The Market Ticker
Commentary on The Capital Markets- Category [Company Specific]
Logging in or registering will improve your experience here
Main Navigation
MUST-READ Selection(s):
There Can Be NO Compromise On Data

Display list of topics

Sarah's Resources You Should See
Sarah's Blog Buy Sarah's Pictures
Full-Text Search & Archives
Legal Disclaimer

The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.

NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES.

The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.

The Market Ticker content may be sent unmodified to lawmakers via print or electronic means or excerpted online for non-commercial purposes provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media, to republish full articles, or for any commercial use (which includes any site where advertising is displayed.)

Submissions or tips on matters of economic or political interest may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.

Considering sending spam? Read this first.

2018-08-14 12:51 by Karl Denninger
in Company Specific , 75 references
[Comments enabled]  

Sleep with dogs, wake up with fleas -- or get sexed.

It used to be that "online dating" (which is really nothing of the sort) had at least some colorable reality attachment.  This was in the days of dozens of actual competing sites and web properties -- Yahoo dating, Match, PlentyOfFish, OkCupid and many more. I have personally used several of them over the last 20 years and prior to about 10 years ago met a few interesting people, and had a couple of good relationships come out of it.

But over the last decade or so IAC/Match has "swallowed" all of them -- including virtually all of the "newer" ones, such as Tinder, which was inextricably tied to Facesucker (you had to have a Facesucker account to register on it.)

Thus, while there are still many "names" in so-called "online dating" there is in fact only one company -- IAC/Match.  Of course that's not apparent when you have dozens of alleged "brands"......

Match was spun off but the fact remains that this is an effective monopoly business with exactly one large firm controlling effectively all of the so-called "online dating" space.

The "space" has become riven through with fraud, scams and schemes, with the most-obvious being the simple: The entire point of these sites is to extract money from you in the form of a subscription, and how that happens doesn't much matter.

Let's face it, "love" (and sex) is one of the big "push-buttons" for virtually everyone.  Tinder was referred to a couple of years ago by some runners I know as Tinder-banging and with good reason.  Meh; if you're into looking for an online meat market for a quickie I suppose it works, but swipe right just isn't my thing.

So it's no surprise that now we hear that the Tinder founders are suing IAC, alleging manipulation and game-playing to basically rob them of the value of their stock options.

Let's be real here -- IAC has seen an explosive increase in its valuation over the last few years as has the spun-off part known as "Match."  Does anyone actually believe the bull**** put forward that one finds "love" via such a mechanism?

Or is it far more-likely that IAC/Match has used the same tools Facesucker does to push your buttons in such a way that you believe if you just spend another $20, $50 or $100 you'll find "love" -- but you never actually do and that's by design and intent, not accident.

Oh, don't get me wrong -- I'm sure there are plenty of exceptions to the rule but let's just apply basic logic -- if you get on one of their sites, find your "true love" and are honest and interested in one person neither of you ever spends another nickel with said firm ever again.  How does such an outcome work out for IAC/Match's stock price?  Not so good, right?

So what do you think the odds are of their "testimonials" being in any way related to reality rather than this firm instead running a basic dopamine extraction racket -- just like Zuck****?

Logic sucks doesn't it -- and while the Tinder executives may well be right as to the merits of their case (we'll see) I find it rather amusing that a service that was founded on the idea of screwing anything that walks irrespective of whether you're truly single or not, turning sex into nothing more than an electronic version of a free *****-house, has now led its founders into...... getting screwed.

View this entry with comments (opens new window)
 

2018-08-13 11:28 by Karl Denninger
in Company Specific , 366 references
[Comments enabled]  

The latest: Now Musk claims "after a meeting with the Saudis" he "believed" they had committed to buy out the stock at $420/share.

That's total crap; funding secured is a specific, factual statement.

Musk has now admitted that statement was false, and in fact he just made another false statement of fact:

To be clear, when I made the public announcement, just as with this blog post and all other discussions I have had on this topic, I am speaking for myself as a potential bidder for Tesla.

No, jackass, you posted that on Corporate Property, as the CEO.  It is thus an official communication of the firm, not "speaking for yourself", just as you are doing right here.

But back to now admitting that you lied:

I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving. This is why I referred to “funding secured” in the August 7th announcement.

But you did not have "funding secured."

You have a bald claim you knew was false, minus any documentation whatsoever (which you still haven't presented and which I believe you do not have), that they're interested in something of this sort.

But it gets better - then Musk admits he lied, flat-out:

Another critical point to emphasize is that before anyone is asked to decide on going private, full details of the plan will be provided, including the proposed nature and source of the funding to be used. However, it would be premature to do so now.

In other words he didn't have the money "secured" in point of fact and now admits this is the case both then and continuing to today.

That statement was not only false it was intentionally misleading; he had no commitment at all by his own admission.

If the board process results in an approved plan, any required regulatory approvals will need to be obtained and the plan will be presented to Tesla shareholders for a vote.

So he had no board approval, he had no funding, and he had no regulatory discussions giving him a reason to believe there would be an approval in that regard either.  That's three more strikes.  How many do you get before you're "out" in this game?

There is no approval possible for a plan that includes Saudi control, in any material way, for this transaction.

Why not?  Because CFIUS will prohibit it, that's why.

There is zero possibility of CFIUS approving a foreign sovereign-wealth fund purchase of Tesla.

Zero.

Musk knows this as well.

