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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)

Posted by ryuzaki0 on from the basking-in-Elon's-musk dept.

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."

30 of 415 comments (clear)

  1. Hey! by TechyImmigrant · · Score: 5, Funny

    Dude, he's doing a Dell.

    --
    I should use this sig to advertise my book ISBN-13 : 978-1501515132.
    1. Re:Hey! by Thelasko · · Score: 5, Informative

      Those apologies during last week's earnings call must have left him with a really bad taste in his mouth.

      --
      One of our competitors trademarked the term "hypothesis". From now on, we will call them "boneheaded ideas".
    2. Re: Hey! by haruchai · · Score: 3, Informative

      "Do you realize this whole hatred of the "shorts" was all Elon's bullshit?"
      That's bullshit alright but not entirely Elon's.
      Short-sellers have been trash-talking Tesla's plans & performance for years. Yes they were losing money while building a car company from nothing but a discounted building but plenty of auto companies have had rough rides without people like Cramer, Chanos, Spiegel et al trashing them at every turn.

      " Musk has proven to me what a loathsome person he is"
      Your shorts are too tight. He made a very offensive remark to someone who openly denigrated his efforts to help WHEN *REPEATEDLY* ASKED to get involved.
      Musk didn't pick that fight but he did overreact.
      And he's since apologized. Where is the apology from Unsworth for telling Musk to stick his supposedly useless mini-sub up his ass?
      OTOH I would like to see Musk keep his promise to demonstrate that the sub would have worked after all.

      --
      Pain is merely failure leaving the body
    3. Re: Hey! by Rei · · Score: 3, Informative

      That sub was an insane idea from the get go.

      Then complain to Rick Stanton, co-lead of the rescue team, who requested the sub and supplied his dimensions. I'm sure he'd be glad to hear from you and your cave rescue expertise.

      Oh, and FYI, even after Musk apologized? Unsworth's mother, in an interview, called for Musk to be shot.

      And I guarantee you that there's already some people out there contemplating doing exactly that. There's orders of magnitude more people that hate Musk than people who even know that Unsworth exists.

      --
      Assuming ethanol comes from murdered children and the hydrogen from magic, hydrogen saves 132% more lives than ethanol.
    4. Re: Hey! by MachineShedFred · · Score: 5, Informative

      GM lies about their faulty ignition switches and killed people.

      Honda continued to ship faulty airbags, and testified before Congress about it. People probably died from that too.

      Toyota denied faulty throttles and cruise control on the Prius that could result in unintended acceleration. Nope, that's perfectly safe.

      Name one car company that never had anyone crash and die, or had a safety recall of any kind. While you come up with nothing, nobody will hold their breath and wait.

      Don't be a fucking idiot.

      --
      Slashdot still doesnâ(TM)t support Unicode after it was added to the HTML standard in 1997.
  2. Do it by WindBourne · · Score: 5, Interesting

    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.
    1. Re:Do it by zlives · · Score: 4, Insightful

      Saudi Arabia called, they want their Oil in control

    2. Re: Do it by WindBourne · · Score: 5, Insightful

      They want their money in control. Like China, Saudi Arabia is investing in a number of western companies. Smart.

      --
      I prefer the "u" in honour as it seems to be missing these days.
    3. Re:Do it by Major+Blud · · Score: 5, Interesting

      I am sick of the trolls that are trying to destroy Tesla.

      Unfortunately, here on Slashdot, a troll is defined as anyone who points out that they are burning through cash faster than they can earn it. Yes, they've hit their production goals with the Model 3, and that takes investment...but time will tell if that investment pays off. They may not have enough time with their current burn rate.
      https://money.cnn.com/2018/08/...

      Look, many of us like electric cars and most everyone will probably end up driving them in the very near future, but odds are Tesla may not be around that long. I'm wondering if part of taking this private is so that their quarterly balances won't be so public.

