Tesla shorts will get a final loss of about $2.7 billion

There were about 34 million Tesla shares that were shorted.

The last day and the likely final buyout price of $420 means that shorts lost about $80 per share.
This would be about a $2.7 billion loss for the shorts or about $2 billion loss if they got in at a higher price.

Elon had tweeted out the Hitler downfall Tesla short version.

36 thoughts on “Tesla shorts will get a final loss of about $2.7 billion”

  1. That’s indeed a real possibility with dire consequences but if it’s in earnest and Tesla goes private then at worst he gets a slap on the wrist from the SEC. I’m frankly surprised that his investors still let him Tweet like this because this whole run things by the seat of your pants with Tweets shows a lack of professionalism. Sure Twitter is great for PR and generating fanboys but terrible for running anything more serious than a Taco Truck.

  2. That’s indeed a real possibility with dire consequences but if it’s in earnest and Tesla goes private then at worst he gets a slap on the wrist from the SEC. I’m frankly surprised that his investors still let him Tweet like this because this whole run things by the seat of your pants with Tweets shows a lack of professionalism. Sure Twitter is great for PR and generating fanboys but terrible for running anything more serious than a Taco Truck.

  3. People who short stocks are playing with fire and deserve to get burned. However, if Elon’s Tweet wasn’t serious and was just meant to harm the short sellers then it’s him that is will get burned in th end. The only reason I mention this as a possibility is that his behavior has seemed somewhat erratic of late. Some example this behavior are his lashing out at a stock analyst and the whole mini-sub debacle.

  4. People who short stocks are playing with fire and deserve to get burned. However if Elon’s Tweet wasn’t serious and was just meant to harm the short sellers then it’s him that is will get burned in th end. The only reason I mention this as a possibility is that his behavior has seemed somewhat erratic of late. Some example this behavior are his lashing out at a stock analyst and the whole mini-sub debacle.

  5. This seems like a reasonable, logical way things could go. Why is it, then, that every other article I’ve read on the matter quotes experts as saying “Wow I don’t know how Musk is going to do this!”?

  6. This seems like a reasonable logical way things could go. Why is it then that every other article I’ve read on the matter quotes experts as saying Wow I don’t know how Musk is going to do this!””?”””

  7. $420 isn’t the limit, it’s the floor. It’s only a first bid. Short losses have no theoretical upper limit. The way this probably works is that some consortium put together by Musk offers to buy shares from anyone who wants to exit at $420, but they hope most people will choose to hang on when they go private. Some people take the offer, some people elect to keep their shares and swap them into the special purpose fund that will be created for small investors. There will probably be a second higher bid at $500 to get a few more people to sell. Then they have the shareholder meeting, and the consortium use their new shares to confirm the vote to go private. Then they set a date to de-list the stock – let’s say December 15. They will probably keep the new offer open up til that date, setting a floor on the price, now $500. But the stock can still trade higher if people want to get in before Tesla goes private. At that stage, all the weak hands are out. Every short seller MUST close their short position before the delisting date. They have an obligation to repay the borrowed share which is absolute. Their broker will probably impose their own deadline a week or two prior so they don’t get caught in the rush. At that point, EVERYONE KNOWS that short sellers must buy stock equivalent to 25% of the free float by a fixed date that is, let’s say, 6 weeks away. And everyone knows that everyone else knows. Whatever the cost, whatever it takes, your broker will do it for you and send you the bill if you don’t comply. But who is going to sell? Everyone who wants out has sold to the consortium already. All that is left is people who intend to hold Tesla for the next 10 years but may sell if you offer them crazy money now, and speculators planning on squeezing the shorts until it hurts and then selling for some ridiculous price above $2000. All this will be front page news on every major financial publication in the final month before shorts have to close their position. Shorts w

  8. $420 isn’t the limit it’s the floor. It’s only a first bid. Short losses have no theoretical upper limit.The way this probably works is that some consortium put together by Musk offers to buy shares from anyone who wants to exit at $420 but they hope most people will choose to hang on when they go private.Some people take the offer some people elect to keep their shares and swap them into the special purpose fund that will be created for small investors. There will probably be a second higher bid at $500 to get a few more people to sell. Then they have the shareholder meeting and the consortium use their new shares to confirm the vote to go private. Then they set a date to de-list the stock – let’s say December 15. They will probably keep the new offer open up til that date setting a floor on the price now $500. But the stock can still trade higher if people want to get in before Tesla goes private. At that stage all the weak hands are out.Every short seller MUST close their short position before the delisting date. They have an obligation to repay the borrowed share which is absolute. Their broker will probably impose their own deadline a week or two prior so they don’t get caught in the rush.At that point EVERYONE KNOWS that short sellers must buy stock equivalent to 25{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} of the free float by a fixed date that is let’s say 6 weeks away. And everyone knows that everyone else knows. Whatever the cost whatever it takes your broker will do it for you and send you the bill if you don’t comply.But who is going to sell? Everyone who wants out has sold to the consortium already. All that is left is people who intend to hold Tesla for the next 10 years but may sell if you offer them crazy money now and speculators planning on squeezing the shorts until it hurts and then selling for some ridiculous price above $2000.All this will be front page news on every major financial publication in t

  9. That’s indeed a real possibility with dire consequences but if it’s in earnest and Tesla goes private then at worst he gets a slap on the wrist from the SEC. I’m frankly surprised that his investors still let him Tweet like this because this whole run things by the seat of your pants with Tweets shows a lack of professionalism. Sure Twitter is great for PR and generating fanboys but terrible for running anything more serious than a Taco Truck.

