TSLA - Tesla Motors

[CorpRaider]

Saudis are likely to be more permissive owners than public markets and likely to fully support a company that could strand most of their national wealth in the desert.  Seems legit.

[frommi]

I doubt that "talk" qualifies as "financing secured". And i really doubt that buying out 33% of all shares will be enough.

[Spekulatius]

Puts are fairly expensive $23 for the Dec 21 $300 put. Even if there is no deal, it’s not clear to me that those would be winners.

[benhacker]

Big winner in all of this is the option MM's for sure.  I would actually bet that very minimal funds are short outright, it's just MM's offset sold puts at huge vol.

 

I think a lot of folks view the company as quite binary, so puts are the way to play that.

 

Musk's statement is interesting as it's nicely wording, and lawyerly edited, but seems to admit to several securities violations (insider trading on MNPI and lying about having secured funding by any conventional definition).

 

Odd times.

[vikx01]

"I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving. This is why I referred to “funding secured” in the August 7th announcement."

 

An opinion is a far cry from "funding secured". Will be fun to watch how things proceed.

[NBL0303]

"The $420 buyout price would only be used for Tesla shareholders who do not remain with our company if it is private. My best estimate right now is that approximately two-thirds of shares owned by all current investors would roll over into a private Tesla."

 

Elon is seeking a unique arrangement here, because if 66% of the shareholders remain (including any individuals that wish to) - then it essentially is a public company still. Basically, he wants to be something like a public company still, but without the possibility of short-sellers, securities filings (10Qs and 10Ks) and financial scrutiny. A private public company. A good gig if you can get it.

[oddballstocks]

Puts are fairly expensive $23 for the Dec 21 $300 put. Even if there is no deal, it’s not clear to me that those would be winners.

 

Why so close to the money?

 

If you believe this is binary ($0 or $420), then OTM puts are the way to go here.  There have been plenty of deals recently too.  I picked up some lottery tickets with a ~1,000:1 payoff. It was the day of the fake bid tweet and they still doubled.

 

There are really two, three ways to look at these:

1) Buy near dated puts with almost no premium, continue to roll hoping for a blow up

2) Buy long dated ATM or ITM puts to avoid premium

3) Look for mis-pricings within date structures. (This is where I play, just another 'value' type thing).  They do exist.

 

What fascinates me is the whole short destruction thesis.  Does Musk not realize that most likely 100% of the convertible holders are short the stock as a hedge? Couple that with options makers and there are a lot of shorts who are doing it for structural reasons.

 

It blows me away that short sellers become a boogie man when companies fail to operate.  Ah yes, short sellers are the cause of manufacturing and delivery disfunction.  Why not get heads down focused on the business and let results take care of themselves?

 

I firmly believe this is a donut the way Bear Stearns was.  One day they're "fine" and then suddenly they're trading for a buck.

 

[rb]

What fascinates me is the whole short destruction thesis.  Does Musk not realize that most likely 100% of the convertible holders are short the stock as a hedge? Couple that with options makers and there are a lot of shorts who are doing it for structural reasons.

 

It blows me away that short sellers become a boogie man when companies fail to operate.  Ah yes, short sellers are the cause of manufacturing and delivery disfunction.  Why not get heads down focused on the business and let results take care of themselves?

 

I firmly believe this is a donut the way Bear Stearns was.  One day they're "fine" and then suddenly they're trading for a buck.

This!

 

It's always financially weak companies that are screaming about the shorts. It's because they need to keep their stock price up to paper over the weaknesses and provide support. Though in the case of Tesla it's probably also Musk's bruised ego that there may be someone with the temerity to question his vision.

 

Look at strong companies. Do you ever hear Buffett screaming about the shorts? You can short Berkshire until you're blue in the face. He doesn't care. In fact he may even invite you to the annual meeting to ask questions. Why? Because his company is strong and has all the money he needs to operate.

 

Here's an idea. If the Saudis love Tesla so much then instead of this nonsense why doesn't Tesla do a secondary PIPE with the Saudis for say $20 billion?  At that point they'll have all the capital they need to execute and can focus on running the business and just ignore the shorts.

[Rod]

I thought that the whole game with Telsa was that they needed to be public with an elevated stock price to issue equity to finance the ongoing losses. I don't know how they do that if they are private.

[nickenumbers]

 

Look at strong companies. Do you ever hear Buffett screaming about the shorts? You can short Berkshire until you're blue in the face. He doesn't care. In fact he may even invite you to the annual meeting to ask questions. Why? Because his company is strong and has all the money he needs to operate.

