Tesla 3 - as predicted

[skibob]

They burned through $ 1 billion in the first quarter of 2018.

Its hard to even comprehend numbers so large.

Sure. But when you spend 1 billion and have 2.2 billion remaining its because you are selling inventory. Cash on hand has never been higher, even through rounds of VC money. 2.2B is actually not a LOT of money for a company this size. But it is about 2.2B more than his detractors were saying he had (based on their calculations). @Started at 53 is predicting that sales will drop sharply. Until and unless that actually happens, Elon will have the last laugh.

In all seriousness, you can't look at losses like this w/o proper perspective. Amazon posted much larger adjusted losses, more times. On the way to becoming hugely profitable, making back all of those losses exponentially, and ending up the second largest company in the world.

It really was a good earnings report. The question Jay raises is relevant. But, with his track record, I'll put my money on Elon (although not literally).

 

[oldschoolskier]

Well, the reverse argument is he's warning people that he thinks may be caught in a bubble...

Exactly my point, however do it a little more openly and say exactly that. Otherwise it comes across as trying to influence the market in underhanded ways, not that doesn't happen any ways in methods that we don't even see, just feel in our pocket books.

In that regard....

There was an economic theory I heard many years ago that all major markets comes down to 3 major players in the end at which point a small up start forms to make 4 again starting the fight to 3 and it repeats. In cars we are getting closer to that 3, only the up start (Testa) is a little early, but the game is on. No matter the outcome the game will be interesting (possibly painful), but interesting none the less.

 

[fatbob]

So Musk is now bumping his stock price (and sticking it to the short sellers) by threatening to take it private. Seems like a bit of a dangerous game or maybe just a bit of a juvenile bluff. Of course being public has a large price associated with it in terms of disclosure and reporting but really as a competent adult he really ought to have been aware of those things when taking it public in the first place. It's one thing to take the market's money when you needed it - smacks of petulism to say it's harmful when they are giving you a rough time/holding you to account.

Does he even have the personal capital to buy out that much?* Or does taking it private essentially mean a consortium of "controllable" investors (plus some activists who no doubt will not give up their stock in order to be a thorn in his side.

* Edit - speculation that he may be in a lot of trouble for market manipulation if he doesn't actually have the funding in place to buy back stock as he repped on Twitter.

 

[skibob]

So Musk is now bumping his stock price (and sticking it to the short sellers) by threatening to take it private. Seems like a bit of a dangerous game or maybe just a bit of a juvenile bluff. Of course being public has a large price associated with it in terms of disclosure and reporting but really as a competent adult he really ought to have been aware of those things when taking it public in the first place. It's one thing to take the market's money when you needed it - smacks of petulism to say it's harmful when they are giving you a rough time/holding you to account.

Does he even have the personal capital to buy out that much?* Or does taking it private essentially mean a consortium of "controllable" investors (plus some activists who no doubt will not give up their stock in order to be a thorn in his side.

* Edit - speculation that he may be in a lot of trouble for market manipulation if he doesn't actually have the funding in place to buy back stock as he repped on Twitter.

Well, I think that is exactly what he is doing. Sticking it to those who tried to undermine him. I told y'all you couldn't trust those "Tesla is bankrupt" stories. Activist investors trying to manipulate the market.

But they did so in nebulous and anonymous ways. What Elon did showed real cajones for sure. But, like you, I am grimacing a little over what the SEC might make of this.

HOWEVER, if you dig deeper into the story, he claims he has Saudi partners who are considering putting up the money. Its a plausible scenario, as they've invested copiously in the "what do we do when the oil runs out" future. There are also a handful of institutional investors who own great big chunks of Tesla (about 50% is owned by just a handful of entities). They would almost certainly agree to take their share private if they are converting it at a huge profit while reducing market risk. But even if there is a Saudi investor(s) "thinking about" swooping in and paying $420 a share to take it private, it isn't clear to me that that entirely absolves him. I just dont know the nuances.

Still, I am not going to rush in to buy at $370 on the assumption that I will get bought out at $420.

 

[scott43]

So speaking of manipulation, no SEC notification, they owe $1.8B in payouts in Q1 2019, have $2.2B on hand and are burning $1B a quarter.. If they can get the share price over $360 they can pay out their liabilities in shares rather than cash... Hmmm...

 

[fatbob]

Not sure how he stops the whole show ending up in the hands of the Saudis if he embarks on that route and his shareholders don't stick with him. And then he'd learn about how much freedom or otherwise he has vs. accountability.

 

[skibob]

I take this:

https://www.marketwatch.com/story/d...with-his-going-private-tweet-today-2018-08-07

To mean that he is probably just fine. I doubt he is dumb enough* to make up the Saudi investors. Note that they don't have to follow through. They just have to be real, and really be considering, and really have the resources to pull it off.

OK, so he certainly isn't stupid. But there was that tweet calling one of the Thai cave rescuers a "pedo" shows a lack of judgment.

 

[LKLA]

I take this:

https://www.marketwatch.com/story/d...with-his-going-private-tweet-today-2018-08-07

To mean that he is probably just fine. I doubt he is dumb enough* to make up the Saudi investors. Note that they don't have to follow through. They just have to be real, and really be considering, and really have the resources to pull it off.

