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Thread: Is Tesla TOAST ?

  1. #201
    DSpencer is offline iTulip Ambassador/Select Premium Member
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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by thriftyandboringinohio View Post
    Fascinating dcarrigg.
    If Musk buys out all the investors who want to sell at something like the $420 he mentioned, I guess it all becomes no-harm-no-foul, good on Musk.

    Trading has halted on TSLA as a result (at $367.25, 2PM EDT), and folks say some short sellers have been burned for nearly a billion dollars. One hates to see harm to anyone, but the short sellers took a risk eyes wide open.

    If Tesla goes private then all manner of things vanish - quarterly earnings calls, profitability disclosures, and legal liability for nudge-nudge-wink-wink statements about automobile production rates. I guess the show would go on.

    I can't help but wonder if the recent plunge in FB was a motivating factor for Mr Musk...
    Where is it being discussed that Musk would buy out all the investors? Do you mean him personally? I don't think he has the funds to do that.

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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by DSpencer View Post
    Where is it being discussed that Musk would buy out all the investors? Do you mean him personally? I don't think he has the funds to do that.

    https://twitter.com/elonmusk/status/1026872652290379776

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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by DSpencer View Post
    Where is it being discussed that Musk would buy out all the investors? Do you mean him personally? I don't think he has the funds to do that.
    True. Like all things Tesla, details are murky. I don't expect Musk could do this with his own money, he has something like $20 billion, and the total TSLA market cap is more like $80 billion. If it happens at all, I would expect a consortium of private investors including Musk, maybe SpaceX, sovereign wealth funds, plus a large slice of existing TSLA shareholders who might gladly exchange TSLA shares for shares in the new company.

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    Default Re: Is Tesla TOAST ?

    How would consortium of investors earn money on their investment taking TSLA private?

    Comparisons have been made to Dell without mentioning that the business was generating profit.

    The net loss for the last six months $1.5 Billion and lots more capital will be needed in the future.

    Can an automobile manufacturer compete if it is a private company? Auto manufacturers need cash constantly and I'm not aware of a single major auto manufacturer that is a private company. https://www.sec.gov/cgi-bin/viewer?a...8&xbrl_type=v#

    What am I missing?
    Last edited by BK; 08-08-18 at 10:57 AM.

  5. #205
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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by BK View Post
    How would consortium of investors earn money on their investment taking TSLA private?

    Comparisons have been made to Dell without mentioning that the business was generating profit.

    The net loss for the last six months $1.5 Billion and lots more capital will be needed in the future.

    Can an automobile manufacturer compete if it is a private company? Auto manufacturers need cash constantly and I'm not aware of a single major auto manufacturer that is a private company. https://www.sec.gov/cgi-bin/viewer?a...8&xbrl_type=v#

    What am I missing?
    BK I honestly have no idea how anyone will ever make any money on Tesla.
    Just reacting to Elon Musk's latest splashy press release and spit balling about how this all might happen, based on nothing but pure speculation pulled from thin air.

    A group of investors would seem to be required somehow because Elon's personal checkbook is not big enough.

  6. #206
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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by BK View Post
    How would consortium of investors earn money on their investment taking TSLA private?

    Comparisons have been made to Dell without mentioning that the business was generating profit.

    The net loss for the last six months $1.5 Billion and lots more capital will be needed in the future.

    Can an automobile manufacturer compete if it is a private company? Auto manufacturers need cash constantly and I'm not aware of a single major auto manufacturer that is a private company. https://www.sec.gov/cgi-bin/viewer?a...8&xbrl_type=v#

    What am I missing?
    Chrysler was bought by Cerebus and brought private (as Chrysler LLC) in 2007. They held it just long enough to collect a pile of TARP money and declare bankruptcy, wiping out all the workers' pensions, then sold it to Fiat, which has since been rolled up into Exor along with Ferarri, Lancia, Alfa-Romeo, Abarth and The Economist magazine and CNH Industrial and Partner Reinsurance and a couple Soccer teams. You know, the sort of feudal arrangment that keeps it so the princes and princesses of the Agnelli Family never have to work for 1,000 years. Or, as many Americans would put it, "free-markets."

