1. Clearing up Elon Musk’s SEC matter & filing this shelf takes care of 2 outstanding items, which I have previously outlined as necessary for a common equity offering
2. On Page 2, note there is no mention of 2 big previous Elon Musk promises, which appeared to be obvious, unachievable lies
A. China mass production by year end 2019
B. Robotaxis (FSD) in 2020
3. There are 3 implied delays in the language
The pipeline is described in date order
Model Y in 2020
“Future”, which implies after 2020
For semi-truck, new roadster, pickup truck
4. A multi billion $ common equity offering requires a bulge bracket I-bank as lead
To get a big bank to take the underwriting risk
Musk needs to
A. Walk back ALL timeline & other projections, which appear to be obvious & unachievable lies
B. Give realistic guidance
5. I-banks have paid tens of billions in govt fines & legal settlements 4 underwriting bad securities
2 get a lead bank
= avoid “knew or should’ve known fraud” potl future liability
= Musk will have to quit lying
= Worst thing for $TSLA stock
= necessary 2 keep Tesla afloat
6. $TSLA downgraded to Peer Perform at Wolfe Securities this morning
Somehow they estimate Tesla will earn $8.50 in 2020 LOL
7. Insurance
Another recent & dubious Musk promise to investors
Not mentioned in the shelf description
Tesla is walking back their lies & hype
Tesla cars cost more to insure due to structural reasons they can’t change, such as aluminum body
8. Tesla just filed to offer $650 million of stock & $1.35 billion of convertible bonds
Assuming the 15% shoes are filled
$747.5 million of equity & $1.55 billion of convertible bonds
9. $747.5 million of equity is woefully inadequate given Tesla's financial condition, and the likely shortfalls ahead in Q2 and Q3
Tesla has > $9 billion debt
only $1.45 billion of non-customer deposit cash belonging to them at 3-31
will burn alot of $ in Q2 and Q3
10. The strategy is simple:
Regular debt wasn't a realistic option, TSLA 2025 yielding >8%
Convertible bonds are typically hedged by institutions
Much lower future legal liability risk to I-banks than common equity
11. I-banks underwriting the deal are clearly hoping:
The smaller than expected equity slice
Will cause $TSLA stock to perform well enough, for long enough, to avoid future legal liability
12. Elon Musk is borrowing ANOTHER $10 million from the banks to invest in the deal
He was over $600 million in margin debt 2 years ago
The filings don't disclose his total margin debt now
It's likely close to $1 billion
This is MADNESS by Elon Musk
13. Tesla will not come remotely close to fixing its financial woes with this offering
The relative sizes of small equity vs mostly convertible debt are a "hail Mary pass" attempt to keep $TSLA stock from completely cratering
14. It will be VERY INTERESTING to learn
A. During the deal roadshow, will the underwriters force Elon Musk to quit the obvious lies?
I believe yes, though not completely
B. Will resetting expectations in A hurt Tesla stock?
15. What will the convertible deal terms look like?
Most importantly
Tesla will almost certainly want some sort of mandatory conversion language in the deal, e.g. if the stock trades over a certain price, Tesla can turn the converts into common equity
Will Tesla get this?
16. Assuming there is a mandatory conversion price for the converts,
e.g. $TSLA trades >$300 for 20 consecutive trading days
Can Elon PUMP $TSLA hard enough after the deal is done
Last week, the US Court of Appeals for the 4th Circuit revoked 2 federally approved permits to complete the critically important Mountain Valley Pipeline project
The Obama & Clinton nominated judges revoked the permit for a 94% constructed, $6.2 billion, critical natural gas pipeline because they claimed the Feds failed to properly assess the effects of climate change on 2 species of rare fish reuters.com/legal/litigati…
Anti-Semites like @stranahan believe the overwhelming support amongst conservatives for Israel against Hamas terrorists is due to "control", rather than any facts or analysis.
Lee @stranahan will claim he is not an anti-Semite, he just promotes attacks on "Zionists" by Adam Green of @know_more_news, one of the most notorious Jew haters on the Internet
The @AP “journalists” had an office there for 15 years, claim they didn’t know, and now they’re whining about the building getting destroyed, after IDF warning, and they all safely evacuated
Hill just made a video with numerous antisemitic statements, as defined by IHRA Working Definition of Antisemitism, which has been adopted by the US State Dept & many others. algemeiner.com/2021/02/09/act…
Hill repeated the long-discredited claim that Israel is responsible for US police violence against minorities, saying, “US police are being trained in Israel and some Israeli police are being trained in the United States.”
Hill expressly accused Israel of teaching the US to commit racist acts of murder, saying that American police don’t need to be trained by Israel to “kill black people” and “vice-versa.”
Does @NiskanenCenter permit employees like @willwilkinson calling for violence against former Vice President Mike Pence, calling for him to be lynched?
President & legal counsel inquiries:
jtaylor@niskanencenter.org dbookbinder@niskanencenter.org