Tesla, the investment

[Hank]

Auto dealers and local beer distributors are both totally unnecessary middlemen that should go away posthaste. (Sorry Cindy McCain.)

I’m originally from Detroit. If I can buy a car without lining the pockets of the dealers and the UAW, it’s likely to be cheaper, more pleasant, and a higher quality product.

[Zaphod]

More FUD, SEC bring charges with intent for Elon to never be able to be a public company executive again.

[Zaphod]

Oh, the big deal with this is that they are unlikely to be able to raise capital with this, and the DOJ is likely not far behind.

Which, stock wise, means one of the biggest upside risks has been removed, making its downfall much more likely.

[ENT Doc]

Zaphod wrote:

Oh, the big deal with this is that they are unlikely to be able to raise capital with this, and the DOJ is likely not far behind.

Which, stock wise, means one of the biggest upside risks has been removed, making its downfall much more likely.

Click to expand...

Wow, yeah just saw this:

https://www.msn.com/en-us/money/companies/sec-sues-tesla-ceo-musk-alleges-fraud-over-tweets/ar-BBNDJSr?li=BBnbfcL

[ajm184]

The SEC made Mr. Musk have a really bad day.  They are going after him with some very aggressive actions.  Must say I was wrong about the 'slap on the wrist'.  The SEC is going to try and make Mr. Musk an example and unlike a criminal court the legal threshold is much lower.  With all the finance bench leaving and Musk being distracted, not exactly a good recipe for Tesla moving forward.  Tesla will really need someone with a very strong personality to right the ship.

[Peds]

Ahhh haaaa!!!

So who is buying more since it's on sale now?

[ENT Doc]

Dear lord, they're down 12% in after hours trading.  We'll see if it holds.

[Zaphod]

ajm184 wrote:

The SEC made Mr. Musk have a really bad day.  They are going after him with some very aggressive actions.  Must say I was wrong about the ‘slap on the wrist’.  The SEC is going to try and make Mr. Musk an example and unlike a criminal court the legal threshold is much lower.  With all the finance bench leaving and Musk being distracted, not exactly a good recipe for Tesla moving forward.  Tesla will really need someone with a very strong personality to right the ship.

Click to expand...

DOJ has an investigation as well. This is break neck speed for these agencies. Usually takes them forever. Now the discovery phase is open, and things could get much worse.

[Hatton]

Front page of the WSJ again.   Not good.

[Zaphod]

Debt has always been a problem, and maturities upcoming likely prompted the tweet in question to attempt to elevate share price higher than conversion price since paying cash would be nearly impossible. Here is a breakdown. Its really amazing no cooler heads were able to get him to take the SEC settlement.

I think another good take away from this is how its almost 100% a self inflicted wound. You see in the table below how much of the debt upcoming is from Solar City, which was a terrible and ego driven acquisition that is in legal battles right now. The other issue being they did not need to raise hardly any of the debt, some of it was great when the stock was rising and they easily took out the convert price, but if your equity is grossly and obviously overvalued (musk himself has said this) then issuing equity is perfect.

Tesla's debt
Type	From	Maturity	Coupon	Size		Conv. Price
Maturing Before		12/2019
Convert	SC	11/2018	2.75%	$230 million		$560.64
Convert	TM	3/2019	0.25%	$920 million		$359.87
Convert	SC	11/2019	1.625%	$566 million		$759.36
Prom. Note	SC	8/2018	6.5%	$100 million
Subtotal				$ 1.816 billion
Non-Recourse
Term Loan	SC	12/2018	4.8%	$157 million
Term Loan	SC	1/2021	4.9%	$176 million
				$333 million
Future Maturities
Convert	TM	3/2021	1.25%	$1.38 billion		$359.87
Convert	TM	3/2022	2.375%	$977.5 million		$327.50
Senior Notes	TI	8.2025	5.3%	$1.8 billion
Subtotal				$4.157 billion
SC=SolarCity
TM=Tesla Motors
TI=Tesla, Inc.

[ko]

ajm184 wrote:

The SEC made Mr. Musk have a really bad day.  They are going after him with some very aggressive actions.  Must say I was wrong about the ‘slap on the wrist’.  The SEC is going to try and make Mr. Musk an example and unlike a criminal court the legal threshold is much lower.  With all the finance bench leaving and Musk being distracted, not exactly a good recipe for Tesla moving forward.  Tesla will really need someone with a very strong personality to right the ship.

Click to expand...

Sure, but to be fair, it's not like those aggressive actions or "making him an example" are unwarranted. Musk is not a victim at all here (not sure if that's what you were implying though). Even without anything else, the $420 tweet was incredibly reckless and showed very poor judgement, to the point of violating law.

[ajm184]

ko wrote:

it’s not like those aggressive actions or “making him an example” are unwarranted.

Click to expand...

There are alot of unflattering words I could use for Elon Musk's use of Twitter and he was basically daring the SEC to go after him; he got his wish.  The board of Tesla has no out either imo as a 2013 8-K states the company can/will communicate material information via Elon Musk's personal twitter account.  I would be very worried as an equity investor, given the CF, leverage, and near term debt maturities.  Twitter is not an appropriate platform to communicate on material subjects IMO, weather you run a company or a branch of government (cough, cough).

[Zaphod]

ajm184 wrote:

ko wrote:

it’s not like those aggressive actions or “making him an example” are unwarranted. 

Click to expand…

There are alot of unflattering words I could use for Elon Musk’s use of Twitter and he was basically daring the SEC to go after him; he got his wish.  The board of Tesla has no out either imo as a 2013 8-K states the company can/will communicate material information via Elon Musk’s personal twitter account.  I would be very worried as an equity investor, given the CF, leverage, and near term debt maturities.  Twitter is not an appropriate platform to communicate on material subjects IMO, weather you run a company or a branch of government (cough, cough).

Click to expand...

If anything, this will signal to CEOs the only legitimate use of social media is banal platitudes and such, there is otherwise only risk, even in seemingly benign interactions. Just doesnt make any sense.

[Dont_know_mind]

It will be interesting to see if it clearly breaks 260 in the next few weeks.

Otherwise Musk lives to fight another day.

[Zaphod]

Dont_know_mind wrote:

It will be interesting to see if it clearly breaks 260 in the next few weeks.

Otherwise Musk lives to fight another day.

Click to expand...

Not up to him anymore. He either settles, which the SEC wont take anything less than his removal for at least a time period as CEO/director, or he fights, in which case he loses (they have >95% success rate in these types of cases) and is never allowed to be a officer/board of a public company. He should have settled. Then there is the criminal case that will be forthcoming.

For the stock though, if it materially breaks it will be very interesting to see where the margin calls come in and how bad it hits given how financially engineered he personally is and the company, it could be a vicious spiral.