Hope some of you guys bought into AMD when I wrote the long thesis on longing AMD. Got another play that may just look to be too good to be true.
Background: Elon Musk tweeted "am thinking about taking Tesla private @420/share, funding secured!" and then submitted a letter to his employees about why he wants privatization, and for share holders who wish to stay in Tesla, they have the option to after privatization. Later he tweeted "the only reason why going private is not a sure thing is because shareholders need to vote on this". Tesla board responded that Elon spoke with them a week ago about privatizing Tesla and addressed the issue of funding.
Elon tweeted 6 weeks ago "shorts you guys have 3 weeks to cover".
Earnings report came out strong for Tesla, hitting 5k/week on the model 3 production and turning it slight gross margin positive. They are expecting 6k+ in the up coming quarters and 15% gross margin positive for the M3 and overall be cash flow positive from now on forward.
The play: Currently Tesla is not at 420. SP is currently at 350ish. You might be scratching your head as to why. There's a bear thesis that Elon does NOT have funding secured, lied on tweeter just to burn the shorts via stock manipulation. They are hoping that the SEC fines/put musk in Jail for this. That's right...the short thesis is Elon decided on a Tuesday morning to commit a crime, sabotaging himself and his company because he's on a suicide mission to burn the shorts!
Potential: So there are a couple thoughts on the matter.
1. Stock goes to 420 eventually after the board files a 8k.
2. Stock goes way beyond 420 after the board files 8k
The reason why there's a chance of surpassing 420 is because
A. Tesla is one of the most shorted stock on the market, with shorts INCREASING AFTER the tweeter announcement. Once 8k is filed and funding is indeed secured, shorts will have no where to go but to cover since their thesis of "Elon is going to Jail, Tesla going down to Zero" is no longer a possibility. With 27%+ of the shares floated(meaning created out of thin air due to shorts borrowing them), these 35 million shares need to be bought back and return them to the share holders. This may trigger a black swan event like what happened to Volkswagen in 2008. Considering that Elon also want die hard Tesla fans to keep their stock privatized, this create more incentive for longs to not sell to shorts..meaning there may be a huge deficit in shares that can be bought back triggering the black swan event.
B. Shares are incredibility hard to buy once the company goes private. This will be the last time to easily purchase Tesla shares via open market before they are delisted. Longs who believe in the mission and their potential will want to pay a premium for Tesla shares.
So to me the play is safe because at the end of the day, the only way Tesla will tank is if Elon is indeed lying and ends up in Jail. It's hard to prove considering that they need to prove he made up the entire scenario, have spoken to no one about going privatization, and secured no funding even verbally from anyone prior to his tweet. Good luck shorts..you guys are crazy.
Disclaimer, I have 70k worth of Tesla stocks.
Background: Elon Musk tweeted "am thinking about taking Tesla private @420/share, funding secured!" and then submitted a letter to his employees about why he wants privatization, and for share holders who wish to stay in Tesla, they have the option to after privatization. Later he tweeted "the only reason why going private is not a sure thing is because shareholders need to vote on this". Tesla board responded that Elon spoke with them a week ago about privatizing Tesla and addressed the issue of funding.
Elon tweeted 6 weeks ago "shorts you guys have 3 weeks to cover".
Earnings report came out strong for Tesla, hitting 5k/week on the model 3 production and turning it slight gross margin positive. They are expecting 6k+ in the up coming quarters and 15% gross margin positive for the M3 and overall be cash flow positive from now on forward.
The play: Currently Tesla is not at 420. SP is currently at 350ish. You might be scratching your head as to why. There's a bear thesis that Elon does NOT have funding secured, lied on tweeter just to burn the shorts via stock manipulation. They are hoping that the SEC fines/put musk in Jail for this. That's right...the short thesis is Elon decided on a Tuesday morning to commit a crime, sabotaging himself and his company because he's on a suicide mission to burn the shorts!
Potential: So there are a couple thoughts on the matter.
1. Stock goes to 420 eventually after the board files a 8k.
2. Stock goes way beyond 420 after the board files 8k
The reason why there's a chance of surpassing 420 is because
A. Tesla is one of the most shorted stock on the market, with shorts INCREASING AFTER the tweeter announcement. Once 8k is filed and funding is indeed secured, shorts will have no where to go but to cover since their thesis of "Elon is going to Jail, Tesla going down to Zero" is no longer a possibility. With 27%+ of the shares floated(meaning created out of thin air due to shorts borrowing them), these 35 million shares need to be bought back and return them to the share holders. This may trigger a black swan event like what happened to Volkswagen in 2008. Considering that Elon also want die hard Tesla fans to keep their stock privatized, this create more incentive for longs to not sell to shorts..meaning there may be a huge deficit in shares that can be bought back triggering the black swan event.
B. Shares are incredibility hard to buy once the company goes private. This will be the last time to easily purchase Tesla shares via open market before they are delisted. Longs who believe in the mission and their potential will want to pay a premium for Tesla shares.
So to me the play is safe because at the end of the day, the only way Tesla will tank is if Elon is indeed lying and ends up in Jail. It's hard to prove considering that they need to prove he made up the entire scenario, have spoken to no one about going privatization, and secured no funding even verbally from anyone prior to his tweet. Good luck shorts..you guys are crazy.
Disclaimer, I have 70k worth of Tesla stocks.
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