Exclusive Breakdown of Tesla Inc (TSLA)’s 2022 Convertible Notes And Why You Should Buy Them

With the array of possibilities mentioned on the previous page in mind, let’s see how Ankur breaks down the likelihood of each scenario playing out:

#1 Probability that this becomes a 10x and Tesla is the next Apple and dominates multiple industries: 25% (if Tesla gets 5% of global market share, Chamath believes Tesla’s market cap jumps to 7x current levels just on the automotive side)
#2 Probability that Tesla becomes the most valuable car company in the world, but does not become a 10x: 15% (~3x upside in this case)
#3 Probability that Tesla remains a niche player and has 1-2% of global market share: 20% (assume no upside in this case)
#4 Probability that Tesla remains under 1% of the market and also needs substantially more cash to stay afloat: 20% (in this case, we can assume it will be worth more than $15 billion and thus the convertible notes do not lose value)
#5 Probability that Tesla suffers a catastrophic loss: 20% (for example #3 in the downside scenario happens and the company value goes to 0)

As Ankur noted, even if the odds were adjusted to the point that #1 was only given 10% odds and #5 was given 90% odds, the expected value of the 2022 Tesla convertible notes would STILL be slightly positive. However, given his actual projections above, Ankur rates the investment as having an Expected Value of 2.8-times, making it a very attractive play, and one in which he also plans to invest heavily in once the note goes back to par.