Gordo14 said:

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tysker said:

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Yep missed him mentioning it was secured. This is great for shareholders, the company and especially the bondholders.

If announcing such information via a tweet versus a press release is a problem for you maybe investing shouldnt be your thing.

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That wasn't releasing anything. It's market manipulation. He never said the company is going private. He picked the top and tried to margin call shorts. Notice the stock didn't move anywhere near $420 - clearly the market thinks this isn't going to happen either.

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Yes there's still a 10% arb at $420 takeout whixh tells me the market thinks it's unlikely given current information. That would be case whether he tweeted or it was announced via press release or even during the recent earnings call. Market manipulation will be hard to prove. Musk has no fiduciary obligation to placate a bunch of shorts. Shorts are often the smartest guys on the equity desks and they're used to getting their dicks handed to them by shady corporate bs. They know the game better than just about everyone and they got f'd on this one. But every TSLA short has known the stock could move like this especially on takeout news. If Musk had come out and gave a $320 price or $220 price is it still manipulation?

IrishTxAggie said:

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Yes it is still manipulation

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Maybe violating Reg FD but manipulation will be hard to prove by the SEC, imo. Manipulation, like insider trading, has to meet certain criteria and its unclear what manipulation occurred.

I guess Musk is playing Trumpian-level 4d chess

If it was said during an interview on TV or for an article, would it still be manipulation? I think the fact that it was directly stated on Twitter makes it seem worse than if it was said on tv or a conference call or something. I'm not privy on the social media regs.

Good interview on cnbc with former SEC chair Harvey Pitt about Tesla this morning. He suggests manipulation hard to prove because intent is part of the statute and Musk has previously mentioned going private. Fraud would be easier if financing is not in fact "secured."

Is Elon derangement syndrome a thing? Many have it.

bmks270 said:

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Greatest pump and dump of all time.

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Only if there's a dump.... Or Musk has created the greatest short opportunity of the decade.

I can't figure how they will be profitable in Q3 at projected sales figures unless their model 3 gross margins are over 30%. The S&X models have been ~20-25% margin vehicles. By my calcs If margins on the model 3 are 25% then they will need to hit the 10,000 production/sales volume per week to become profitable. Valuation still makes absolutely no sense to me, but I have to hand it to Elon, this was the short burn of the century. This is definitely the most interesting company that I've ever followed.

I also read the theory that this was an attempt to goose the stock price to a level that would enable convertible debt to be exercised as shares in 1Q '19 instead of repaid with cash....which they won't have enough of without issuing stock or debt.

If they can't pull off the LBO I think they will go bankrupt. May be for the best as they have interesting products with a lot of appeal they just need a better management team to make this a profitable company.

oldarmy1 said:

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Received the alert. No news? My 1st shorts filled but want $400.

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Weeeeeeeeeee

Thank you big mouth Elon!

500,000ags said:

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The tweets certainly seem criminal to me and I hope he's held accountable. However, as an institutional asset manager, how do you tell your investors your due diligence for purchasing the stock was based on a 53 character tweet with absolutely no official release or detail available.

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Most of the run up was likely algorithmic trading.

I'm probably going to buy puts going into 3Q earnings. Everything is about to fall apart.

Dirt 05 said:

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I can't figure how they will be profitable in Q3 at projected sales figures unless their model 3 gross margins are over 30%. The S&X models have been ~20-25% margin vehicles. By my calcs If margins on the model 3 are 25% then they will need to hit the 10,000 production/sales volume per week to become profitable. Valuation still makes absolutely no sense to me, but I have to hand it to Elon, this was the short burn of the century. This is definitely the most interesting company that I've ever followed.

I also read the theory that this was an attempt to goose the stock price to a level that would enable convertible debt to be exercised as shares in 1Q '19 instead of repaid with cash....which they won't have enough of without issuing stock or debt.

If they can't pull off the LBO I think they will go bankrupt. May be for the best as they have interesting products with a lot of appeal they just need a better management team to make this a profitable company.

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The stock needs to be above $370 for his 2019 bonds to be in the money. Also, if they are in the money TSLA has entered into a call spread transaction with the underwriters of that deal to take the effective conversion price even higher. What this means is that TSLA would have the ability to settle the bonds in stock if they're in the money and receive cash consideration back from the underwriters for the moneyness of the call options TSLA bought as part of the call spread.