    So it at least happened on that one occasion. But Chrysler is probably the worst major auto manufacturer, and it was just another pick-the-bones-clean private equity buy-flip gamut that lasted 2 years or so. I doubt it could have lasted very long as a legitimate enterprise.

    One of the suppositions of the efficient market hypothesis is that there's wisdom in crowds. Would seem to me that as inequality further spirals out of control, and an increasing share of world capital is controlled by a smaller and smaller number of people, weird decisions like this will proliferate. It's much easier to dupe a couple princes and/or billionaires who inherited their positions than hundreds of thousands of individual and institutional investors.

    Hell, I'm not at all convinced that the public equities markets would have let Juciero or Theranos happen the way they did. But I saw in real time who they bilked Kleiner Perkins and Google Ventures. If you open your mind to the possibility--or likelihood--that extreme wealth has no correlation with intelligence, and the world's 8 richest people have more wealth than the bottom 50% (3.5 billion people or so) combined, then selling a few of those people a bill of goods, 1) should be more profitable than selling something to the bottom half of the world, and 2) should probably be much easier.
    Last edited by dcarrigg; 08-08-18 at 11:36 AM.

  7. #207
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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by dcarrigg View Post
    Chrysler was bought by Cerebus and brought private (as Chrysler LLC) in 2007. They held it just long enough to collect a pile of TARP money and declare bankruptcy, wiping out all the workers' pensions, then sold it to Fiat, which has since been rolled up into Exor along with Ferarri, Lancia, Alfa-Romeo, Abarth and The Economist magazine and CNH Industrial and Partner Reinsurance and a couple Soccer teams. You know, the sort of feudal arrangment that keeps it so the princes and princesses of the Agnelli Family never have to work for 1,000 years. Or, as many Americans would put it, "free-markets."

    So it at least happened on that one occasion. But Chrysler is probably the worst major auto manufacturer, and it was just another pick-the-bones-clean private equity buy-flip gamut that lasted 2 years or so. I doubt it could have lasted very long as a legitimate enterprise.


    Hell, I'm not at all convinced that the public equities markets would have let Juciero or Theranos happen the way they did. But I saw in real time who they bilked Kleiner Perkins and Google Ventures. If you open your mind to the possibility--or likelihood--that extreme wealth has no correlation with intelligence, and the world's 8 richest people have more wealth than the bottom 50% (3.5 billion people or so) combined, then selling a few of those people a bill of goods, 1) should be more profitable than selling something to the bottom half of the world, and 2) should probably be much easier.
    Chrysler buyout was a disaster for Cerberus "When Cerberus Capital Management took over Chrysler back in 2007, the New York private equity shop knew it was a gamble. But Cerberus believed it could steer the automaker to firmer ground and remake Detroit in the process. Two years later, that ambitious "find, fix and hold" investment strategy blew up in its face." https://www.forbes.com/2009/05/01/ba...l#222f67d71ad9

    Agree 100% - You can never really appreciate the distortions in markets and asset prices when interest rates are at historic lows around the globe.

  8. #208
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    Default Re: Is Tesla TOAST ?

    Tesla looks much different than Chrysler as a purchase. Chrysler had huge legacy costs for pensions; big brick-and-mortar assets; and a big financing/banking operation. Tesla not so much. dcarrig's suggestion makes sense to me that some immeasurably rich investor will end up fleeced as the patsy. Let's remember that Musk and Tesla absorbed Solar City with a couple billion in debt there. Musk's goal is to avoid the embarrassment of admitting Tesla is a business failure, thereby preserving his ability to do this all one more time. But no profit will ever be made selling electric cars or rooftop solar installations, and some third party investor will be left holding the bag.

