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Elon Musk Says He's Considering Taking Tesla Private; Tesla Suspends Shares As It is Expected To Make an Announcement (cnn.com)
Elon Musk said he's thinking about taking Tesla private. More specifically, he said he may buy back the company for $71.3 billion (at a share price of $420), and already has the funding to do so. From a report: Musk, the CEO and largest shareholder of the electric car maker, said on Twitter on Tuesday that he has secured funding from a private buyer. He implied that the funding values the company at $420 a share. The stock had been worth about $342 a share before Musk's tweet, and shares quickly jumped as high as $371.
The stock had climbed slightly earlier in the day after the Financial Times reported that Saudi Arabia has quietly built a big stake in Tesla. Tesla didn't immediately respond to a request for comment. About an hour and 20 minutes after the Musk tweet, trading in Tesla stock was suspended because the company was expected to release news. TechCrunch: Musk's hope, he later tweeted, is that "all current investors remain with Tesla even if we're private. Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity's SpaceX investment." Musk, who said he would stay on as CEO, also seems willing to have a provision for retail investors, who have held Tesla shares prior to Dec. 31, 2016, to convert their shares into private shares. Musk, in response to a tweet, said he's "super appreciative of Tesla shareholders" and "will ensure their prosperity in any scenario." Musk has publicly mused about taking Tesla private before, saying in a 2017 Rolling Stone profile: "I wish we could be private with Tesla," Musk murmurs as they exit. "It actually makes us less efficient to be a public company."
Analysts speaking to Reuters said they believe Musk is serious. George Galliers of Evercore ISI, said, "I can't believe this is something to bluff or make fun of. Given his historic frustration with short sellers, analysts and certain parts of the press, it is perhaps also not surprising that he has given consideration to taking the company private."
Update: Elon Musk sent an email to employees on Tuesday to explain his rationale behind the move. He wrote: Earlier today, I announced that I'm considering taking Tesla private at a price of $420/share. I wanted to let you know my rationale for this, and why I think this is the best path forward. First, a final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best. As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders. Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term. Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company. I fundamentally believe that we are at our best when everyone is focused on executing, when we can remain focused on our long-term mission, and when there are not perverse incentives for people to try to harm what we're all trying to achieve. This is especially true for a company like Tesla that has a long-term, forward-looking mission. SpaceX is a perfect example: it is far more operationally efficient, and that is largely due to the fact that it is privately held. This is not to say that it will make sense for Tesla to be private over the long-term. In the future, once Tesla enters a phase of slower, more predictable growth, it will likely make sense to return to the public markets. In a tweet moments ago, Musk said, "Investor support is confirmed. Only reason why this is not certain is that it's contingent on a shareholder vote."
Analysts speaking to Reuters said they believe Musk is serious. George Galliers of Evercore ISI, said, "I can't believe this is something to bluff or make fun of. Given his historic frustration with short sellers, analysts and certain parts of the press, it is perhaps also not surprising that he has given consideration to taking the company private."
Update: Elon Musk sent an email to employees on Tuesday to explain his rationale behind the move. He wrote: Earlier today, I announced that I'm considering taking Tesla private at a price of $420/share. I wanted to let you know my rationale for this, and why I think this is the best path forward. First, a final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best. As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders. Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term. Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company. I fundamentally believe that we are at our best when everyone is focused on executing, when we can remain focused on our long-term mission, and when there are not perverse incentives for people to try to harm what we're all trying to achieve. This is especially true for a company like Tesla that has a long-term, forward-looking mission. SpaceX is a perfect example: it is far more operationally efficient, and that is largely due to the fact that it is privately held. This is not to say that it will make sense for Tesla to be private over the long-term. In the future, once Tesla enters a phase of slower, more predictable growth, it will likely make sense to return to the public markets. In a tweet moments ago, Musk said, "Investor support is confirmed. Only reason why this is not certain is that it's contingent on a shareholder vote."
