).

 

[AudubonB]

That 37% move doesn’t look all that strange, now. If only somebody knew then there was a chance of taking Tesla private in the very near future at a price of just over $400/share.

Holy cow....you are absolutely spot on there. Someone...and I believe IAJG said who his brokerage firm is...should be due for a very uncomfortable discussion with SEC Enforcement Constababobbles.

 

[Cosmacelf]

Does this mean profitability won’t happen starting in Q3 as Elon promised? I don’t see the point of this all of sudden if Tesla can actually start delivering profitability and have the shares skyrocket much higher than $420. I’m a long time bull btw.

Whether the shares or private or public doesn't make much of a difference to the company itself. The point of taking Tesla private was outlined in his letter than someone just posted. Read that for the reasons.

 

[oneday]

The fact that Tesla backers will buy the share for $420 has no bearing on what a short will have to pay to buy the share. They are competing for the same purchase! All it does is establish a floor price.

I'm amazed that we're still $40 below that floor at this instant. Hmmm... need spreadsheet...

When you finish this spreadsheet please post here (or dm if you would rather) what trades your considering, I have a feeling I’d consider mimicking some of them. Thanks!

 

[Richgoogol]

Whether the shares or private or public doesn't make much of a difference to the company itself. The point of taking Tesla private was outlined in his letter than someone just posted. Read that for the reasons.

I read the letter and I totally understand the reasoning. But if I were him, and I have full confidence in showing profitability from Q3 and onwards. I would not let the shorts down that easily. This is essentially offering them a “cap” in terms of their losses. Now if I’m having doubts about showing profitability, then I would think this is the way out.

 

[Moderatefan]

Does this mean profitability won’t happen starting in Q3 as Elon promised? I don’t see the point of this all of sudden if Tesla can actually start delivering profitability and have the shares skyrocket much higher than $420. I’m a long time bull btw.

Like he said, he's forced to make short term decisions vs long term that he wants.

We should expect similtaneous investments on all fronts - Y, Semi, GFs, energy - after going private; no money laying around in cash

 

[Boomer19]

Now that the chat has settled a bit, can someone please tell me if this is correct?

If it is correct, I plotted this on an excel spreadsheet to see where the highest profit would be. Since we don't know when the move to privatization would be, I continue to choose J20s options.

if you buy J20 210, the price is 179.98x100. If you are able to exercise the option when the SP is 420, the cost will be

(179.98+210) * 100 = 38,998

The payout will be 42000, meaning a profit of 3002 per call option. Can someone please verify? I'm still upset I was hesitant over the Solar City deal and lost out on a lot of potential money, so I don't want to make the same mistake again.

why calls that are over 100 ITM?

(1) I’ve seen some questions about why TSLA didn’t jump all the way to 420. I believe that this reflects some uncertainty as to whether the privatization deal will actually happen. When Intel bought Mobileye last year, the tender offer was something like $63/share. The market price jumped after the deal announcement, but not to the tender offer price. Traded price only crept up to offer price as regulatory hurdles cleared.

I believe that TSLA may behave differently owing to the short interest and media attention.

(2) This was an insane day. I did not expect this turn of events at all.

not only about whether it will happen or not, but how it will happen.

the shareholder meetings in 2017 and 2018, the scty deal... the votes were all about 80% in favor of tesla’s guidance...far from what the media would have you believing beforehand.

therefore i believe about 80% of shrhldrs want either
a) private shares
b) a price above $420

some will be happy with $420 in hand

then lastly those against, along with the shorts trying to kill tesla..

a filing should be coming shortly. the deal may be more complicated than it sounds, they always are.
that said, if the 80% favorable voting rate holds true like in past voting matters, which will become evident (ron baron, munster, gerber all talking) as we progress forward and more details are revealed, the minimum we could expect is a $420 target. yes, those guys won’t sell at $420, but that’s the point.

the mechanics of the deal, the financing, and the subsequent deleveraging and re-levering by market is yet to be seen. everyone was caught off guard. and the way it was revealed was unorthodox, and incomplete. so the fact that the street doesn’t know how to price this deal yet isn’t out of the ordinary either. there is still arb to be had here.

 

[ZachShahan]

Ah ha. So that's who was buying in June.

Sets the precedent for other sovereign wealth funds to buy up some TSLA as well. Where go the Saudis so goes everyone else.

This is sort of a secret, and I don't have proof of it but believe the source — once upon a time, another government in the Middle East (will refrain from saying which) had 10% share of Tesla. Elon reportedly sent an email to major shareholders asking them to stick with them through a coming difficult year — all would be fine — and this government unloaded the next day. Again, not 100% proof of it, but I trust the source, who is connected to the guys running the country. Must be some interesting discussions in the backrooms of the Middle East.