  9. #209
    DSpencer is offline iTulip Ambassador/Select Premium Member
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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by thriftyandboringinohio View Post
    True. Like all things Tesla, details are murky. I don't expect Musk could do this with his own money, he has something like $20 billion, and the total TSLA market cap is more like $80 billion. If it happens at all, I would expect a consortium of private investors including Musk, maybe SpaceX, sovereign wealth funds, plus a large slice of existing TSLA shareholders who might gladly exchange TSLA shares for shares in the new company.
    Most of the $20 billion is in Tesla stock already. To be fair, it's not like he would have to buy out the whole company, just those who want to sell. Regardless, I don't see anywhere that Musk himself would be buying out shareholders.

    If Musk thought that TSLA stock was undervalued...he could simply buy more. It seems his motivation is freeing himself/Tesla from the burdens of being a public company. Maybe he thinks it will be easier to raise the cash that Tesla needs to stay alive. Maybe he wants less scrutiny about how financial results are reported. Or maybe he just wants to make short selling impossible.

    The current stock price seems to far from $420 for this to work. Who can know for sure, but it seems like a lot of investors would gladly take a 10% premium over the current market price. Especially if it's their last chance to easily get off the wild ride. The fact that the market price isn't converging with the target private price seems to suggest the market is skeptical that will happen. Who knows, maybe it will happen but at a lower price.

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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by DSpencer View Post
    If Musk thought that TSLA stock was undervalued...he could simply buy more. It seems his motivation is freeing himself/Tesla from the burdens of being a public company.
    Exactly. He wants all the privileges and upside of markets, but none of the downsides and responsibility. Another John Galt hiding under his bed from the Mammon he fed and nurtured when the beast grows too big for him to control and comes for its pound of flesh. Or, alternatively, jk's signature .jpg says it all too.

    Government tax credits on every car and government subsidies on every factory and government contracts up the wazoo weren't enough. Now he gets a $2b cash infusion from a government sovereign wealth fund, and probably finances the operation of taking his show off the market with even more government cash. And yet we're supposed to sit back and believe it's a good thing citizens in countries around the world are chipping in their hard earned cash and nations' balance sheet to subsidize a billionaire making $50k+ luxury vehicles and running his own private little space program. I feel like the very idea would have been laughed out of the room just a few decades ago. But here we are. It's happening. In real time. And everyone think's it's normal. Can't fix the bridges. Can't fix the dams. Can't pay the workers. Can't pay the pensions. But we always have another few billion to subsidize luxury goods.

    But hey, the Treasury Dept today proposed redefining the term "financial services" to exclude banking. So this is just what we do now. Nonsense.


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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by dcarrigg View Post
    Exactly. He wants all the privileges and upside of markets, but none of the downsides and responsibility. Another John Galt hiding under his bed from the Mammon he fed and nurtured when the beast grows too big for him to control and comes for its pound of flesh. Or, alternatively, jk's signature .jpg says it all too.
    Ah yes, John Galt, the fictional character who promoted universal basic income and ran his business off government subsidies. /s

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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by DSpencer View Post
    Ah yes, John Galt, the fictional character who promoted universal basic income and ran his business off government subsidies. /s
    They all do. Hell, even the author glommed onto the government teat when it suited her. That's the thing about these "self made men" in fiction. Hypocrisy comes with the fantasy.

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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by dcarrigg View Post
    But hey, the Treasury Dept today proposed redefining the term "financial services" to exclude banking.
    Wow, I missed this.

    Source, page 62:
    [The term financial services] ...includes services provided by financial advisors, investment bankers, wealth planners,and retirement advisors and other similar professionals, but does not include takingdeposits or making loans.

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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by bpr View Post
    Wow, I missed this.

    Source, page 62:


    It's such a bad joke, isn't it? I mean, this is a 20% tax cut, and if they can get away with redefining this by regulation along with their proposed regulations to recalculate capital gains to adjust the taxable portion for inflation (that is, if you bought for 100, and sold for 110 a year later, but there was 3 percent inflation, now they'd only tax top earners on 7 instead of 10), they're basically making a raw mockery out of the law. This interior department is probably the most baldly corrupt since Harding's, and over at treasury Mnuchin's giving Geitner a run for his money right now.