Dude, he's doing a Dell.
I should use this sig to advertise my book ISBN-13 : 978-1501515132.
I am sick of the trolls that are trying to destroy Tesla.
I prefer the "u" in honour as it seems to be missing these days.
I don't if it's the regulatory environment or what driving the trend towards privately owned companies, but every time one goes private there's less ability for common small investors to benefit from wealth generation. I'm just a worker with a 401K, and I'd like to get the returns needed to retire on my investment income. Events like this make it slightly harder to do.
I'm not surprised Mr. Musk is doing this, he is clearly fed up with Wall Street and trying to meet their quarterly expectations rather develop the company and the products for the long term. I would think that dealing with analysts/quarterly statements and their (potential) fallout to be essentially overwhelming as well as causing the executive suite to try and maintain a positive outlook every twelve weeks.
Going private doesn't mean that the stress of creating the best product and making a profit goes away, just that more focus can be put on the company and its products which should result in better products and a better ROI for the company's owners at the end of the day.
I would expect other companies with long lead time products (Boeing, Ford, etc.) will consider finding private investors and taking themselves out of the exchanges so they can focus on their businesses and not making Wall Street investors happy.
Mimetics Inc. Twitter
Otherwise Musk just committed a securities violation by lying about a potential private buyout.
it seems as if it would be more prudent to use that kind of funding to accelerate production and research.
Free of noise and short manipulation he'll have a lot more time and funds free to go into R&D.
Once could also argue this move is a massive marketing expenditure as without short backing, negative Tesla news stories will dry up like dust in the wind, and sales should soar ever higher...
Remember, he only has to actually spend money on people wanting to sell shares - the large majority of Tesla investors (like myself) would not be selling at $420, we'd continue to be private shareholders, so that would be part of the funding not spent that could be used further on R&D. So while he has $84 billion in funding to take TSLA private, he probably will only have to spend about 20$ of that on share buybacks and can put the rest into other efforts.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Let's hope that is exactly how it works. In light of so many that we're trying to destroy Tesla, I would enjoy finding out how many of these ppl will be harmed or possibly financially wrecked.
I prefer the "u" in honour as it seems to be missing these days.
Well unless you are speculating, investing should be long term anyway
I am Slashdot. Are you Slashdot as well?
The fidelity angle isn't much of an angle as it turns out. Fidelity among other companies, invested in SpaceX during earlier funding rounds, and so owns private stock. Those private stocks in SpaceX are then split up into a couple of Fidelities mutual funds. So you could "buy" some SpaceX private stock by purchasing shares in those mutual funds, however they'd be watered down as SpaceX represents a tiny portion of what is in those mutual funds. Additionally if the fund managers at Fidelity so choose they could sell that private stock position. The same is true for Alphabet, which also bought private shares in the same funding round.
I don't think you grasp what has happened. Must has secured enough funding to buy back every single share at $420.00 (ha ha Elon). Trading is suspended pending this announcement. Tesla is THE buyer now, and so is paying for any stock sales that will happen as part of the transition.
People who do not want to sell will be converted to private shares. So the only cash Tesla has to spend is on the shareholders that do not want to go private and get out - basically the short holders, plus probably some small number of people that consider $420 a great exit point to avoid any further risk.
were you asleep in econ 101?
Yes because I already knew everything they were teaching there from my own studies in grade school, but unlike you I actually attended economics and business classes beyond Econ 101 so I can understand what is occurring.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
It goes with his S3XY cars, you know...
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Why are you guys so focused on the "shorts"? What are they doing to Tesla? Nothing
Only funding a vast array of negative news about Tesla , no big deal right?
Basically from my angle, I just love to see people motivated by hate fail.
Suckers like you will continue giving him money and going private means he doesn't have to tell you what is going on
"Suckers like me" have made quite a lot of money from Tesla just through stock, and will likely make more going forward.
