[newacct23]

>$325 million, paid in Tesla stock.

>Musk wrote in a June 21, 2014 letter to Simbol CEO John Burba

Jesus. I probably wouldn't have taken this deal either because it's all in stock but damn they must be kicking themselves right now.

[ckastner]

All in stock of a not-yet-profitable company who's stock price has been highly volatile in the past.

I don't mean to disparage Tesla, but rather to emphasize that there's a difference between receiving $325 million in cash, $325 million in blue-chip stock, and these $325 million.

[gondo]

THIS! it seems like everyone simply assumes that current stock value = cash value. if it was true, than the offer would be $325m in stock OR in cash. but not even Elon think that offered stocks are worth $325m

[an_account]

That's not true. I think Elon thinks that $325m cash is worth less because he thinks the stock is going to go up, however he needs any cash he can get to grow the company. As a growing company you need cash to grow and must give up stock to do so

[banktaoe]

If they wanted to guarantee cash, they could've bought a collar by selling calls and buying puts. It would have a very small cost, and the deal's investment bankers could set it up, no problem.

tl;dr: you're both extremely confident, ignorant, and wrong.

[MagnumOpus]

If it were that easy, Tesla could do the same. It is not that easy. While you or any other spiv can buy a collar on $10k or even $1m worth of stock for a super short period (1 month, 3 month), it is an entirely different thing to:

- But options for multi-year expiries (because that is how long the disposal will take, after the obligatory lockup)...

- ... in a stock that is 1000x less liquid that your usual AAPL or GOOG...

- ...on a short notice on $325 million worth of stock, i.e. a huge percentage of the free float of the stock, making it impossible to hedge for any bank that offers the collar.

tldr: You are a bit too cocky given your lack of knowledge.

[jonknee]

FWIW, Tesla is a high volume stock and over a billion dollars worth of TSLA shares are traded daily. It's comparably liquid to GOOGL.

The full $325m would be about 1.5M shares which would be 15,000 options contracts. Quite a bit, but not too far from the current action in some December strikes (the 50 put has 11,883 open contracts).

tl;dr You could quite easily either divest of the stake outright or protect a large portion of it through options.

[forgetsusername]

Why did you put a tl;dr on a comment that is two sentences?

[JoeAltmaier]

You can sell stock. SO not much difference, except to Musk who can print stock (and can't print money).

[AYBABTME]

you can't just sell +300M$ of stock like that

[gersh]

4.45M Tesla shares trade ever day. You could liquidate $300m in Tesla stock at less than one day's average volume.

[manicdee]

Trading almost 2M shares on a 5M market is a silly thing to do.

More sensibly, tossing out one batch at a time of less than 5% of the market will allow the stock to clear without sinking the market.

So parcel up the 2M into 50 groups of a few tens of thousands and we are cooking with gas.

[valarauca1]

$300mil in Tesla Stock ~1.4M shares.

The average trade volume is as you say 4.45M shares. Selling an additional 1.4M raises the daily trade volume by 31.4%.

Economics is supply and demand. If you increase supply by a massive amount when not changing demand. The price tanks. Effectively you are killing your own price point and this sales strategy isn't in your favor.

[jonknee]

Not in all companies, but in Tesla you sure can.

[JumpCrisscross]

I have practically never heard of a story involving Jefferies and technology anything going well.