 

 

 

That was very well said.  All RB needed was a Mic Drop at the end of that..  I tip my hat to you kind sir.  Bravo, bravo..!!  ;D ;D ;D :)

[pcm983]

https://www.wired.co.uk/article/whats-driving-elon-musk

 

 

Thought this piece was really well done. Don't know if it's a long but anecdotes like those would be make me scared to short it.

[Spekulatius]

https://www.wired.co.uk/article/whats-driving-elon-musk

 

 

Thought this piece was really well done. Don't know if it's a long but anecdotes like those would be make me scared to short it.

 

This piece also would scare me if I were long in TDLA and much more so, if I were bond investor in issues from his companies. Of course that is nothing new.

[walt373]

Elon Musk’s Tweet on Taking Tesla Private Surprised Even Its Board

 

https://www.nytimes.com/2018/08/13/business/dealbook/tesla-elon-musk-saudi-arabia.html

 

Two people familiar with the chain of events said that in a conversation with an informal adviser about the mess he had gotten himself into, Mr. Musk said he had taken to Twitter impulsively. He said he had done so because he was not the kind of person who could hold things in, and was angry at the company’s critics.

 

A person with direct knowledge of the Tesla board’s thinking said some members of the board had been totally blindsided by Mr. Musk’s decision to air his plan on Twitter.

[Voodooking]

The fact that Elon has announced that his legal counsel are Munger, Tolles & Olsen has given me some comfort and reassurance.  :) 8)

[Spekulatius]

Elon Musk’s Tweet on Taking Tesla Private Surprised Even Its Board

 

https://www.nytimes.com/2018/08/13/business/dealbook/tesla-elon-musk-saudi-arabia.html

 

Two people familiar with the chain of events said that in a conversation with an informal adviser about the mess he had gotten himself into, Mr. Musk said he had taken to Twitter impulsively. He said he had done so because he was not the kind of person who could hold things in, and was angry at the company’s critics.

 

A person with direct knowledge of the Tesla board’s thinking said some members of the board had been totally blindsided by Mr. Musk’s decision to air his plan on Twitter.

 

I think there is a chance that Elon gets canned as CEO , if the legal entanglement gets too deep. There is a lot of key man risk with Tesla. As I mentioned before, I think Elon may suffer from burnout syndrome. I have seen this before and one symptom is that folks that have it can‘t turn off any more.

[nickenumbers]

I think Elon has run his mouth one too many times this turn.

 

 

Either the SEC is going to bring the pain, or

 

His board is going to have a long stern conversation / Clip his little Twitter Wings, or

 

Investors, Present and Future are going to apply a Krazy Discount, allocated less, reduce their position, or

 

Bond Holders are going to start to worry about repayment and tighten up on the covenants.

 

 

I wonder what the next earnings call is going to look like?  Elon doesn't like any challenging questions and the analyst community is sharpening their pitchforks and collecting their torches.

[DTEJD1997]

I think Elon has run his mouth one too many times this turn.

 

 

Either the SEC is going to bring the pain, or

 

His board is going to have a long stern conversation / Clip his little Twitter Wings, or

 

Investors, Present and Future are going to apply a Krazy Discount, allocated less, reduce their position, or

 

Bond Holders are going to start to worry about repayment and tighten up on the covenants.

 

 

I wonder what the next earnings call is going to look like?  Elon doesn't like any challenging questions and the analyst community is sharpening their pitchforks and collecting their torches.

 

I think it is clear at this point, that Elon Musk has gone from an asset to a liability.

 

There is going to some fallout from his tweets about getting bought out...and it won't be good.

[benhacker]

The fact that Elon has announced that his legal counsel are Munger, Tolles & Olsen has given me some comfort and reassurance.  :) 8)

 

How about Silver Lake and Goldman also being named... and since both of them denying it... how does that make you feel?

 

Let me see... So Elon has personally hired some restructuring lawyers and lied about getting bankers for a bid?

 

This stock is literally amazing.  I honestly love it.  I don't think it's possible to be short enough. 

 

I think separating the owners of this from their capital here is doing God's work.... just ensuring they get a more fair entry price.

 

it's really one of the strangest situations I can recall.

[SmallCap]

I've been trying to come up with an explanation or at least a name for what seems like a trend that I think is typified by Musk/Trump.

 

There seems to be some kind of fatigue where when someone does something illegal or unethical. Going from my memory (very suspect) there is less and less impact or consequences for someone who does something like this.

 

Nixon lied = significant shock and he resigned

Clinton lied = Shock and impeachment but he stayed and continued as president

Trump lied = collective shrug of the shoulders

 

Martha Stewart violates SEC rules = collective gasp, her reputation will never be the same and some jail time

Elon Musk violates SEC rules = some people expressing incredulity and an SEC investigation but little expectation that it will be more than a slap on the wrist.

