The potential scenario I see playing out is something like 35-40% in top line growth and a decline on the bottom line. Maybe the figures out away to reduce cost a bit but it won’t be significant. Tesla makes money in China and losses money in the rest of the world, and there could be some serious geopolitical problems in China over the next few years.
Maybe I get burned here. I just feel like the repricing that took place over the last year was the correct response to the value of the stock and the most recent rise was in part due to this major risk on sentiment that has taken place over the last 4-6 weeks.
Shorting things with price movement detached from reality is usually not a great strategy. It’s way too easy to lose even when you’re right. Either you get blown up on borrow costs, or your options decay.
This shit goes sideways even with “known” events too. I threw away a bunch of money buying puts when literally 3x the current float of shares unlocked for a scammy EV battery company. The owners had a basis that was like <$1 and the stock was $7+ and it dumped 60% almost a month after unlock - way after the puts expired.
That sucks man. I’m just shorting with cash in my account. So no margin and no borrow cost, at least not now. It’s a tiny position as well.
The last month has been so insane. Top bankruptcy candidates like carvana, and open door are flying and the material outlook for both companies is horrible. But the market is the market so who knows.
I’m sure unit margins will shrink, but the government is gonna kick in something like $4 or $5 billion to subsidize people buying Teslas in 2023. Tesla’s going to capture a significant chunk of that. It’s hard to see how they don’t make more money than they did without that subsidy.
Early corporate behavior and statements from executives suggest that companies might be accepting the 1% tax as a cost of doing business, not changing their buyback practices.
This isn’t a problem! Unless you’re intentionally implementing some kind of Pigouvian tax, you don’t want taxes to distort decisions. This fight against buybacks continues to be ridiculous.
I’m not sure how I’d characterize it. People are angry at profitable businesses, but it’s hard to get support for things that would actually constrain their profits. So they attempt to do it via some kludge like a buyback tax. Maybe in some world this is the best available option, but I can’t believe that’s actually true. Like, what on earth is this?
Chevron Corp. last month announced a $75 billion buyback along with higher dividends. The White House in its preview of the State of the Union speech criticized oil-and-gas companies’ buybacks.
Senate Finance Committee Chairman Ron Wyden (D., Ore.) said last month that oil companies’ buyback tax should be 25%.
“It’s important to put a check on the price gouging and the windfall for wealthy shareholders,” Mr. Wyden said after Chevron’s announcement.
It seems like part of the reasoning may also be about tax treatment of dividends vs. buybacks (i.e., capital gains) for shareholders, and that this policy is (potentially) easier to implement than raising taxes on the rich.
I’ve never heard any rationale on why buybacks are worse than dividends. And often times it seems like those criticizing buybacks don’t even understand that dividends are the alternative that’s being incentivized.
Correct, it’s a perfectly cromulent decision. If a company is in the fortunate position of having more cash than they know what to do with then they can just issue a one-time special dividend. But buybacks receive better tax treatment so companies usually do that instead.
There is no societal benefit to companies doing buybacks vs dividends so the government should raise taxes on buybacks until they are no longer receive more favorable tax treatment than dividends.
But if it rallies anti-corporate sentiment behind Dems isn’t it worth it?
I guess in a perfect world I’d rather just see them go hard in the paint on taxing corporate profits but absent that approach, why not keep poking large corporate execs in the eye with this share buyback stuff?
I don’t exactly buy this, but if there’s “supposed” to be a shareholder-level tax on excess corporate cash flow, then corporations are getting around it by diverting their excess corporate cash flow to buybacks rather than paying out dividends. And raising taxes doesn’t solve the problem, because there’s no taxable event for shareholders who don’t sell their stock (and some of the people selling shares could be tax-indifferent too–pension funds or non-U.S. people). The corporate-level tax can get some revenue back, but it has different incidence than a tax on dividends. So it isn’t totally insane to think that the buyback tax should be high enough to deter buybacks unless they’re essential for some reason and force corporations to mostly pay out regular dividends.
I just think it’s scummy that airlines will buy back their stock, pay all their executives that are compensated on the stock price, and then a global pandemic breaks out and they show up hat in hand to be bailed out by the American taxpayer. You know what would have been helpful right about then? A cash reserve.
It’s capitalism on the way up, socialism on the way down.
These oil companies are raking in record profits right now, but it wasn’t the case three years ago. If you buy back your stock, and the market turns against you, I have zero sympathy for letting your company go bankrupt.
But corporations are people, and we know people are bad at socking money away for a rainy day, and that’s why we have WELFARE. Wouldn’t be fair to exclude the corpeople from the socialisms.
Right, so demonizing stock buybacks while not mentioning dividends is either ignorant or a cynical tactic to make Democrats look like they’re being tough on corporations while not actually challenging the generous tax arrangements the corporate elite (who are the Democrat’s actual constituents) have.