9 ms·

Curious question: what's wrong with 420$/share ?

by F_r_k 8y ago

a_humean 8y ago
As indirectly explained by others, 420 is a drug reference about getting high on cannabis. The thinking here is Musk deliberately lied in public and/or was joking in public about the financials of his publicly listed company - potentially out of malice to disrupt the day traders that he frequently criticises on twitter and in quarterly report conference calls. Unless he has evidence that some kind of deal existed that could be construed of as "secured", then he broke the law and there will be lots of short sellers with standing to sue for compensation.
- wand3r 8y ago
  Reid Hasting lawsuit did hold that you can make announcements via socials (facebook in his case) and while you’re correct im not sure what the burden of proof for “secured” is. He could take Solar City private or potentially a piece of the company private. An IOI/LOI the Saudis or SoftBank could suffice but im not a lawyer of course. I suspect this wont count as a crime and given Musks position in the company he holds the cards. If he stepped down those investors would take a beating atleast for the foreseeable future.
  - chibg10 8y ago
    This misses the point I think. The issue is less that he used Twitter, and more that it's illegal for a CEO to manipulate the stock price by (potentially in this case) making misleading and/or false claims. If Musk e.g. didn't actually have funding secured (may or may not be true), it seems to me like a lawsuit might be appropriate.
    - guiambros 8y ago
      For all the doubters here thinking that there's nothing wrong with Musk making some jokes on twitter, go read Matt Levine's Money Stuff column on Bloomberg this week. Not only it explains in detail what's wrong, but it's also high entertainment value (as all his columns. Also the follow-up yesterday [2] is a good summary of the possible solutions for Musk. TL;DR: > If I were Musk’s lawyer, and if he doesn’t actually have $80 billion of financing locked up, I’d be working on a termsheet for the board that (1) offers Tesla shareholders the choice between (A) $420 in cash or (B) shares in a new special-purpose-vehicle that will hold shares in a private Tesla (or whatever your plan is to let people hold on to their shares); (2) limits the cash consideration to, like, $5 billion, or whatever Musk can actually raise; and (3) has some sort of proration mechanism in case more people choose the cash than he can afford. > Does this fit with the spirit of the going-private transaction that Musk tweeted about? No, absolutely not, not even a little bit. But it is … something. And then let the special committee reject it, and then quietly walk away and say “well no we were serious about the buyout proposal but it just didn’t work out.” Which is a much better position to be in than walking away saying “oh yeah sorry we were kidding about that.” [1] https://www.bloomberg.com/view/articles/2018-08-08/elon-musk-has-some-fun-with-tesla https://www.bloomberg.com/view/articles/2018-08-08/elon-musk... [2] https://www.bloomberg.com/view/articles/2018-08-10/tesla-does-some-going-private-stuff https://www.bloomberg.com/view/articles/2018-08-10/tesla-doe...
crunchlibrarian 8y ago
Well he was going to sell for $69 a share but then he tried $666 a share but that was too high so they settled on $420. The point is Musk is looking increasingly like a joke, which is not what you really want in a massive company that is hemorrhaging money and could actually collapse if Model 3 demand doesn't pick up.
- osrec 8y ago
  I agree. He's a talented guy, but a victim of his own grandiose imagination. I think he'll probably pull through, but he might have had more success as a respected, humble, private company, rather than trying to take public stage with his boastful showmanship at every occasion. Also the under-delivering (while still delivering a lot in actual terms) is starting to grow tiresome. Maybe it's the introvert in me talking, but I would certainly respect him a lot more if he made smaller claims and let his results speak for themselves.
  - chibg10 8y ago
    I agree with you, but I wonder how much of (imo tiresome) antics are part of an intentional strategy. Deserved or not, Musk has an enormous fanbase because of his showmanship/public persona/whatever. My hunch is that this is net positive among Tesla's potential customers and probably has been net positive in terms of attracting capital as well. The latter is becoming somewhat more debatable lately though given Musk's somewhat erratic behavior I think. Personally as an investor, Musk's behavior looks uncomfortably to me like how Enron's CEO was behaving near the end (though I would object to any other serious comparisons between Enron and Tesla as businesses).
    - nickik 8y ago
      Or maybe he has fans because he has pushed the almost dead rocket industry and space into a new age. I never particularly liked him as a person, but I like him because of what he actually does.
- jmpman 8y ago
  The backlog of Model 3 reservations is rumored to be over 400,000. Of course I’ve never seen the split out of reservations for $35k variant versus the currently available $50k+ variety. (Yes it would be possible for Tesla to calculate the demand signal even though people waiting for a $35k variety look like customers that haven’t use the configurator) My hypothesis is that his financial model needs more customers of the $50k variety, isn’t seeing the demand, and needs to quickly go private before the cash flow becomes problematic again. The evidence I have to support this hypothesis is the lead time for recent dual motor Model 3. It’s very short. Once that demand dries up, all that’s left is a horde of angry masses waiting for their $35k car that they were expecting to arrive with a $7500 tax credit. Of course my hypothesis is ignoring international sales, which may provide a large enough buffer of premium model demand to keep this ship afloat.
jacknews 8y ago
I'm joking - you could just google those numbers. But maybe Musk was too.