  10. People who short stocks are playing with fire and deserve to get burned. However, if Elon’s Tweet wasn’t serious and was just meant to harm the short sellers then it’s him that is will get burned in th end. The only reason I mention this as a possibility is that his behavior has seemed somewhat erratic of late. Some example this behavior are his lashing out at a stock analyst and the whole mini-sub debacle.

  11. This seems like a reasonable, logical way things could go. Why is it, then, that every other article I’ve read on the matter quotes experts as saying “Wow I don’t know how Musk is going to do this!”?

  12. $420 isn’t the limit, it’s the floor. It’s only a first bid. Short losses have no theoretical upper limit.
    The way this probably works is that some consortium put together by Musk offers to buy shares from anyone who wants to exit at $420, but they hope most people will choose to hang on when they go private.
    Some people take the offer, some people elect to keep their shares and swap them into the special purpose fund that will be created for small investors. There will probably be a second higher bid at $500 to get a few more people to sell.
    Then they have the shareholder meeting, and the consortium use their new shares to confirm the vote to go private. Then they set a date to de-list the stock – let’s say December 15. They will probably keep the new offer open up til that date, setting a floor on the price, now $500. But the stock can still trade higher if people want to get in before Tesla goes private. At that stage, all the weak hands are out.
    Every short seller MUST close their short position before the delisting date. They have an obligation to repay the borrowed share which is absolute. Their broker will probably impose their own deadline a week or two prior so they don’t get caught in the rush.
    At that point, EVERYONE KNOWS that short sellers must buy stock equivalent to 25% of the free float by a fixed date that is, let’s say, 6 weeks away. And everyone knows that everyone else knows. Whatever the cost, whatever it takes, your broker will do it for you and send you the bill if you don’t comply.
    But who is going to sell? Everyone who wants out has sold to the consortium already. All that is left is people who intend to hold Tesla for the next 10 years but may sell if you offer them crazy money now, and speculators planning on squeezing the shorts until it hurts and then selling for some ridiculous price above $2000.
    All this will be front page news on every major financial publication in the final month before shorts have to close their position. Shorts will not only be exposed, everyone in the financial world will be talking about the coming short squeeze. All the forums will debating how high the stock will go before the shorts are able to cover. $1500, $2000, $25000, $3000?. Everyone knows that everyone knows that you will be forced to buy.
    It’s an incredibly vulnerable position to be in for shorts, and the likely panic for the exit in the last couple of weeks could be something for the history books.

  13. I do pay attention. That’s how I know this is not stock fraud.

    You only pay attention to what you want to, which is a way you are an idiot.

    It’s not the only way. This can only be stock fraud if there was no buyer interested in taking the stock private.

  14. No idiot, he didn’t retract anything.

    arstechnica com cars 2018 08 employee-email-explains-elon-musks-plan-to-take-tesla-private

    arstechnica com cars 2018 08 elon-musk-tweets-he-has-funding-to-take-tesla-private

  15. Technically, Tom’s right: murder is a legal definition. The killing of a human by another human can happen in many ways, with murder being “the unlawful premeditated killing of one human being by another.”

  16. “I do not believe this is the appropriate way to suggest going private,”

    “If his comments…

    You treat speculation as though it were truth. If he pursues the offer, he’s fine. Time must still pass.

  17. Yes, it usually means exactly that.

    And really, the shorts metaphorically need killing. They are pathological skeptics, the crabs trying to pull down all of society to their level in the bucket.

  18. Because I can’t include the link, I will quote from them:

    Securities lawyers said they were shocked by the tweet. “I do not believe this is the appropriate way to suggest going private,” said Charles Elson, the director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

    “If his comments were issued for the purpose of moving the price of the stock, that could be manipulation, it could also be securities fraud,” former SEC Chairman Harvey Pitt told CNBC on Tuesday. “The use of a specific price for a potential going private transaction is highly unprecedented and therefore raises significant questions about what his intent was. So, that would have to be investigated.

    Google for this yourself.

  19. I think their losses may be a lot higher. Take a look at what happened to VW shares in 2008.
    The 28% of TSLA’s public float which has been sold short means that there is currently 128% of shares owned by long holders (the excess above 100% being the holders who bought the shares sold by the shorts, who in turn borrowed those shares from some of the original holders in order to sell them). In other words, current prices reflect a level of demand sustained in the face of an artificially inflated supply, which will have to be reduced back to only 100% by the time the conversion to private status happens.

    The opportunity to close out short positions assumes that there will be enough long holders who want to tender their shares at the $420 buyout price to create an opportunity for the shorts to front run that transaction and return the shares they borrowed, thereby liquidating the non-existent shares in the process. However, if many current holders decide to stay long through the conversion to private ownership, the shorts (or their margin calling broker-dealers) will have to keep raising their market offer until they arrive at a price that is compelling enough to convince prospective long-term holders to sell. I might be convinced to part with a few of my shares above $1000. But only maybe.

  20. Really? He just committed outright securities fraud by manipulating the markets with his little buy-out claim stunt on Twitter.

    I know you seem to worship the ground Musk walks on Brian. But to the point where you drink the same Kool-Aide as the Musk Fluffers on here? Wow!

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