The Saudi fund has remained below the 5% reporting threshold intentionally for a reason -- it is below the level at which regulatory scrutiny will be involved. Remember that KHC was allowed to effectively "rescue" Citibank; it is extraordinarily unlikely that any such "go-private" or "LBO" transaction would get anything more than a giggle in response to such an inquiry today, especially in the current political climate.

My best guess -- Musk is scared ****less that the converts due early next year will not be converted (because the stock will be below the conversion price) and will have to instead be paid either through a rollover transaction (and given the firm's junk-credit rating that will be expensive, if it can be done at all) or paid off.  The cash is unlikely to exist at that time, given the firm's cash burn, to pay that issue off which means that a failure to roll it over is a default and such an event would tank all outstanding bond prices, destroy the stock value entirely and quite-possibly put the firm out of business.

Where is the SEC on this?

I want to see indictments right here and now.

Had the board done its job when he made the "pedo" comment about the cave diver, which was certainly plenty of cause to fire him on the spot there wouldn't be an issue to deal with now.  But the board instead owns this entire thing due to its outrageous and intentional malfeasance in refusing to can this jackass for his previous actions.

Enjoy the decline.

View this entry with comments (opens new window)
 

2018-08-08 08:38 by Karl Denninger
in Company Specific , 211 references
[Comments enabled]  

If you don't live under a freeway overpass you probably know that Musk yesterday, during the time the market was open, claimed an intent (sort of) to take the company private and claimed he had the "funding secured."

Now let's look at the math.  At $420, the claimed "price" he said he had set up, this is a roughly $80 billion transaction.  To do it he would have to get enough to reach the 50% control threshold, minimum.  Musk owns about 20% of the company, so that means he would need to fund roughly $20-25 billion to buy up 30% more shares.  But, the company is registered in Delaware (as are most public firms) so there's a potential fly in the ointment there in terms of corporate law; he might need to actually acquire a majority of the shares that are not closely held, which puts another $~10 billion on that (in other words he needs more than 50% representation ignoring his 20%.)  The reason is that Delaware has some "anti screwing" laws which make it easier to challenge a transaction like this if the insiders have a material piece of the shares voting for the go-private action, which is the case here.

Then there's the fact that the board has to vote for this; Musk cannot do it on his own.  He could of course try to use that majority to stack or eject the board and then do it that way, but again now you're inviting more litigation.

Finally, there's a further problem with this sort of "deal" -- it does exactly nothing to improve the firm's financial position.  In fact it makes it much worse unless "someone" wants to simply buy the company, as if this turns out being some sort of complex financial deal then the debt winds up out in the market and that debt has to be serviced on top of what's already there.

It's important to note that not one penny goes into Tesla's bank account through this, since the buying of the shares comes from the existing shareholders and not Treasury shares the company holds.

So was this a stunt or is it real?  Good question.  But this time, unlike the Mr. Pedo comment that Musk made about the cave diver that helped rescue the boys when they spurned his advances, he did materially move the market, his statement was one of fact, not opinion, and it was most-certainly material.

So Elon -- where's the ****ing money eh?  Either he has an actual commitment for the cash -- and we're talking about a hell of a lot of it, and not foreign cash either as there's no ****ing way either the Saudis or Chinese, or for that matter any other foreign nation's money is going to get approval to buy the company -- or he's in deep **** as that's a quite clear violation of long-standing law.  Further, determining intent ought to be easy too, never mind malice as the gist of the action, given how much Musk is known to "like" short-sellers.

If Musk doesn't actually have at least a binding letter of intent in-hand -- not in "discussion" -- then he needs to do 420.

Years, in prison, that is.

View this entry with comments (opens new window)
 

2018-08-02 10:11 by Karl Denninger
in Company Specific , 115 references
[Comments enabled]  

No, this won't be abused....

From a comment on a previous post:

Amazon Lending 

Fund additional inventory to grow your business.
Take a loan of up to $9,000 over 12 months at a total cost of $506.04.
This invitation expires on August 14, 2018.


Apply Now 

Since Amazon completely controls the order in which vendors are displayed in their search results and no outside party has any access to how the decisions are made nor any means of auditing compliance for fairness, it is entirely reasonable to expect that those who are in hock in this fashion will have priority.

This in turn will essentially force you to take a loan and pay 5% of the "working capital" you acquire plus all the ordinary fees and costs of being listed on Amazon.

This is how the company can -- and probably will - turn a 10% cut off the top into a 15% one and is why this sort of "proprietary" and predatory practice needs to be stomped on Gorilla-style.

View this entry with comments (opens new window)
 

2018-07-22 20:32 by Karl Denninger
in Company Specific , 275 references
[Comments enabled]  

Oh oh...

The Wall Street Journal reports that Tesla is now "asking for" (read: demanding) a post-delivery rebate on some of the funds spent with suppliers -- for the last two years.

In other words they agreed to buy "X" for $Y, and now, after the fact, after they were invoiced and, presumably they paid said invoice and consumed said supplier's stuff they are demanding some of the money they paid back.

The Journal does not imply or state, incidentally, that this is due to some sort of post-delivery quality problem (for which such a "request" would be reasonable.)

Nobody in their right mind would respond to such a "request" with anything other than laughter unless they had a sizable A/R amount outstanding with Tesla which was at risk of not being paid at all.

Draw your own conclusions -- mine is that I may need some way out-of-the-money PUTs.

PS: This might explain Musk's increasingly erratic behavior.....

PPS: Own a Tesla?  How well will it operate (or will it operate at all) when it can't talk to "momma" any more?

View this entry with comments (opens new window)