Tesla, Inc. (NASDAQ:TSLA) Musk plans to buy another $10 million worth of shares as part of the sale announced on May 2
Tesla Inc Chief Executive Elon Musk personally owes $507 million to Wall Street banks involved in Tesla’s stock and debt sale, backed by his stake in the electric car maker, a company filing shows.
The lending was disclosed in Tesla’s prospectus on May 2 to raise up to $2.3 billion with new shares and convertible debt, and it was $117 million less than the personal loans to Musk disclosed in Tesla’s previous prospectus in 2017.
Still, Tesla said that if the price of its stock falls and the banks force Musk to sell some of his shares, that could create additional pressure on the stock.
Tesla jumped over 4% after Tesla disclosed capital raising plans, which soothed investors’ recent concerns about the Palo Alto, California company and pulled its stock up from two-year lows.
Musk, who owns 20% of Tesla, has taken personal loans from Wall Street banks for years. A Tesla 2017 prospectus showed $624 million in loans to Musk.
The filing on Thursday showed Musk owed money to three banks working on the capital increase.
Goldman Sachs Group Inc has $213 million in loans outstanding to Musk, while he owes Morgan Stanley $209 million, and another $85 million to Bank of America Corp. Goldman was not mentioned as a personal lender to Musk in the 2017 filing.
Those loans are backed by Musk’s shares in Tesla, currently worth a total of around $8 billion. If Tesla’s stock declines, then Musk could be forced to sell some of those shares under terms of the loan, according to the Tesla filing.
Mark Williams, a professor of finance at Boston University, said that investment banks can run into conflicts of interest with their deals with companies, their founders and CEOs, testing their rules to keep different businesses separate.
“This is particularly true in the case of Tesla where you have an aggressive and vocal CEO who is prone to pushing the legal limits and gain terms that might run counter to Goldman’s conflict of interest policies,” Williams said.
Goldman and Citigroup Inc, the top-line book runners in Thursday’s capital raise, both have “sell” ratings on Tesla’s stock, which is unusual but not exceptional on Wall Street.
At the end of 2018, Musk and his trust had 13.4 million Tesla shares pledged as collateral for personal debts, according to another filing. That is down from 13.8 million shares at the end of 2017.
Tesla, Morgan Stanley and Goldman Sachs declined to talk about the loans. Tesla has a policy that caps executives’ borrowings at a quarter of the value of the shares pledged as collateral.
With Tesla repeatedly pushing back forecasts for turning a profit, its stock has dropped 27% year to date.
Musk plans to buy another $10 million worth of shares as part of the sale announced on May 2.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 281.72.
The projected upper bound is: 279.13.
The projected lower bound is: 229.48.
The projected closing price is: 254.31.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend (which appears to be the case with TESLA INC). It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend, it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 57.0890. This is not an overbought or oversold reading. The last signal was a buy 3 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 46.28. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 4 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -16. This is not a topping or bottoming area. The last signal was a buy 1 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 9 period(s) ago.
Rex Takasugi – TD Profile
TESLA INC closed up 10.930 at 255.030. Volume was 154% above average (trending) and Bollinger Bands were 0% narrower than normal.
Open High Low Close Volume___
243.860 256.610 243.490 255.030 23,706,772
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 248.14 273.84 306.09
Volatility: 63 57 74
Volume: 15,677,813 10,795,525 9,536,042
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
TESLA INC is currently 16.7% below its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of TSLA.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on TSLA.O and have had this outlook for the last 15 periods.
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