 

Is my memory so very off?

can you explain this phenomenon?

[walt373]

Tesla Directors Do Damage Control After Elon Musk Tweets

 

https://www.nytimes.com/2018/08/14/business/dealbook/tesla-board-musk-tweets.html

 

BOD's priority is becoming self-preservation.

 

Members of Tesla’s board are scrambling to control a chief executive who some directors think is out of control.

In recent days, according to people familiar with the matter, some of his fellow board members delivered a stern message: Stop tweeting.

 

Mr. Musk hasn’t heeded that advice.

 

Tesla’s board members are also racing to inoculate themselves from the possible fallout from Mr. Musk’s public statements.

While it’s standard for boards to retain lawyers to counsel them on complicated matters, Tesla’s outside directors have hired two law firms to represent them.

 

The independent directors retained Paul, Weiss, Rifkind, Wharton & Garrison to help deal with a Securities and Exchange Commission inquiry related to the posts, which is at an early stage but which directors expect could intensify into a full-blown investigation, one person said.

[Spekulatius]

I've been trying to come up with an explanation or at least a name for what seems like a trend that I think is typified by Musk/Trump.

 

There seems to be some kind of fatigue where when someone does something illegal or unethical. Going from my memory (very suspect) there is less and less impact or consequences for someone who does something like this.

 

Nixon lied = significant shock and he resigned

Clinton lied = Shock and impeachment but he stayed and continued as president

Trump lied = collective shrug of the shoulders

 

Martha Stewart violates SEC rules = collective gasp, her reputation will never be the same and some jail time

Elon Musk violates SEC rules = some people expressing incredulity and an SEC investigation but little expectation that it will be more than a slap on the wrist.

 

Is my memory so very off?

can you explain this phenomenon?

 

The halo effect is still working. Once it wears off, the pendulum could swing the other way.

[rkbabang]

I've been trying to come up with an explanation or at least a name for what seems like a trend that I think is typified by Musk/Trump.

 

There seems to be some kind of fatigue where when someone does something illegal or unethical. Going from my memory (very suspect) there is less and less impact or consequences for someone who does something like this.

 

Nixon lied = significant shock and he resigned

Clinton lied = Shock and impeachment but he stayed and continued as president

Trump lied = collective shrug of the shoulders

 

Martha Stewart violates SEC rules = collective gasp, her reputation will never be the same and some jail time

Elon Musk violates SEC rules = some people expressing incredulity and an SEC investigation but little expectation that it will be more than a slap on the wrist.

 

Is my memory so very off?

can you explain this phenomenon?

 

The halo effect is still working. Once it wears off, the pendulum could swing the other way.

 

Nixon lied about a burglary, Clinton just lied about sex, while Trump just lies about all kinds of things. 

The Martha Stewart thing was ridiculous, she should have never went to jail for such a small thing, but there are a lot of people who hate her for some reason.  Envy maybe? I don't know.    And Musk, of course, can do no wrong.

 

There, all cleared up.

 

[chesko182]

does anyone have a guess of why Baupost bought TSLA converts? I would think it's some sort of arb trade with the options or CDS.

[rb]

Nobody ever knows why Baubost does whatever they do.

[rkbabang]

I've been trying to come up with an explanation or at least a name for what seems like a trend that I think is typified by Musk/Trump.

 

There seems to be some kind of fatigue where when someone does something illegal or unethical. Going from my memory (very suspect) there is less and less impact or consequences for someone who does something like this.

 

Nixon lied = significant shock and he resigned

Clinton lied = Shock and impeachment but he stayed and continued as president

Trump lied = collective shrug of the shoulders

 

Martha Stewart violates SEC rules = collective gasp, her reputation will never be the same and some jail time

Elon Musk violates SEC rules = some people expressing incredulity and an SEC investigation but little expectation that it will be more than a slap on the wrist.

 

Is my memory so very off?

can you explain this phenomenon?

 

The halo effect is still working. Once it wears off, the pendulum could swing the other way.

 

Nixon lied about a burglary, Clinton just lied about sex, while Trump just lies about all kinds of things. 

The Martha Stewart thing was ridiculous, she should have never went to jail for such a small thing, but there are a lot of people who hate her for some reason.  Envy maybe? I don't know.    And Musk, of course, can do no wrong.

 

There, all cleared up.

 

 

And BTW, I don't want to see Musk in jail either.  The best outcome is that the SEC does nothing and the TSLA BOD removes him as CEO so he can focus on SpaceX. Hopefully he stays off Twitter for a while too.  There are some people who just shouldn't use social media, because they can't handle it, he is one.