Ulrich said:

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I'm probably going to buy puts going into 3Q earnings. Everything is about to fall apart.

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You're right that Tesla has a ton of problems and will almost certainly fall apart at some point, but I wouldn't touch it. Tesla's stock price broke away from reality a long, long time ago.

Just go to Vegas and play roulette if you want to do double or nothing with a pile of cash. I'm only half kidding. Are we actually sure that roulette is riskier than trading Tesla? FFS, the CEO of Tesla is actively manipulating the stock price on Twitter, and a lot of people suspect he did it to stick it to short sellers. Yes, options protect you from THAT level of risk, but with the stock's volatility, even options are gonna cost you your firstborn.

If you decide to throw a couple thousand at it, best of luck with your timing.

If the SEC is doing its job, there is a communication going right now asking TSLA to substantiate Musk's claim. And it sounds like they are.

Just keep it trading. I shorted that sucker at $376.

DannyDuberstein said:

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If the SEC is doing its job, there is a communication going right now asking TSLA to substantiate Musk's claim. And it sounds like they are.

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If they could substantiate it, they'd already have filed an 8-K. Also, damn near zero percent chance that a $71B leveraged buyout hasn't been claimed or heard of by now. If the market thought the was an actual buyout the stock price would be almost $420. In fact, if you're so confident this is substantiated there's a 20% arbitrage opportunity on Tesla stock.

It's interesting that all Tesla deliveries were cancelled yesterday. Just something to keep an eye on that has particularly interesting timing.

I'll be putting some decent coin on the table to get options that expire well into 2019. Before I buy I'll be double-checking the timing of when some of their debt is due and running a model I'm working on, but basically I'm willing to gamble (no question it's gambling) that 2019 is the year the illusion breaks. If it does, I don't see a 20% drop I see a 95% drop before entering bankruptcy and getting parted out. Panasonic will buy the gigafactory, GE will buy the utility scale battery farm business, and Fiat Chrysler will buy most of the auto tech. In theory some of that might be possible to sell off to keep the rest of the business afloat, but between Musk's ego and the complexity of their capital structure I'm not sure that will happen before it's too late.

Just to be clear, by "sounds like they are", I meant the SEC acting. Not TSLA being able to substantiate. Curious to watch this one

DannyDuberstein said:

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Just to be clear, by "sounds like they are", I meant the SEC acting. Not TSLA being able to substantiate. Curious to watch this one

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Gotchya

8-k would need to be filed by today if he really has funding, right?

Only if there's a forthcoming event that would be considered material. Talking to bankers/attorneys/M&A people, studying the possibility of going private, or getting a hand-shake LOC or financing commitment generally doesnt fall into that standard.

TennAg said:

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tysker said:

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Only if there's a forthcoming event that would be considered material. Talking to bankers/attorneys/M&A people, studying the possibility of going private, or getting a hand-shake LOC or financing commitment generally doesnt fall into that standard.

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"Funding Secured" for a buyout of tens of billions of dollars is about as material an event as you can get and would require official disclosure. That's what everybody is waiting on, because if not, then it was stock pumping i.e. fraud.

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I think you're conflating two issues. Company's can secure funding without filing a 8-k. Also, Section 16 insiders can talk generally about going private without filing an 8-k. Musk did not say 'we are going private at $420 and funding secured.' That would require an 8-k as a forthcoming material event. Using the word 'considering' and noting a stock price in combination probably gets him a slap on the wrist.

Musk did however disclose that funding had been secured on the possibility of a takeover (again at a certain price level) but there's no evidence such financing exists. That could be considered fraud. And if he did with intention to hurt the shorts, it could be considered manipulation. Intent to manipulation is hard to prove unless SEC discovers an email or something like that. And similarly all it takes to absolve Musk of any concerns of 'funding secured' disclosures would be to discover a private email from the Saudi's or some other sovereign wealth fund saying they'll prop up the company up to $xx billions. Such an email may be enough for the SEC, maybe not.

