Elon Musk taking Tesla private?


(Alex Sherwood) #1

quote from here

Speaking of..

I’m not sure I’d invest with their current valuation but I’d be pretty gutted not to have the option, if this actually happens :cold_sweat:


Does Tesla have a sustainable competitive advantage (yet)?
Dream IPO
(Vladislav Kozub) #2

$20 intraday growth since!


(Chris) #3

420 blaze it :joy:

I very much doubt he’ll do it.


(Alex Sherwood) #4

I expect that tweet’s going to upset a few people..


(Vladislav Kozub) #5

$420 is peanuts for Tesla in long run. Do not hold it myself but was considering getting into it. Incredibly overvalued and problematic at the moment, but enormous potential as being a single technology car manufacturer in the world.

Those who shorted [i.e. gambled that the stock price will go down and hence will lose their money if they did] Tesla definitely would not be happy!


(Alex Sherwood) #6

Enormous potential but do you think they’ll manage to scale up before the other manufacturers manage to deliver cars with similar performance & technology?

When you look at the potential it could well be but also..


(Chris) #7

Much as I want a Tesla, and believe the company can succeed. I wish he’d stop talking so much shit.
It’s gone from refreshing/funny to cringey. There’s a certain amount of Trump to his tweets these days.

Am considering taking Trump private at $420. Funding secured.


#8

Saudi Arabia’s sovereign wealth fund has built up to owning 5% of Tesla.


(Alex Sherwood) #9

He sounds pretty sure that he wants to do this to me..


(Giridhar Tammana) #10

Been waiting on the fence since $40 :sob:
And finally bought 1share at $295, was planning to add more but this happens…


(Calum McWhir) #11

A lot of good stuff in the employee email, but this particularly stood out:

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.

Given the ‘early’ stage they are at as a company and how attacked / misunderstood they seem to be it does seem to benefit all parties (other than the shorters :rofl:) for them to get their heads down and worry about making sh*t happen in the long run. Short-termism (i.e. pressure on quarterly results) and the ability of the media to affect the stock price every time a car breaks down is not a good recipe for innovation, in my view.

Also:

In the future, once Tesla enters a phase of slower, more predictable growth, it will likely make sense to return to the public markets.

I think this is a fine (and perhaps unintended) insight into what it makes sense to consider when assessing most stock market investment opportunities.


(Alex Sherwood) #12

I completely agree with that but I’ve also just been reading Alphaville’s comments on this & amongst other things, they point out that

It’s consensus that Tesla needs to sink $5bn-6bn on a Model Y production line next year, and $18bn for a dealer/sales network plus $2bn to $8bn for a charging network, by next decade. It’s consensus that Tesla burns through the remaining cash by next year. In what way is cutting off access to equity markets positive to that circumstance?

presumably that (& managing the financing of this deal) will be a pretty big distraction too, although maybe less for the company’s employees & more for the management.


#13

So how does it work for existing shareholders if the company is made private? Are they still holders, but can’t sell? Would it be like Freetrade, I have shares but can’t trade them?


(Vladislav Kozub) #14

There will be a shareholder vote where he needs to get the shareholders’ supermajority agreement (usually between 67 and 90 per cent). All minor holders (mostly non-institutional investors) will be forced to sell at a price of $420.

If he will not achieve supermajority - the stock will go down significantly as it usually does when privatisation is failed due to the lack of shareholders’ consensus.

Although in his letter he said that he does want to give the existing investors (mostly Tesla staff) the opportunity to retain the shares if they wish. I am not sure how this will be done for non-staff.


(Chris) #15

What happens if the price is above $420 if/when it’s agreed? Do they do a 20% markup again or is part of the agreement to sell at $420?


(Vladislav Kozub) #16

Good questions, I am now curious myself :thinking:

Might do some research

Edit: @Chris, it seems like the offer is fixed. So it is up to the supply/demand equilibrium NOT to drive the stock price to $420. After all, they only reason for the stock to go beyond that is if someone will be ready to offer a higher price - and I guess the logic is “why would you if you know the most you will get is $420?”.


(Dave Smith) #17

If he gives shareholder the right to retain shares isn’t that just not going private? sound more like de-listing off the exchange than going private to me, which I don’t see as a good move


(Vladislav Kozub) #19

It will still close the ability to short the stock as well as it will remove plenty of reporting liabilities public companies are exposed to.

And if you are a shareholder (if there will be an ability to remain as one), you will not need to be concerned about the stock price swings every time a car breaks or a weekly production target is not achieved.

Arguably, there are massive pros and cos to both outcomes - public and private. Only depends from which perspective to look at it.


(Chris) #20

It seems like it’s in the interest of those who short to actually drive the price up as close to $420 as possible so that this fails. I’m assuming that may well cause a massive drop in price and the shorts win?


(Vladislav Kozub) #21

Shorters are in a very peculiar position at the moment. If the decision by Tesla will be made swiftly - shorters will lose due to stock price being below the offered buyout price (shorters win when stock price goes down). But the closer it gets to $420 before the vote, the more reluctant shareholders will be to agree to the deal (unless the offer will increase) - and if the vote fails, shorters will win again.

Moreover, if somehow (theoretically possible but piratically unthinkable) the price will exceed $420, for sure there will be a massive (I mean massive) short selling. This will lead to huge supply and lack of demand, which will inevitably reduce the stock price. This is one of those circumstances when it seems like the stock movement outcome is certain - it either gets force bought at $420 (shorters win if the actual price was more than that) or if the shareholder vote fails, Tesla will remain public but go down drastically (shorters win again). Hence in either case, short sellers may win.

But if the whole process will only take a few days/weeks, they could risk a lot too.