Tesla Motors Talk

M

Mouthconnoisseur

#41
#41
He did not sell but was able to have the stock above the 360 level which i think is the level to have some of his debt not convert...

So yeah he should be made an example of by the sec and doj
 
M

Mouthconnoisseur

#43
#43
I heard it on CNBC they were just talking about him right now on fast money show, they just mentioned another tidbit I forgot about just the simple fact that he tweeted during trading hours is a violation of something or other since an official release of any sort of take over or take private would be done before the open or after the close just like the earnings reports...

I’m sure there’s a bunch of articles If you google convertible debt.... i just keep CNBC on every day 6am-6pm in the background

I think it’s the tsla bonds that are convertible at 360 so it being above it would be profitable for the holders to take stock instead of collect on the debt
 
J

justme

homo economicus
#44
#44
The convertible bond thing doesn’t make sense. If bond holders elect to convert (which they’d never do prior to expiry), the company would have to pay out in stock which would either dilute shareholders, notably Musk, or actually cost the company more than par on the bond.
 
M

Mouthconnoisseur

#45
#45
I have no idea how it works but I do know there not a profitable company have been burning billions of dollars so it would be beneficial to pay the debts back with stock than money the company can’t generate on its own
 
M

Mouthconnoisseur

#47
#47
Nobody wants to borrow from peter to pay Paul and that’s not the issue it’s that he’s a ceo and large steak holder trying to squeeze the shorts and manipulate his own stocks price....

Regardless the motive I believe it’s a crime that will likely go unpunished
 
WizardOfAhhs

WizardOfAhhs

#48
#48
justme said:
The convertible bond thing doesn’t make sense. If bond holders elect to convert (which they’d never do prior to expiry), the company would have to pay out in stock which would either dilute shareholders, notably Musk, or actually cost the company more than par on the bond.
Click to expand...
Not exactly. A convertible bond contains a provision that allows the bondholder to convert it, often whenever they choose but it must be prior to maturity, into a pre-determined # of shares of stock. The stock would come from already authorized but not issued shares, so there's no dilution. Let's say a $ 1,000 bond could be converted to 10 shares of stock. As long as the share price is above $ 100 per share, it might be worth converting. Note I say might: It turns a previously guaranteed return on a bond into stock, which obviously fluctuates in value. It would most often be done as you get close to maturity, where, in my example above, instead of taking the $ 1,000 face value of the bond, you convert it into $1,100 worth of stock. That said, I have no idea if or how that applies to Tesla.
Mouthconnoisseur said:
I have no idea how it works but I do know there not a profitable company have been burning billions of dollars so it would be beneficial to pay the debts back with stock than money the company can’t generate on its own
Click to expand...
Conversion rights are at the option of the bondholder, not the company.
 
genius

genius

#49
#49
WizardOfAhhs said:
..... Let's say a $ 1,000 bond could be converted to 10 shares of stock. As long as the share price is above $ 100 per share, it might be worth converting. Note I say might: It turns a previously guaranteed return on a bond into stock, which obviously fluctuates in value. ........
Click to expand...
Basic assumption here that a $1000 face value bond trades at $1000 — rarely happens. Also if the stock is trading at close to or above the bond conversion price, the bond trading price will fluctuate with changes in the stock price. If the stock has soared way above the conversion price the bond trading price will reflect this and trade above the face value. May not pay to convert as you can convert later and until then collect interest or if you want to cash out of the company just take your capital gains with the bond.

Another basic assumption: "guaranteed return on a bond". It's "guaranteed" as long as the company doesn't go bust; this is not an insignificant risk with Tesla.
 
J

justme

homo economicus
#50
#50
WizardOfAhhs said:
The stock would come from already authorized but not issued shares, so there's no dilution.
Click to expand...
I’m at the limit of my knowledge of the accounting side of this. Are unissued authorized shates held as treasury stock?

In any case, from: https://www.investopedia.com/terms/a/authorizedstock.asp

An investor might want to know how many authorized shares a company has in order to analyze the potential for stock dilution. Dilution reduces a stockholder’s share of ownership and voting power in a company and reduces a stock’s earnings per share(EPS) following the issue of new stock. The larger the difference between the number of authorized shares and the number of outstanding shares, the greater the potential for dilution.

WizardOfAhhs said:
It would most often be done as you get close to maturity
Click to expand...
justme said:
(which they’d never do prior to expiry),
Click to expand...
“Never” was strong, but, absent a serious change from the recent behavior of the term structure, the convertible is essentially an American call on the underyer. These, famously, have no early exercise premium.
 
J

justme

homo economicus
#51
#51
genius said:
May not pay to convert as you can convert later and until then collect interest or if you want to cash out of the company just take your capital gains with the bond.

Another basic assumption: "guaranteed return on a bond". It's "guaranteed" as long as the company doesn't go bust; this is not an insignificant risk with Tesla.
Click to expand...
If you wanted to lock in the share price in the rally while preserving optionality you could simply short the stock and finance the short with the bond coupons. If the company defaults on the bonds or the share price gets away from you, you convert and cover.

I wonder how many bond holders did exactly that. Would be awesome if it all resulted in more shorts.
 
Banacek

Banacek

#56
#56
I thought when the rich act crazy that they are termed as just being eccentric. I guess that doesn't hold true when you have money invested in their stock.
 
C

ChicagoMade434

#59
#59
Personally I'd never get a tesla. Electric cars are boring to me. I'm also someone that loves driving and I do multiple track days each year in my time attack car.

The only hybrid cars I would get are ones that use to electric motors to help spool the turbos and reduce lag, like the Acura NSX, McLaren P1. Obviously the Acura is much more affordable at a price tag just south of 200k, compared to the McLaren at around $1 million.

But give me performance cars all day. Race gas, a stupid high gear ratio, sticky tires and no shits given about fuel economy lol

Current race car is a Honda S2000 with a stroker motor in it. Before that I had a big block monte carlo ss that was strictly a 1/4 mile car. Now looking to start a new build on a Nissan GTR
 
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