OK, so he certainly isn't stupid. But there was that tweet calling one of the Thai cave rescuers a "pedo" shows a lack of judgment.

The "odd" or "oddest" part was that he stated a specific price - not that making a statement about an active deal is not odd or doing so via Twitter is normal.

It's been "known" for a while that Saudi Arabia was interested in TSLA - has to do with the Saudi Arabia's 2030 Vision strategy to reduce their dependence on oil and diversify its economy. One of the initiatives is to invest in solar to create electricity and sell it to China and other large markets. They would be buying Tesla more so for the the solar and battery tech than the cars. The cars would just be the icing on the cake.

 

[scott43]

And..the SEC is investigating..

 

[Eleeski]

@scott43 Don't you mean the DEA? While 420 is legal in California, there is the Delorean history...

 

[graham418]

@scott43 Don't you mean the DEA? While 420 is legal in California, there is the Delorean history...

Yeah, I was wondering why he picked a seemingly arbitrary price like $420....hmmmmmm

 

[Erik Timmerman]

So this would be twice the size of the largest take private deal in history. That last deal ended in bankruptcy, btw. Going private makes no sense, he would lose the ability to raise funds and the investors would expect profit. Seems like he is really just trying to screw the short sellers - which would be illegal. Say hello to the SEC.

 

[fatbob]

Well given that everything seems to have gone quiet on the Tesla end I guess that his lawyers are sitting on him tight. That they didn't immediately have stuff to roll out in press releases or further market announcements yesterday I know which way I'm betting on the "shooting his mouth off" v. actual fully implementable process but of course I could be wrong and Tesla might be sitting on whole reams of documentation proving the funding and the plan to privatise. Maybe just letting the short sellers dig themselves another hole.

Either way is seems like Musk will be in a different role. Can't see him surviving if SEC nail him, just too much of a liability for a grown up company.

 

[skibob]

Well given that everything seems to have gone quiet on the Tesla end I guess that his lawyers are sitting on him tight. That they didn't immediately have stuff to roll out in press releases or further market announcements yesterday I know which way I'm betting on the "shooting his mouth off" v. actual fully implementable process but of course I could be wrong and Tesla might be sitting on whole reams of documentation proving the funding and the plan to privatise. Maybe just letting the short sellers dig themselves another hole.

Either way is seems like Musk will be in a different role. Can't see him surviving if SEC nail him, just too much of a liability for a grown up company.

As I've been saying, I think it would be good for Elon too to be ousted, not that he likely agrees.

I suspect what he did fell into enough of a gray area that he will be OK. But yes, the subsequent silence speaks loudly.

 

[graham418]

https://www.cbc.ca/news/business/tesla-elon-musk-smokes-pot-1.4814231


I think he needs a handler. Even in this day and age, I don't think it wise to go on a national podcast smoking a fattie. Investors are skittish enough already. He keeps shooting himself in the foot.

 

[skibob]

https://www.cbc.ca/news/business/tesla-elon-musk-smokes-pot-1.4814231


I think he needs a handler. Even in this day and age, I don't think it wise to go on a national podcast smoking a fattie. Investors are skittish enough already. He keeps shooting himself in the foot.

I keep wondering if $420 was too rich for takeover and he is trying to drive stock price down first.

 

[cantunamunch]

I keep wondering if $420 was too rich for takeover and he is trying to drive stock price down first.

I thought that too, but personality wise I'm getting a strong Hussein-crazy top note with a bit of senile Castro finish.

 

[Corgski]

@scott43 Don't you mean the DEA? While 420 is legal in California, there is the Delorean history...

Musk's mental state does seem to be similar to DeLorean's when he was trying to save DMC. That was a setup though, not an investigation. A former FBI agent eventually testified in court that some agents wanted a high profile case and thought that they could set up DeLorean, despite not suspecting him of anything.

DeLorean claimed that he initially thought the undercover FBI agents were legitimate investors and later came to believe they were mobsters, claiming the agents were threatening to kill his family if he did go along. When asking his lawyer how to get out of the situation without getting killed his lawyer advised him to play along, but not do any deals. Basically that all it was at the end, he played along (whether for his family's safety or other reasons), but dodged any deals, forcing them to construct a fake drug deal around him without actually including him. The weird thing was that neither the agents or the media ever really understood that this famous drug deal that DeLorean was charged with did not actually involve him in any meaningful way.

 

[Erik Timmerman]

http://online.wsj.com/public/resources/documents/musk0927.pdf?mod=article_inline

 

[skibob]

http://online.wsj.com/public/resources/documents/musk0927.pdf?mod=article_inline

I was just headed here to comment when your notification popped up.

Funny, Tesla is down nearly 40 pts in after hours trading. But I would think that investors would see this as a plus. Tesla is on track to become a real kid and the biggest factor standing in the way will almost certainly have to step down very soon. These charges have nothing to do w/ Tesla directly.

Bad news for Elon, good news for Tesla is how I see it. He'll spend 10 million on defense, get a slap on the wrists (ie, big fine) and move on to his next wild and crazy brilliant idea. Of course, he'll almost certainly

IMHO, this is exactly how it should go anyway (minus the stupid tweet and inevitable loss of sleep and money).