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0 pointsgondo10y ago0 comments

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

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5 comments · 2 top-level

banktaoe10y ago· 3 in thread

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.

MagnumOpus10y ago

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.

jonknee10y ago

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.

forgetsusername10y ago

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

an_account10y ago

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

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