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    Default Re: Is Tesla TOAST ?

    Bought a house for 180 K in 1980.
    Sold it in 2010 for 320 K. Paid capital gains on about 80 K of the difference.
    According to online calculators, the original investment was worth 450 K at time of the sale.
    Would have been nice to deduct the inflation and paid nothing.

  16. #216
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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by Thailandnotes View Post
    Bought a house for 180 K in 1980.
    Sold it in 2010 for 320 K. Paid capital gains on about 80 K of the difference.
    According to online calculators, the original investment was worth 450 K at time of the sale.
    Would have been nice to deduct the inflation and paid nothing.
    This isn't about you in particular TN. Just what your post made me think. I guess the point is most people in the coming generation don't even have 1 home, never mind multiple houses. And you already can write off up to $500k in capital gains on your primary residence. Adding the inflation thing only helps people who have second or third homes. And even then, not nearly as much as people who have incomes in the stratosphere.

    I guess the point is, the deficit is already sky high, and they're looking to make a new banker loophole and new adjustments to cap-gains that will add trillions more to it. And you know what's gonna happen as well as I do. After they slash rates for top earners and do the largest corporate tax cut in history and exempt bankers from financial services taxes and slash capital gains by recalculating it, they're going to cry, "The deficit is so huge, we have no more money for social security and medicare, we need to destroy them to make ends meet!"

    Even the argument that any of that is good for the economy is obvious hogwash. There's no lack of capital looking for places to invest right now. You could start a lemonade stand (with an app) in Silicon Valley and get a bajillion dollars of funding. Everything from real estate to stocks to bonds to anything you can think of is at a record high, while real wages are still dropping. And of course the reaction is to give more breaks to capital, as if that's the problem here. You know who doesn't have it good enough in America? Bankers and people who live off cap gains. Good thing we're redistributing to them.

  17. #217
    DSpencer is offline iTulip Ambassador/Select Premium Member
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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by dcarrigg View Post
    They all do. Hell, even the author glommed onto the government teat when it suited her. That's the thing about these "self made men" in fiction. Hypocrisy comes with the fantasy.
    Are anti-war protestors hypocrites because they pay taxes that fund the military? Is someone who thinks capital gains should be taxed as ordinary income a hypocrite if they don't purposefully overpay their taxes every year?

    Of course not, because this line of reasoning is just plain silly.

  18. #218
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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by Thailandnotes View Post
    Bought a house for 180 K in 1980.
    Sold it in 2010 for 320 K. Paid capital gains on about 80 K of the difference.
    According to online calculators, the original investment was worth 450 K at time of the sale.
    Would have been nice to deduct the inflation and paid nothing.
    Yeah the concept actually makes sense. In a world where inflation is a stated goal of the Fed, it's crazy to use nominal amounts over long time periods. Of course, if the goal was a revenue-neutral correction for the inflation issue then the rate would have to increase which I assume is not being proposed.

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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by DSpencer View Post
    Are anti-war protestors hypocrites because they pay taxes that fund the military?
    They are if they work for military or defense contractors. That's a much better analogy to Ayn taking her Medicare to save her estate. Especially since she never really paid into it.



    Of course not, because this line of reasoning is just plain silly.
    Just as silly as you saying I can't call Elon John Galt.

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    Default Re: Is Tesla TOAST ?

    Quote Originally Posted by DSpencer View Post
    Are anti-war protestors hypocrites because they pay taxes that fund the military?
    Erm, collecting benefits by applying for SS and Medicare is a choice that eligible folks can make. It is not legally binding, as is paying taxes that fund things that an individual citizen may personally be against.

    If you are eligible for Medicare and choose not to go on it, good luck finding an insurer that will be your primary, but I don't think you're breaking any laws by refusing it.

    Just because you are compelled to do something by law does not mean that fighting against it is hypocritical.

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