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>$325 million, paid in Tesla stock. >Musk wrote in a June 21, 2014 letter to Simbol CEO John Burba Jesus. I probably wouldn't have taken this deal either beca

>$325 million, paid in Tesla stock. >Musk wrote in a June 21, 2014 letter to Simbol CEO John Burba Jesus. I probably wouldn't have taken this deal either because it's all in stock but damn they must be kicking themselves right now.

ckastner 10y ago
All in stock of a not-yet-profitable company who's stock price has been highly volatile in the past. I don't mean to disparage Tesla, but rather to emphasize that there's a difference between receiving $325 million in cash, $325 million in blue-chip stock, and these $325 million.
- gondo 10y ago
  THIS! it seems like everyone simply assumes that current stock value = cash value. if it was true, than the offer would be $325m in stock OR in cash. but not even Elon think that offered stocks are worth $325m
  - an_account 10y ago
    That's not true. I think Elon thinks that $325m cash is worth less because he thinks the stock is going to go up, however he needs any cash he can get to grow the company. As a growing company you need cash to grow and must give up stock to do so
  - banktaoe 10y ago
    If they wanted to guarantee cash, they could've bought a collar by selling calls and buying puts. It would have a very small cost, and the deal's investment bankers could set it up, no problem. tl;dr: you're both extremely confident, ignorant, and wrong.
    - MagnumOpus 10y ago
      If it were that easy, Tesla could do the same. It is not that easy. While you or any other spiv can buy a collar on $10k or even $1m worth of stock for a super short period (1 month, 3 month), it is an entirely different thing to: - But options for multi-year expiries (because that is how long the disposal will take, after the obligatory lockup)... - ... in a stock that is 1000x less liquid that your usual AAPL or GOOG... - ...on a short notice on $325 million worth of stock, i.e. a huge percentage of the free float of the stock, making it impossible to hedge for any bank that offers the collar. tldr: You are a bit too cocky given your lack of knowledge.
      - jonknee 10y ago
        FWIW, Tesla is a high volume stock and over a billion dollars worth of TSLA shares are traded daily. It's comparably liquid to GOOGL. The full $325m would be about 1.5M shares which would be 15,000 options contracts. Quite a bit, but not too far from the current action in some December strikes (the 50 put has 11,883 open contracts). tl;dr You could quite easily either divest of the stake outright or protect a large portion of it through options.
    - forgetsusername 10y ago
      Why did you put a tl;dr on a comment that is two sentences?
- JoeAltmaier 10y ago
  You can sell stock. SO not much difference, except to Musk who can print stock (and can't print money).
  - AYBABTME 10y ago
    you can't just sell +300M$ of stock like that
    - gersh 10y ago
      4.45M Tesla shares trade ever day. You could liquidate $300m in Tesla stock at less than one day's average volume.
      - valarauca1 10y ago
        $300mil in Tesla Stock ~1.4M shares. The average trade volume is as you say 4.45M shares. Selling an additional 1.4M raises the daily trade volume by 31.4%. Economics is supply and demand. If you increase supply by a massive amount when not changing demand. The price tanks. Effectively you are killing your own price point and this sales strategy isn't in your favor.
      - manicdee 10y ago
        Trading almost 2M shares on a 5M market is a silly thing to do. More sensibly, tossing out one batch at a time of less than 5% of the market will allow the stock to clear without sinking the market. So parcel up the 2M into 50 groups of a few tens of thousands and we are cooking with gas.
    - jonknee 10y ago
      Not in all companies, but in Tesla you sure can.
JumpCrisscross 10y ago
I have practically never heard of a story involving Jefferies and technology anything going well.

ckastner 10y ago

All in stock of a not-yet-profitable company who's stock price has been highly volatile in the past. I don't mean to disparage Tesla, but rather to emphasize that there's a difference between receiving $325 million in cash, $325 million in blue-chip stock, and these $325 million.

gondo 10y ago
THIS! it seems like everyone simply assumes that current stock value = cash value. if it was true, than the offer would be $325m in stock OR in cash. but not even Elon think that offered stocks are worth $325m
- an_account 10y ago
  That's not true. I think Elon thinks that $325m cash is worth less because he thinks the stock is going to go up, however he needs any cash he can get to grow the company. As a growing company you need cash to grow and must give up stock to do so
- banktaoe 10y ago
  If they wanted to guarantee cash, they could've bought a collar by selling calls and buying puts. It would have a very small cost, and the deal's investment bankers could set it up, no problem. tl;dr: you're both extremely confident, ignorant, and wrong.
  - MagnumOpus 10y ago
    If it were that easy, Tesla could do the same. It is not that easy. While you or any other spiv can buy a collar on $10k or even $1m worth of stock for a super short period (1 month, 3 month), it is an entirely different thing to: - But options for multi-year expiries (because that is how long the disposal will take, after the obligatory lockup)... - ... in a stock that is 1000x less liquid that your usual AAPL or GOOG... - ...on a short notice on $325 million worth of stock, i.e. a huge percentage of the free float of the stock, making it impossible to hedge for any bank that offers the collar. tldr: You are a bit too cocky given your lack of knowledge.
    - jonknee 10y ago
      FWIW, Tesla is a high volume stock and over a billion dollars worth of TSLA shares are traded daily. It's comparably liquid to GOOGL. The full $325m would be about 1.5M shares which would be 15,000 options contracts. Quite a bit, but not too far from the current action in some December strikes (the 50 put has 11,883 open contracts). tl;dr You could quite easily either divest of the stake outright or protect a large portion of it through options.
  - forgetsusername 10y ago
    Why did you put a tl;dr on a comment that is two sentences?
JoeAltmaier 10y ago
You can sell stock. SO not much difference, except to Musk who can print stock (and can't print money).
- AYBABTME 10y ago
  you can't just sell +300M$ of stock like that
  - gersh 10y ago
    4.45M Tesla shares trade ever day. You could liquidate $300m in Tesla stock at less than one day's average volume.
    - valarauca1 10y ago
      $300mil in Tesla Stock ~1.4M shares. The average trade volume is as you say 4.45M shares. Selling an additional 1.4M raises the daily trade volume by 31.4%. Economics is supply and demand. If you increase supply by a massive amount when not changing demand. The price tanks. Effectively you are killing your own price point and this sales strategy isn't in your favor.
    - manicdee 10y ago
      Trading almost 2M shares on a 5M market is a silly thing to do. More sensibly, tossing out one batch at a time of less than 5% of the market will allow the stock to clear without sinking the market. So parcel up the 2M into 50 groups of a few tens of thousands and we are cooking with gas.
  - jonknee 10y ago
    Not in all companies, but in Tesla you sure can.

JumpCrisscross 10y ago

I have practically never heard of a story involving Jefferies and technology anything going well.