Wednesday, 26 September, 2018

Elon Musk Considering Taking Tesla Private, Has Already Secured Funding

Tesla CEO Elon Tesla CEO Elon
Lindsey Cook | 08 August, 2018, 09:27

In his typically unorthodox fashion, the eccentric Mr Musk dropped his bombshell on his Twitter account, which he has used as a platform for pranks, vitriol and now for a proposal to pull off one of the biggest buyouts in USA history.

Musk's approach to a possible go-private transaction went against the grain of many companies that release major news in non-trading hours. "Funding secured", Musk said on Twitter, without disclosing the source of the funding. He later tweeted that the only uncertainty about completing the deal is whether he can gain shareholder approval.

The Financial Times had earlier reported that Saudi Arabia's sovereign wealth fund had built a $2bn stake in the company. The report said that the Saudis had acquired a significant $2 billion to $3.2 billion stake in Tesla.

But time and again Musk and Tesla have been given more time to achieve success.

VideoJamie Albertine, Consumer Edge Research senior automotive analyst, discusses Tesla Inc.

In a very characteristic move, Tesla CEO Elon Musk tweeted that he was considering taking Tesla private at a value of $420 a share.

Last month, he apologised for calling British caver Vernon Unsworth, who helped rescue 12 Thai boys from a cave, a "pedo" - short for paedophile - after Unsworth spoke dismissively of the Tesla chief's proposal for bringing the boys to safety.

Mr. Musk could also face scrutiny by the U.S. Securities and Exchange Commission if his tweet turned out to be a joke.

Or is it part of a wider phenomenon, combined with crowdfunding, seed/Angel venture capital and billionaire philanthropy whereby the primary and secondary public share market functions are being truly subverted. Although it's unusual for a chief executive to make such a major announcement over social media, it does not appear to be improper.

Camera IconTesla boss Elon Musk with the new Roadster.

"Am considering taking Tesla private at $420", he said.

Camera IconTesla's existing shareholders could be given the option of retaining a stake in the company through a special fund.

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Musk has a history of making bold statements on Twitter and walking back from the precipice after more careful consideration, but the more detailed email to employees seems to add credence to his plan to go private. "Funding secured." Still, owing to the informal nature of the platform as well as the $420 stock price's close association with so-called weed day dated April 20, many questioned whether Musk was serious. Musk owns almost 20 per cent of the company.

Now the question is, is this a similar move, taking the pressure off the public performance that Musk disdains each quarter, combined with some hubris over decimating the multitude of short positions.

Making money has proven elusive for Tesla while it has been investing in electric auto technology and ramping up production of its vehicles, including a sedan with a starting price of $US35,000 to appeal to a broader audience.

"Tesla's volatility makes it more of a trading stock than a value play", said Ihor Dusaniwsky, head of research at S3 in NY.

Musk explained his rationale in a letter to Tesla employees on Tuesday afternoon, noting at the outset that he has not made a final decision about whether to actually take the company private.

Tesla shareholder Quint Tatro, managing director of Joule Financial, praised the idea as "brilliant", adding that "Musk is exhausted of dealing with all the challenges of being 'public'".

In its second quarter results for 2018 the company posted $4bn of revenue and a loss of $717m.

Tesla Motors CEO Elon Musk is considering taking the company private, saying it would be less distracting that the "enormous pressure" of meeting quarterly financial targets.

Tesla CEO Elon Musk says he is considering taking the electric vehicle maker private. Musk has insisted Tesla has no such need. Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts suggested that less transparency would be welcomed by Musk. My hope is for all shareholders to remain, but if they prefer to be bought out, then this would enable that to happen at a nice premium.

Musk complains that Tesla is "the most shorted stock in the history of the stock market" and many people "have the incentive to attack the company".

He also said he does not now have a controlling vote in the company and wouldn't expect a single shareholder to have one if the company were private.

Elon formally lays out his idea of going private.

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