Why would I care what is going on day to day? I invest for what will be happening ten years from now, not to know what kind of bagels the CEo is eating or small yearly fluctuations. If you don't have a good guess as to how well Tesla will be doing ten years hence, you aren't much of a technologist and I would advise you to stick entirely to low-risk mutual funds. With your mindset, it seems like you would have shorted Tesla if you could have... zounds.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Elon posted a blog about it: https://www.tesla.com/blog/tak...
Looks like a great plan!
I see what you are getting at and I don't exactly care either, I too mostly say let people do what they want.
However in the case of Tesla it's gone a lot further than that, and into the realm of there being so many shorts and some of vast size, they were trying desperately to manipulate and lower the stock price, trying to drive the company out of business.
When you cross the line from "Well I'll bet the company will fold", to actually trying to cause a company with tens of thousands of employees to fail, then I get pissed off. You are affecting those who bet the company would not fail, but worse you are affecting the lives of a lot of people with jobs there.
You are going to see a remarkable shift in Tesla coverage over the coming years with nothing more to gain from short sellers, probably a few vindictive "I sat at thee from the depths of hell" level articles from those poor shorts who believed the lie the industrial short sellers were peddling than Elon would fail...
So I do feel a little sorry for shorts that were too small to actually affect public stock and news. But not too sorry because the mindset it takes to invest via shorts is a feel a fundamentally bad moral choice, and I would never use that myself - if I don't like a company I just don't buy from them, I don't actively bet on failure. It's really unhealthy to build any aspect of your life around negative mindsets, it bleeds into other aspects of your life and makes you an unpleasant person.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
1) They're quarterly calls, not yearly
2) It was Q1 of this year, not last year
3) There were two people. They were not "investors", they were analysts, both of whom had been pushing short theses (although only one was generally negative on Tesla as a whole). The the questions were - BTW - boneheaded. One of them was literally answered right at the top of the quarterly newsletter that everyone on the call was supposed to have read before calling in.
4) There actually was one person on the call (Galileo) representing actual retail investors, and Musk devoted half the call to answering questions from him.
Assuming ethanol comes from murdered children and the hydrogen from magic, hydrogen saves 132% more lives than ethanol.
Elon has donated only slightly more to the GOP/Republican candidates than he has to Democrats/Democratic candidates. Generally his own reps and people on key congressional committees. Aka, for access (I hope that it doesn't shock your sensibilities to learn that members of your government pay more attention to you when you give them money, although I know you'll feign offense at the concept)
These donations in turn have been orders of magnitude smaller than he's given to organizations such as the Sierra Club.
Assuming ethanol comes from murdered children and the hydrogen from magic, hydrogen saves 132% more lives than ethanol.
The current U.S.A. president?
(no idea, just asking)
#DeleteFacebook
$27,9 billion in assets. $22,6 billion in liabilities. Was there any reason why you handpicked only one part of the assets and liabilities lists? Also, any particular reason you didn't bother to mention the 60 day payment terms on accounts payable, that is to say, they build, deliver, and get payment for a vehicle before the bills for its production come due? No bothering to mention the nearly 20% margins they make on said vehicles? The fact that the Model 3 margins are without any AWD/P (significant extra profit) in the mix, despite them now being half of all new orders? Let alone natural margin increases as production scaleup and refinement decreases the depreciation and labour per vehicle? Not going to mention that the decline in cash in Q2 was less than the value of the vehicles in transit at the end of the quarter, held back for the 200k limit? Not going to bother bringing up the severence/restructuring costs that hit in Q2 turn into a cost savings in Q3 and beyond? Not going to mention that total Q3 production will be three times higher than in Q2, and if you doubt Tesla on this, may I recommend checking out the Bloomberg tracker?
Nah, that would all ruin your narrative. So please. Keep up the cherrypicking.
Assuming ethanol comes from murdered children and the hydrogen from magic, hydrogen saves 132% more lives than ethanol.