      --
      If you post as Anonymous Coward, don't expect a reply.
    4. Re: Do it by barc0001 · · Score: 5, Informative

      The Saudis have their mitts in a number of things you wouldn't expect, and which will give them reach for decades to come, for example, they own 50.1% of the Canadian Wheat Board:

      https://www.theglobeandmail.com/report-on-business/us-saudi-firms-to-buy-former-canadian-wheat-board/article23966156/

      In light of the recent 9/11 style threat made against Canada by a Saudi State controlled twitter account:

      https://www.cbc.ca/news/canada/toronto/saudi-arabian-group-apologizes-for-posting-image-appearing-to-threaten-canada-with-9-11-style-attack-1.4775509

      The Canadian government should look strongly at foreign ownership of things like our Wheat Board as that's not in our nation's best interests from a food security standpoint.

    5. Re: Do it by WindBourne · · Score: 5, Interesting

      Oh, I suspect that issues over financing/gaap/etc is a huge part of it. But musk has multiple problems. The first is the shorters like chanos are manipulating the market. Then you have multiple lawsuits from ppl that are also trying BS. Add in the union garbage, and CA's playing with regulations, well, it might mean a private Tesla can make lots of changes with little issues.

      --
      I prefer the "u" in honour as it seems to be missing these days.
    6. Re: Do it by Major+Blud · · Score: 4, Informative

      It was also just announced that the Saudi's purchased a pretty big slice of Tesla:
      https://www.bbc.com/news/busin...

      "The tweets came after a separate report in the Financial Times that Saudi Arabia's sovereign wealth fund had taken a 3%-5% stake in Tesla, a holding worth at least $1.9bn."

      --
      If you post as Anonymous Coward, don't expect a reply.
    7. Re:Do it by Thelasko · · Score: 5, Interesting

      They may not have enough time with their current burn rate.

      The problem with burn rate is it's an extrapolation. It ignores the plan to reduce the burn rate.

      I'm wondering if part of taking this private is so that their quarterly balances won't be so public.

      No doubt this is part of it.

      Wall Street wants information that Tesla simply can't disclose because it would lose it's competitive edge. What are the cost targets per vehicle? How will the company reach those targets? If Tesla gives up that information, it would be valuable information for competitors.

      At the end of the day, an investment in Tesla is an investment in Musk. Do you trust his planning? Do you trust his ability to overcome obstacles along the way? Some people think he is a liar and a cheat. However, I look at the success of SpaceX and conclude that Musk is entirely capable of leading Tesla to the same success.

      --
      One of our competitors trademarked the term "hypothesis". From now on, we will call them "boneheaded ideas".
    8. Re: Do it by datavirtue · · Score: 4, Insightful

      Foreign ownership of any asset is a gamble. At any time the government can re-appropriate it or revoke the debt without payment and of little consequence. Foreigners owning property and debt in my country concern me very little for this reason. We get their money in good times...and we can take the shit back if we need it.

      --
      I object to power without constructive purpose. --Spock
    9. Re:Do it by Anonymous Coward · · Score: 3, Interesting

      LMAO. Your case is rested based upon mod points on Slashdot? That's awesome! Well, at least it's as consistent as your argument. I can't think of a single company with massive demand (greater than any in the entire market), that went bankrupt. Not a single one. Maybe Telsa is the first in all of history . . . but not likely. I hope I get modded up, so I can rest my case too.

    10. Re: Do it by sysrammer · · Score: 3, Funny

      What are you talking about - "a religion"? Please. It's the one true religion. We can prove the existence of our savior, what about you? ;)

      And very early in the morning the first day of the week, they came unto Pad 39 at the rising of the sun.

      And they said among themselves, Who shall launcheth us away the rocket from the base of the tower?

      And when they looked, they saw that the stack was fired away: for it was very great.

      And entering into orbit, they saw a young man sitting on the left side, clothed in an air-tight white garment; and they were affrighted.

      And he saith unto them, Be not panicked!

      --
      His ignorance covered the whole earth like a blanket, and there was hardly a hole in it anywhere. - Mark Twain
  3. So Few Public Companies by glennrrr · · Score: 4, Insightful

    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.

