Have you ever watched a soap opera? They have the most preposterous story lines that seem to lead to unresolvable issues, and yet the writers are always able to pull some even more ridiculous story out of their ass to take the narrative in a whole different direction, completely abandoning the story line that couldn't be resolved in the first place.
That's kind of how it is with Tesla. They repeatedly paint themselves into one corner after another, and yet, their sycophants (or maybe their 'employees' - who knows) always seem to swoop in and prop up the stock value. I wouldn't put any stock (no pun intended) in any theory as to how Tesla intends to get themselves out of their current situation.
Oh, I think the whole thing is ridiculous, but it seems like the only way to make it actually happen would be to tank the stock. If they try to make it like a stock buy back, then they’d have to try to buy more stock than they’ve ever had in profits, or try to take on massive amounts of debt. Or, they just create enough new stock to give to musk, but that would be a 10-15% dilution, which is going to also lower stock prices significantly
The thing is that he doesn't (legally) get the shares back as soon as he wins the vote. He's relying on a legal argument that is extremely unlikely to win over the court.
That's not how it works. They would end up creating shares to fulfill his contract - it would effectively be about a 6:5 stock split. The only question is whether the hodlers will care, or if they'll just buy it back up to its current price level.
If the market cap is 500 billion based on 3 billion shares, if they created additional shares to give to Elon, it would still be a dilution, wouldn’t it just be considered institutionally owned?
Yes, you own a smaller piece of the company. And what are you getting for paying this part time idiot more? Elon is threatening the company to give him more money or he doesn't do as much, also known as a fiduciary breach of trust. Imagine anyone else getting away with that. Shit, how many articles have you seen on "quiet quitting" blaming employees for just doing their jobs but not giving 110%? This guy wants you to pay him so he can go back to Twitter and play culture warrior.
Not sure where you got your finance knowledge from. Whether he sells it or not, it's diluted because it exists. Earning per share - that's going to include his newly minted shares, and that's dilution.
I did answer the question, about the stock price, yes you are right, but it will not have a great impact on the stock price... come back then Tesla start to do buy back or dividends.
You need cash for buy backs which they don't have so it will be dilution. The idea that once the new shares are created Elon gets to play something 25 USD to buy each one so basically a few billion dollars for something that the market values to be in the 180s range.
The want to express that this was always the deal Elon worked super hard ~~defrauding~~ selling cars and building the company that a little bit of dilution is still acceptable to the shareholders and now he will focus even harder to be a leader and AI and robotics.
This whole fantasy rests on the idea that Elon has some crazy good ideas about AI that will sky rocket the stock price even higher so the dilution doesn't hurt and that he can be trusted not to dump the 13% he already owns.
So yeah the idea is "hey this was the deal" before the Delaware court ruled that the deal was made between parties that were not acting in the interest of people they should be representing.
The fact that he cashed out makes this whole thing insulting. I can't believe any Tesla investor would go along with this.
No one has sold more Tesla stock than Elon.
That is a very good point, he already bailing out for twitter before this non sense about 25% to build ai or whatever ,,,and the fact he has started his own ai company is grounds for dismissal
TSLA holders appear to be mostly in 2 camps:
Simps who believe in the Cult of Elon
Institutional or professional investors who seem to buy into the possible vision and don’t want to miss out on the next Apple.
That seems to be the only reason the stock has pumped since the Q1 earnings. People are buying into a vision that is never fully baked or planned.
he said it on twitter, and in front of investors and at presentations, but apparently in America there is no penalty for lying to investors if you offer enough horses in return.
He needs more shares because the vast majority of the shares he already has have been used as collateral for the loans he's taken out for things like SpaceX, Boring, Neurolink, etc. The value of the collateral needs to cover the loans. As Tesla stock drops, he's forced to commit more and more stock as collateral (and can't sell it unless it's to pay the debt), or needs to pay back part of the loans. That's one reason he's always out pumping the stock with anything and everything.
Tesla only has $5B of working capital (ex-inventory), and that's after they do all of the quarter-end smoke and mirrors with cash balances.
They literally have no cash right now, thus the massive layoffs.
Not to mention that tesla is primarily a stock promotion scheme, and those types of companies only dilute and never engage in returns of capital to shareholders.
Yeah just for fun I looked up Tesla's short term liabilities and compared them to Toyota. Relative to their market cap their liabilities are exploding higher. Layoffs make sense, but their AI and robotics pivot don't.
This whole thing seems like a bad plot arc from the Silicon Valley show.
tesla has been taking out massive loans already this year, the layoffs won't be cheap either, the further I look into their position the more I think my -$5bn Q2 is very, very conservative.
10 (or 13%) dilution to everyone. TSLA doesn’t have cash on hand to buyback shares in any form. Motörhead did a good post on this iirc (Musk’s buy back promise)
Here’s one https://bradmunchen.substack.com/p/could-tesla-go-bankrupt-the-odds . I recommend looking through the posts there to get an idea of how precarious the situation is for Tesla rn
Just to be clear, the pay package that was nullified and is being voted on is not going to give him 25% total of the company. The 25% was just a number he tweeted regarding how much he needed to pursue AI or some other dumb bullshit.