Tesla probably should have filed an 8-K concerning the ongoing SEC investigation. Its as if the BoD doesnt feel like theres too much to lose by floating in the grey areas at this point.

Holders can start converting the 2019 in December. Undoubtedly, the larger institutions have the converts hedged. I mean the 0.25% coupon has bascially been free money to Tesla. I kinda get a feeling that the banks/VCs are all hedged against each other so maybe the ~$360 convert parity price becomes something of a magnet into maturity date. But the long time holders (lower cost basis) have much more runway to play with\ and might be willing to handle larger downswings that the recent longs.

tysker said:

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TennAg said:

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tysker said:

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Only if there's a forthcoming event that would be considered material. Talking to bankers/attorneys/M&A people, studying the possibility of going private, or getting a hand-shake LOC or financing commitment generally doesnt fall into that standard.

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"Funding Secured" for a buyout of tens of billions of dollars is about as material an event as you can get and would require official disclosure. That's what everybody is waiting on, because if not, then it was stock pumping i.e. fraud.

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I think you're conflating two issues. Company's can secure funding without filing a 8-k. Also, Section 16 insiders can talk generally about going private without filing an 8-k. Musk did not say 'we are going private at $420 and funding secured.' That would require an 8-k as a forthcoming material event. Using the word 'considering' and noting a stock price in combination probably gets him a slap on the wrist.

Musk did however disclose that funding had been secured on the possibility of a takeover (again at a certain price level) but there's no evidence such financing exists. That could be considered fraud. And if he did with intention to hurt the shorts, it could be considered manipulation. Intent to manipulation is hard to prove unless SEC discovers an email or something like that. And similarly all it takes to absolve Musk of any concerns of 'funding secured' disclosures would be to discover a private email from the Saudi's or some other sovereign wealth fund saying they'll prop up the company up to $xx billions. Such an email may be enough for the SEC, maybe not.

Tesla probably should have filed an 8-K concerning the ongoing SEC investigation. Its as if the BoD doesnt feel like theres too much to lose by floating in the grey areas at this point.

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Correct but once you tweet out partial material info it needs to be followed up with the filing. "Funding secured" is a very definitive statement and it should be backed up with appropriate supplemental info.

tysker said:

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Holders can start converting the 2019 in December. Undoubtedly, the larger institutions have the converts hedged. I mean the 0.25% coupon has bascially been free money to Tesla. I kinda get a feeling that the banks/VCs are all hedged against each other so maybe the ~$360 convert parity price becomes something of a magnet into maturity date. But the long time holders (lower cost basis) have much more runway to play with\ and might be willing to handle larger downswings that the recent longs.

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They've got $920MM due on March 1, 2019 that are currently just out of the money, and I'd expect that >95% are held by convertible arbitrage funds. This is where the "most shorted stock in history" is kind of misleading, because you really invite the short sellers in when you issue as much convertible debt as TSLA has.

jh0400 said:

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tysker said:

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Holders can start converting the 2019 in December. Undoubtedly, the larger institutions have the converts hedged. I mean the 0.25% coupon has bascially been free money to Tesla. I kinda get a feeling that the banks/VCs are all hedged against each other so maybe the ~$360 convert parity price becomes something of a magnet into maturity date. But the long time holders (lower cost basis) have much more runway to play with\ and might be willing to handle larger downswings that the recent longs.

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They've for $920MM due on March 1, 2019 that are currently just out of the money, and I'd expect that >95% are held by convertible arbitrage funds. This is where the "most shorted stock in history" is kind of misleading, because you really invite the short sellers in when you issue as much convertible debt as TSLA has.

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True. There's no telling how much of the shorts is pure hedge or how much is short against the box. I bet there are massive long positions out there with the express purpose of loaning out TSLA and picking up rebates as a hard to borrow. Stock loan departments are probably loving this volatility.

If the Saudis actually do take this private we'll get to see a sequel to the "Who killed the electric car" documentary.

I wonder how many people at Tesla identify as Jim, to Elon's Michael.

Dirt 05 said:

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If the Saudis actually do take this private we'll get to see a sequel to the "Who killed the electric car" documentary.

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When I was a banker, we use to joke about how foreign money starts buying assets at silly valuations at the peak.