    1. Re:So Few Public Companies by edtice1559 · · Score: 4, Insightful

      This comment makes no sense. The OP's point is that if the best companies keep going private, investing in an index fund will start yielding lower returns and then retail investors will be completely shut out. If those index funds suddenly comprise only penny stocks, they wouldn't be good investments. Whether there is a risk of this happening or not is an interesting discussion (but off topic). But the OP is spot on that public markets are the last place where retail investors can get a good return. If those go away, there will be little upward mobility left.

  4. Time to rethink public corporations by mykepredko · · Score: 5, Insightful

    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
    1. Re:Time to rethink public corporations by JoeyRox · · Score: 4, Interesting

      You live by the sword, you die by the sword. Musk wasn't forced to take his company public - he did so because it was financially beneficial to do so. You can't feed at the trough and then complain about how the trough is set up.

      And back in more normal times, companies were required to have a track record of profit and profit growth before the markets would even consider buying into their public offering.

    2. Re:Time to rethink public corporations by barc0001 · · Score: 4, Insightful

      > trying to meet their quarterly expectations rather develop the company

      Absolutely right. We've been seeing what happens to long standing tech institutions when the investors' quest for better quarterly numbers is king - R&D is sacrificed, entire parts of the company are sold off, and after the investors sell to take their profits and move elsewhere, the company is a sad shell of itself.

      And it's not just tech companies, it's most public companies. One of the public companies I worked for in years past owned the building they were in and rented out the bottom 3 floors to other businesses for a decent chunk of revenue, but decided one quarter that selling the building would be a great way to prop up the numbers for the shareholders and get some capital. Needless to say they went into receivership and were sold piecemeal a few years later as it turns out that a one time cash infusion doesn't help a company's long term bottom line nearly as much as renting out 3 floors of a commercial/retail building in one of Canada's most expensive neighborhoods (Vancouver's Kitsilano area), but hey quick cash made the shareholders happy that quarter.

  5. That private funding deal better be real by JoeyRox · · Score: 3, Insightful

    Otherwise Musk just committed a securities violation by lying about a potential private buyout.

    1. Re:That private funding deal better be real by drinkypoo · · Score: 3, Insightful

      Dumb enough to insult analysts instead of presenting a plan to profitability

      The analysts were being insulting, they deserved to be insulted. Stop crying about their crying.

      --
      "You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
  6. He only pays for shareholders selling by SuperKendall · · Score: 5, Insightful

    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
  7. May want to read summary again. by SuperKendall · · Score: 4, Insightful

    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
  8. Legit..posted by 110010001000 · · Score: 4, Informative

    Elon posted a blog about it: https://www.tesla.com/blog/tak...

    Looks like a great plan!

  9. There is a line though by SuperKendall · · Score: 5, Insightful

    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. Re:There is a line though by Rei · · Score: 3, Informative

      Yes, you can. People like Chanos have basically made a career out of it. By shorting, you lower the stock value, and its market cap. It puts the company in a position to borrow on less favourable terms and pay off convertible debt with cash. Short campaigns generally come hand-in-hand with FUD campaigns, designed to encourage longs to sell and worsen lending terms to the company / create less interest in its bond offerings / reduce its sales. In short, they attempt to create a self-reinforcing downward spiral.

      The problem is that it only works effectively with companies that are currently dependent on borrowed cash - usually companies heavily invested in scaling up operations, wherein their investments have not yet transformed into revenue.

      --
      Assuming ethanol comes from murdered children and the hydrogen from magic, hydrogen saves 132% more lives than ethanol.
  10. Re:Shareholders by Rei · · Score: 4, Informative

    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.
  11. Re:Bullshit. by DontBeAMoran · · Score: 4, Funny

    Anyway, who the hell commits to a twitter request? Seriously?

    The current U.S.A. president?

    (no idea, just asking)

    --
    #DeleteFacebook