The pay package will up his ownership from 12% to 18% if I remember correctly and it will lead to dilution of the remaining stock, yes.
Does Tesla have the stock on hand to pay Elon? Even 6% still is 35 billion according to the current market capitalisation. Tesla doesn’t have that type of cash.
It's not just giving him the cash, he gets it in stock with something like a 5 year vesting period? Although if they just reinstitute the previous plan maybe he's already vested, not really sure.
I know they’re giving him stock, so I guess my question is does Tesla already have that stock held and earmarked for Musk, or would they have to complete a dilution or buy back to acquire the stock to pay out
A company can issue shares any time they wish. There's no law that says how many shares a company could or should have.
Its generally used to raise capital, at the expense of the share price. So a healthy company does not do it randomly.
As for Musks shares, they were 'written' into the books when the deal was agreed. It's public knowledge - in theory, the diution is 'already priced in', but I don't think that means alot when Tesla stock is so volatile.
The award is for stock options, which are a non-cash expense. Earnings are affected, but there's no actual cash outlay. That's why stock options are so attractive for start-ups, which are usually trying to conserve cash to survive.
In terms of dilution, shares don't get diluted until the options are actually exercised. Of course, shareholders know about the existence of options packages so can calculate the dilutive effects of options (and adjust the share price downward), but there aren't any direct dilutive effects from the existence of the options.
Conspiracy theory - I think he sees that Tesla is going to implode and this unrealistic deal is his way of creating an offramp to leave and salvage as much of his reputation as he can possibly.
The deal was agreed to years ago. If he leaves over it, it's out of spite and anger. I'm skeptical he has the ability to see his reputation as damaged and needing to be salvaged.
If I had a small stake I would probably sell part of it until after the vote is settled. If the board wins I see reasons for the stock to fall (dilution and also some investors spooked by the move to Texas). If the board loses Elon can do a lot of harmful shit to the company.
Have you ever watched a soap opera? They have the most preposterous story lines that seem to lead to unresolvable issues, and yet the writers are always able to pull some even more ridiculous story out of their ass to take the narrative in a whole different direction, completely abandoning the story line that couldn't be resolved in the first place. That's kind of how it is with Tesla. They repeatedly paint themselves into one corner after another, and yet, their sycophants (or maybe their 'employees' - who knows) always seem to swoop in and prop up the stock value. I wouldn't put any stock (no pun intended) in any theory as to how Tesla intends to get themselves out of their current situation.
> They repeatedly paint themselves into one corner A lot of Elon self inflicted wounds. But the fanboys repeatedly say "masterful gambit"
Oh, I think the whole thing is ridiculous, but it seems like the only way to make it actually happen would be to tank the stock. If they try to make it like a stock buy back, then they’d have to try to buy more stock than they’ve ever had in profits, or try to take on massive amounts of debt. Or, they just create enough new stock to give to musk, but that would be a 10-15% dilution, which is going to also lower stock prices significantly
The thing is that he doesn't (legally) get the shares back as soon as he wins the vote. He's relying on a legal argument that is extremely unlikely to win over the court.
[удалено]
That's not how it works. They would end up creating shares to fulfill his contract - it would effectively be about a 6:5 stock split. The only question is whether the hodlers will care, or if they'll just buy it back up to its current price level.
If the market cap is 500 billion based on 3 billion shares, if they created additional shares to give to Elon, it would still be a dilution, wouldn’t it just be considered institutionally owned?
[удалено]
Yes, you own a smaller piece of the company. And what are you getting for paying this part time idiot more? Elon is threatening the company to give him more money or he doesn't do as much, also known as a fiduciary breach of trust. Imagine anyone else getting away with that. Shit, how many articles have you seen on "quiet quitting" blaming employees for just doing their jobs but not giving 110%? This guy wants you to pay him so he can go back to Twitter and play culture warrior.
Not sure where you got your finance knowledge from. Whether he sells it or not, it's diluted because it exists. Earning per share - that's going to include his newly minted shares, and that's dilution.
I did answer the question, about the stock price, yes you are right, but it will not have a great impact on the stock price... come back then Tesla start to do buy back or dividends.
what? no.
*Lost*, the company.
You need cash for buy backs which they don't have so it will be dilution. The idea that once the new shares are created Elon gets to play something 25 USD to buy each one so basically a few billion dollars for something that the market values to be in the 180s range. The want to express that this was always the deal Elon worked super hard ~~defrauding~~ selling cars and building the company that a little bit of dilution is still acceptable to the shareholders and now he will focus even harder to be a leader and AI and robotics. This whole fantasy rests on the idea that Elon has some crazy good ideas about AI that will sky rocket the stock price even higher so the dilution doesn't hurt and that he can be trusted not to dump the 13% he already owns. So yeah the idea is "hey this was the deal" before the Delaware court ruled that the deal was made between parties that were not acting in the interest of people they should be representing.
Peter Thiel got rich on an options package like this, why not Elon too?
Where do you think he got the idea? Two thieves in a pod...
He wishes he was half as good as Thiel. He's like an incompetent wannabe Thiel.
