All: please stick to specifics and don't go into MuskMania (the fever that results when MuskLove meets MuskHate). That's always the same and therefore off topic here.<p><a href="https://news.ycombinator.com/newsguidelines.html" rel="nofollow">https://news.ycombinator.com/newsguidelines.html</a>
Honestly, I'm starting to think this is less about avoiding the public markets and more about getting out of the crushing debt (8.65 in liabilities comming due before the end of March 2019)that they have coming due in March of 2019.<p>The billion of debt coming due is convertible above a price of $360 and if he can keep the price propped up will almost certainly force all bond holders to convert into equity holders.<p><a href="https://seekingalpha.com/article/4191711-tesla-stealth-capital-raise?ifp=0" rel="nofollow">https://seekingalpha.com/article/4191711-tesla-stealth-capit...</a><p>I mean, think about this rationally, if it wasn't for the public markets Tesla would already be bankrupt. Going private means giving up this access to capital as well as having to come up with 9 Billion to fund debt commind due.<p>With stock you have something to bargain with when selling debt. Without it you've lost a huge weapon.<p>Same for paying your employee's. No more tesla stock that appreciates each quarter that you can sell as soon as it comes to you.<p>Also just did some digging on Tesla bonds and CDS...<p>At current levels, they imply a about a 30% chance of a Tesla default in the next five years. It costs around $1.3 million to insure $10 million of bonds against default.<p>And if Tesla went private and he funded it with debt he's looking at a rate somewhere around the low teens from what Bloomberg is reporting which means borrowing $58 Billion to finance this would cost aroudn $7.1 Billion a year in interest payments at 12.5%.<p>And keep in mind he's paying that to cut off public markets access for raising money, one of his best sources of cheap capital in the past 5 years.
Keep in mind that this position was built via the secondary market and not from Tesla itself. And that the position size would be about 3 Billion, a large but pretty ordinary size for a fund of their size.<p>They also put in $400 million into magic leap, ar large bet on Uber and about $50 Billion into the Softbank vision fund that is throwing money around.<p>I think this puts them about the 8th largest shareholder of Tesla.<p>As an aside, with Musk's recent tweet I think he's going to get a pretty stern talking to by the SEC about discomfiture and Reg FD.<p>Even if its true,<p>1) You've now used that bullet in your gun against the short sellers<p>2) Did it in a very dubious way, via twitter rather than RegFD disclosure.<p>3) will now have to answer questions about this "private takeover", ie where is the money coming from? how long is it committed for?<p>For what? An SEC headache a momentary pop that was immediately erased?<p>The tweet caused a momentary pop in the stock price which was erased about 2 minutes after it popped. The market can be exceedingly good and correcting itself.<p>Elon seems to be doubling down<p><a href="https://twitter.com/elonmusk/status/1026879404905885697" rel="nofollow">https://twitter.com/elonmusk/status/1026879404905885697</a>
The Saudi fund just made public that they own just under 5%, which is when you have to publicly declare to the SEC your holdings. This usually happens when there is an attempt at a hostile takeover. What Elon did was brilliant and he just countered it by tweeting this out. He is willing to take it private at the $420 price, probably way higher than the Saudi's were planning on. So now it'll be a race to see who can obtain >50% of the shares. Elon has a massive head start with how much he owns already, but the Saudi's fund is ridiculously huge right now ($250B) and I'm sure they have the ability to pull in another few hundred billion on demand. Kind of scary. Elon will need to find a stupid amount of capital and fast to do this.<p>It's very smart on Saudi Fund's part... They would own the worlds largest solar, battery, and EV producer. They could cover a desert in panels and sell the cars and batteries across Europe/Asia, while providing the power as well. They would once again have the largest control of the world's energy.
Trading of Tesla stock has now been halted following this news & Elon's tweets.<p><a href="https://www.cnbc.com/2018/08/07/tesla-stock-jumps-on-musks-tweet-that-he-is-considering-taking-compan.html" rel="nofollow">https://www.cnbc.com/2018/08/07/tesla-stock-jumps-on-musks-t...</a>
Taking Tesla Private<p><a href="https://www.tesla.com/en_GB/blog/taking-tesla-private" rel="nofollow">https://www.tesla.com/en_GB/blog/taking-tesla-private</a>
It's a sign public equity markets aren't structured well that companies aren't encouraged to think long term. The most successful companies in today's markets don't even allow common shareholders to control the company, ie Google and Facebook with their special classes of controlling shares. We might need to reconsider changing laws around choosing board seats or requiring shareholders to have minimum holding times in order to align incentives better for the long term.<p>If public equity markets don't work, the alternative is more and more of wealth creation happening privately, in startups funded by VCs, private equity, or family owned businesses. The public won't get to participate.
Saudi money is dripping with blood - the kingdom's wealth and control is a result of well documented massacre of dissidents, of Shias and of funding terror and patronizing the Wahabis, especially against philosophies opposed to the kingdom.<p>It's deeply disappointing to see Musk legitimatize the Sauds, who threatened Canada with a 9/11 style attack just 24 hours ago
Who would have predicted 30 years ago that a <i>Saudi</i> sovereign fund would invest in an electric car company ?<p>Symbolically that is a pretty potent signal.