Curious question: what's wrong with 420$/share ?

by F_r_k 8y ago

Curious question: what's wrong with 420$/share ?

As indirectly explained by others, 420 is a drug reference about getting high on cannabis. The thinking here is Musk deliberately lied in public and/or was joking in public about the financials of his publicly listed company - potentially out of malice to disrupt the day traders that he frequently criticises on twitter and in quarterly report conference calls. Unless he has evidence that some kind of deal existed that could be construed of as "secured", then he broke the law and there will be lots of short sellers with standing to sue for compensation.

wand3r 8y ago
Reid Hasting lawsuit did hold that you can make announcements via socials (facebook in his case) and while you’re correct im not sure what the burden of proof for “secured” is. He could take Solar City private or potentially a piece of the company private. An IOI/LOI the Saudis or SoftBank could suffice but im not a lawyer of course. I suspect this wont count as a crime and given Musks position in the company he holds the cards. If he stepped down those investors would take a beating atleast for the foreseeable future.
- chibg10 8y ago
  This misses the point I think. The issue is less that he used Twitter, and more that it's illegal for a CEO to manipulate the stock price by (potentially in this case) making misleading and/or false claims. If Musk e.g. didn't actually have funding secured (may or may not be true), it seems to me like a lawsuit might be appropriate.
  - guiambros 8y ago
    For all the doubters here thinking that there's nothing wrong with Musk making some jokes on twitter, go read Matt Levine's Money Stuff column on Bloomberg this week. Not only it explains in detail what's wrong, but it's also high entertainment value (as all his columns. Also the follow-up yesterday [2] is a good summary of the possible solutions for Musk. TL;DR: > If I were Musk’s lawyer, and if he doesn’t actually have $80 billion of financing locked up, I’d be working on a termsheet for the board that (1) offers Tesla shareholders the choice between (A) $420 in cash or (B) shares in a new special-purpose-vehicle that will hold shares in a private Tesla (or whatever your plan is to let people hold on to their shares); (2) limits the cash consideration to, like, $5 billion, or whatever Musk can actually raise; and (3) has some sort of proration mechanism in case more people choose the cash than he can afford. > Does this fit with the spirit of the going-private transaction that Musk tweeted about? No, absolutely not, not even a little bit. But it is … something. And then let the special committee reject it, and then quietly walk away and say “well no we were serious about the buyout proposal but it just didn’t work out.” Which is a much better position to be in than walking away saying “oh yeah sorry we were kidding about that.” [1] https://www.bloomberg.com/view/articles/2018-08-08/elon-musk-has-some-fun-with-tesla https://www.bloomberg.com/view/articles/2018-08-08/elon-musk... [2] https://www.bloomberg.com/view/articles/2018-08-10/tesla-does-some-going-private-stuff https://www.bloomberg.com/view/articles/2018-08-10/tesla-doe...

crunchlibrarian 8y ago

Well he was going to sell for $69 a share but then he tried $666 a share but that was too high so they settled on $420. The point is Musk is looking increasingly like a joke, which is not what you really want in a massive company that is hemorrhaging money and could actually collapse if Model 3 demand doesn't pick up.

osrec 8y ago
I agree. He's a talented guy, but a victim of his own grandiose imagination. I think he'll probably pull through, but he might have had more success as a respected, humble, private company, rather than trying to take public stage with his boastful showmanship at every occasion. Also the under-delivering (while still delivering a lot in actual terms) is starting to grow tiresome. Maybe it's the introvert in me talking, but I would certainly respect him a lot more if he made smaller claims and let his results speak for themselves.
- chibg10 8y ago
  I agree with you, but I wonder how much of (imo tiresome) antics are part of an intentional strategy. Deserved or not, Musk has an enormous fanbase because of his showmanship/public persona/whatever. My hunch is that this is net positive among Tesla's potential customers and probably has been net positive in terms of attracting capital as well. The latter is becoming somewhat more debatable lately though given Musk's somewhat erratic behavior I think. Personally as an investor, Musk's behavior looks uncomfortably to me like how Enron's CEO was behaving near the end (though I would object to any other serious comparisons between Enron and Tesla as businesses).
  - nickik 8y ago
    Or maybe he has fans because he has pushed the almost dead rocket industry and space into a new age. I never particularly liked him as a person, but I like him because of what he actually does.
jmpman 8y ago
The backlog of Model 3 reservations is rumored to be over 400,000. Of course I’ve never seen the split out of reservations for $35k variant versus the currently available $50k+ variety. (Yes it would be possible for Tesla to calculate the demand signal even though people waiting for a $35k variety look like customers that haven’t use the configurator) My hypothesis is that his financial model needs more customers of the $50k variety, isn’t seeing the demand, and needs to quickly go private before the cash flow becomes problematic again. The evidence I have to support this hypothesis is the lead time for recent dual motor Model 3. It’s very short. Once that demand dries up, all that’s left is a horde of angry masses waiting for their $35k car that they were expecting to arrive with a $7500 tax credit. Of course my hypothesis is ignoring international sales, which may provide a large enough buffer of premium model demand to keep this ship afloat.

jacknews 8y ago

I'm joking - you could just google those numbers. But maybe Musk was too.