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ELEPHANT IN THE ROOM
Elon “Tusk” is what some in the business would call “totally f*cked.” Although it doesn’t come as much of a surprise that Tesla’s stock didn’t hit the price threshold that would allow the company to exchange $920M worth of company debt for stock instead of straight cash homie.
With TSLA shares down more than 10% this year, Musk has a better chance of scoring an invite to the SEC Holiday Party than he did of reaching the volume-weighted average stock price of $359.87 for the 20-day trading period that began January 29. Tesla's share price average finished at $306.91 over the span.
So what does this mean?
Well, technically bondholders still have the choice of converting their debt to equity … at a lesser value than the cash payout. Econ 101 would suggest that market participants should, to quote The Steve Miller Band, “take the money and run.” But alas, Elon’s ride or dies aren’t exactly “most market participants.”
With $3.7B of cash on hand, Tesla seems prepared to absorb the blow. Of course, if this was the only concern for the brand a blow to the balance sheet might be more easily absorbed. But it isn’t, and it won’t be.
Let's point fingers, shall we?
Not all of the blame falls on Elon Musk … just most of it. The manic man-child went all loose cannon on Twitter last week and the SEC took notice, threatening to hold Elon in contempt for breaching a pact he made with the Commission to review all aforementioned boneheaded tweets with legal. Musk has until March 11th to provide a (attorney reviewed) response.
Thus far he has only thrown shade via a Twitter tirade aimed at the SEC. And possibly in some socially inept attempt at humor or as a way to impress an indie recording artist, “Elongated Muskrat” changed his Twitter profile name to Elon Tusk.
And lest we forget Elon’s more tangential f*ck ups which have plagued the Nio competitor. Like the resignations of the company’s CFO and chief legal officer in quick succession and the loss of a coveted Consumer Report's recommendation for the Model 3.
The good news? Musk has hinted at a major announcement slated for today. Tesla fan boys are getting their panties in a bunch about a possible Model Y announcement.es.
Tesla to Pay $920 Million Bond as Musk Tweet Bars Stock Rise [Bloomberg]
IN OTHER NEWS
- Wells Fargo just increased its legal reserves again
- The US and China have settled on how to enforce trade agreements
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