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Tesla’s $5B Capital Raise; A Wake Up Call for the SEC?

By Jacob Wolinsky. Originally published at ValueWalk.

Tesla Capital Raise Apple Tesla Stock Split NASDAQ:TSLA NASDAQ: TSLA tesla tech stock gross margin percentage tesla Inc shorts Tesla's record market

Whitney Tilson’s email to investors discussing Tesla‘s $5B capital raise; JB Straubel’s new venture; the secret adjustment factor Tesla uses to get its big EPA range numbers; Tesla 0.8% EV market share in Europe in July; Kass comments.


Q2 2020 hedge fund letters, conferences and more

Tesla’s $5B capital raise

1) Two tweets on Tesla’s $5B capital raise, announced today:

The $5B number was likely negotiated betw S&P and $TSLA. An “at the market” secondary with timing to be determined rather than a typical secondary likely signals to S&P TSLA will help smooth liquidity issues for indexers trying to buy 125-150M $TSLA shares upon inclusion. https://t.co/4iHdymuH5e

— Gary Black (@garyblack00) September 1, 2020

This is not a normal secondary.

First, $TSLA is using 10 different brokers – the largest brokers that trade for the indexers.

Second, everything about this will be specified by TSLA – price, time, size, etc.

This is clearly being done to pave the way for S&P Inclusion.

— Gary Black (@garyblack00) September 1, 2020

A friend’s comments:

At some level it sounds plausible, but I have not been in that room and really can’t offer an opinion on that specific interpretation.

Generally speaking, of course, at this kind of totally insane valuation — roughly 100 times what the company is really worth — the company should have raised as much equity as possibly regardless of whether S&P 500 inclusion was in the cards or not.

3) An interesting WSJ article about JB Straubel’s new venture: One of the Brains Behind Tesla May Have a New Way to Make Electric Cars Cheaper

4) From my analyst Kevin (a Tesla car and stock owner):

Another TSLAQ conspiracy theory bites the dust.

They use an adjustment factor that is completely allowed but other automakers don’t use it because they are too lazy and don’t actually WANT to sell their EVs…

The Secret Adjustment Factor Tesla Uses to Get Its Big EPA Range Numbers

Doug Kass Comments

5) From a friend:

The dominant EV brand held a commanding 0.8% EV market share in Europe in July: http://ev-sales.blogspot.com/2020/08/europe-july-2020.html

Model 3 sales: 856 units

Total EV sales: 113,659 units

That’s less than 0.8%.

(Model X and S too small to count)

6) Doug Kass’s comments:

I would add:

Despite protestations from @stoolpresidente and others, a Tesla stock split produces no new value — and has led to a price increase of nearly $200 billion in market value.

Further, such a split will not add new investors.

People who think Tesla is too rich to buy a single share can already buy slices from Schwab, Fidelity and Robinhood.

One of the underappreciated sources of $TSLA price appreciation: Chinese hot

money. This blogger has 10 million followers and each day pumps out bullish premonitions that Tesla will continue to skyrocket. Chinese pump and dump schemes are not prosecuted in China for U.S. stocks.

Original Tweet, here.

This is just a massive manipulative game being played without any regulatory attention

Aug 27, 2020 | 12:05 PM EDT DOUG

KASS

A Wake Up Call for the SEC on Tesla

*Investigate!

Look at the volume in the August 28 calls (expiring tomorrow!) in Tesla (TSLA)

25,000 August 28 $2200 calls.

31,000 August 28 $2250 calls.

32,000 August 28 $2300 calls.

By comparison there is little trading in Tesla August 28 puts.

Someone or some group of traders go in nearly every morning and buy large sums of Tesla calls.

This forces buying in the common.

Traders, like Robinhood, who sell their order flow to others who buy in front of them, and possibly think that there is good news ahead, aggressively buy Tesla’s common.

In other words, the initial call buying creates much more artificial buying.

This has been going on for weeks.

Then the analytical community, with dramatically lower price targets, like Jeffries, doubles the target based on no new incremental fundamental news.

The SEC remains silent.

Position: Long TSLA puts, Short TSLA

The post Tesla’s $5B Capital Raise; A Wake Up Call for the SEC? appeared first on ValueWalk.

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