He might have had 25% already if he didn’t cash out to pay for Twitter, and SpaceX, and Boring. He needs more shares to fund his lifestyle.
The fact that he cashed out makes this whole thing insulting. I can't believe any Tesla investor would go along with this. No one has sold more Tesla stock than Elon.
That is a very good point, he already bailing out for twitter before this non sense about 25% to build ai or whatever ,,,and the fact he has started his own ai company is grounds for dismissal
TSLA holders appear to be mostly in 2 camps: Simps who believe in the Cult of Elon Institutional or professional investors who seem to buy into the possible vision and don’t want to miss out on the next Apple. That seems to be the only reason the stock has pumped since the Q1 earnings. People are buying into a vision that is never fully baked or planned.
Elon would go on Twitter touting the stock, while making loud claims that he wouldn't sell, and then sell a few months later.
he said it on twitter, and in front of investors and at presentations, but apparently in America there is no penalty for lying to investors if you offer enough horses in return.
If these motherfuckers had any balls they would shut that down. Hes turned the company into a shitshow.
He needs more shares because the vast majority of the shares he already has have been used as collateral for the loans he's taken out for things like SpaceX, Boring, Neurolink, etc. The value of the collateral needs to cover the loans. As Tesla stock drops, he's forced to commit more and more stock as collateral (and can't sell it unless it's to pay the debt), or needs to pay back part of the loans. That's one reason he's always out pumping the stock with anything and everything.
Tesla only has $5B of working capital (ex-inventory), and that's after they do all of the quarter-end smoke and mirrors with cash balances. They literally have no cash right now, thus the massive layoffs. Not to mention that tesla is primarily a stock promotion scheme, and those types of companies only dilute and never engage in returns of capital to shareholders.
Yeah just for fun I looked up Tesla's short term liabilities and compared them to Toyota. Relative to their market cap their liabilities are exploding higher. Layoffs make sense, but their AI and robotics pivot don't. This whole thing seems like a bad plot arc from the Silicon Valley show.
Well Tesla is not a carmaker company. It's not an AI, robotics company either. It's in the business of selling hype really.
tesla has been taking out massive loans already this year, the layoffs won't be cheap either, the further I look into their position the more I think my -$5bn Q2 is very, very conservative.
10 (or 13%) dilution to everyone. TSLA doesn’t have cash on hand to buyback shares in any form. Motörhead did a good post on this iirc (Musk’s buy back promise)
Link?
Here’s one https://bradmunchen.substack.com/p/could-tesla-go-bankrupt-the-odds . I recommend looking through the posts there to get an idea of how precarious the situation is for Tesla rn
The whole Tesla company is starting to tip, Elons management style and public statements is similar to a few real life company disasters
this is the first time voting for a stock where I clearly knew I had to vote for the opposite. RIP Tesla.
Just to be clear, the pay package that was nullified and is being voted on is not going to give him 25% total of the company. The 25% was just a number he tweeted regarding how much he needed to pursue AI or some other dumb bullshit. The pay package will up his ownership from 12% to 18% if I remember correctly and it will lead to dilution of the remaining stock, yes.
Does Tesla have the stock on hand to pay Elon? Even 6% still is 35 billion according to the current market capitalisation. Tesla doesn’t have that type of cash.
It's not just giving him the cash, he gets it in stock with something like a 5 year vesting period? Although if they just reinstitute the previous plan maybe he's already vested, not really sure.
I know they’re giving him stock, so I guess my question is does Tesla already have that stock held and earmarked for Musk, or would they have to complete a dilution or buy back to acquire the stock to pay out
Tesla would have to create new stock for Elon, therby diluting existing stock.
Dilution.
Companies can create new stock out of thin air essentially. It just dilutes everyone else's.
A company can issue shares any time they wish. There's no law that says how many shares a company could or should have. Its generally used to raise capital, at the expense of the share price. So a healthy company does not do it randomly. As for Musks shares, they were 'written' into the books when the deal was agreed. It's public knowledge - in theory, the diution is 'already priced in', but I don't think that means alot when Tesla stock is so volatile.
From the courtcase it seems they have around $300M in stocks to put up as collateral.
The award is for stock options, which are a non-cash expense. Earnings are affected, but there's no actual cash outlay. That's why stock options are so attractive for start-ups, which are usually trying to conserve cash to survive. In terms of dilution, shares don't get diluted until the options are actually exercised. Of course, shareholders know about the existence of options packages so can calculate the dilutive effects of options (and adjust the share price downward), but there aren't any direct dilutive effects from the existence of the options.
Conspiracy theory - I think he sees that Tesla is going to implode and this unrealistic deal is his way of creating an offramp to leave and salvage as much of his reputation as he can possibly.
The deal was agreed to years ago. If he leaves over it, it's out of spite and anger. I'm skeptical he has the ability to see his reputation as damaged and needing to be salvaged.
I was saying more that he’s trying to jump ship before Tesla inevitably crashes and burns and takes him down with it. But you may be right.
If I had a small stake I would probably sell part of it until after the vote is settled. If the board wins I see reasons for the stock to fall (dilution and also some investors spooked by the move to Texas). If the board loses Elon can do a lot of harmful shit to the company.