Super coincidental that Elon announced he was thinking about taking the company private right after this happened.<p>My guess is that they had run the numbers on taking the company private before. Since the Saudis had approached Elon before and he denied their offer (for whatever reason) he probably was upset that they acquired a stake through secondary markets and tweeted their half-baked plan... (not a good course of action IMO)
This article mentions 4 times that it's unlikely Tesla will be able to pull this off.<p>Not a single positive or optimistic note. Which is fine, but it's not as if Bloomberg has no ability to influence market prices.
I get it, it's Musk, but this is still such an irresponsible way to announce news of this magnitude. From a WaPo article:<p>The sudden announcement gained immediate criticism from former regulators who suggested it may conflict with SEC rules for potentially market-moving statements.
Harvey Pitt, a former SEC chairman, told CNBC on Tuesday that Musk’s tweets “might consittute fraud if any of the facts he disclosed are not true” or if there was any indication that he had floated the proposal purely to boost the stock price
Can someone explain how Tesla can go private while still allowing all employees and any current investor who wants to remain shareholders as Musk is saying? AFAIK there is a threshold number of shareholders after which a company is required to be public. You can't just declare that you're a private company if you have thousands of members of the general public still holding equity.
Just saw this today. I couldn't believe it because I saw this first on reddit like a few weeks back, where a redditor thought all of Musk's weirdly negative publicity stunts were to make Tesla less desirable in wallstreet's eyes so he could make it private. I can't find the post now, but that's interesting it turned out like this. I do agree that institutional investors have an incentive to prioritize short term over long term gain. After all, you can just sell your stocks, buy into another company and push for short term gain over and over. Maybe it is better for Tesla to be private
Trading is halted.<p><a href="https://seekingalpha.com/news/3379457-tesla-trading-halted-live-updates" rel="nofollow">https://seekingalpha.com/news/3379457-tesla-trading-halted-l...</a>
Elon has just written an email to employees, also published on the site, explaining how he thinks going private would be good for Tesla and very generally how it could work.<p>It doesn’t appear to include any more specifics about where funding for the opt-in buyout would come from.<p>TSLA resumed trading just before closing bell and closed at $379.57 up 11% for the day.<p><a href="https://www.tesla.com/en_GB/blog/taking-tesla-private?redirect=no" rel="nofollow">https://www.tesla.com/en_GB/blog/taking-tesla-private?redire...</a>
I don't mean to rub it in , those people who said to short Tesla a couple weeks ago were sure wrong. Last week Steve Eisman who rose to fame in 2008 by betting against the housing market, shorted Tesla. That position is probably at least 25% underwater now. Not only that, but Tesla losing money does not mean it is insolvent, because it can keep raising money and most of those losses are capital expenditures instead of operating losses.
DISCLAIMER: I work for a Tesla competitor, any opinions are solely my own. I am not a financial analyst, I may be a lizard-person.
If I were Elon, I would love it if I could take my company private and keep my fans as shareholders. I would love it if I could "go private" and not have to actually buy back all of the shares of people who want to go long anyway. I would love it if shorts had no mechanism to short my company.<p>I would love it, but I don't know if I could find a real financial instrument that allows for it.<p>(I posted this on another thread in case it shows up twice.)
I hope he pulls this off. It would be excellent if he could get out of the public company weeds, and get more brain bandwidth to focus on executing and solving problems.
I really don’t get the obsessions with going private. It used to be everybody’s goal to go public, an IPO was one of the greatest achievements. Musks wants to go private to have better control of “his” companies and to prevent market pressures?<p>I think being a public company is good for many reasons, amongst other: the <i>public</i> can participate in the success of companies and for the company it provides a great reality gauge. Maybe that’s what he’s afraid of...
IMO it's just a PR ploy to prop up the price.<p>1. How is Tesla going to raise capital if not through the public markets? Would a PE firm lend them money at better rates (unlikely, with interest rates going up)? They could've gone to Warren Buffett for another convertible-bond deal but Musk just had to get into a pissing match with Buffett.<p>2. Only Musk can sell a story about how $TSLA going private is good for employees' stock options. It's the other way around; Tesla is losing employees and the only way to get them to stay is to lock them in with an inflated valuation. Ask anyone who has worked during the Dotcom bust.<p>3. Using an after market hours price of $380, $420/share would be a premium of 10.5%, or a market cap of about $72B. In the meantime the company is still not profitable. And that Saudi sovereign fund investment is just a hedge against oil prices, since Musk has said he will not give up his holdings nor resign if the firm were to go private. His ego wouldn't allow him to do so, either.
Very simple, as the fight of big oil against tesla seems to have backfired as Musk still has resources to buy back the company. It's better for them to hedge their exposure to oil.
What if the funding is the Saudi wealth fund and the stake they acquired was to form a majority ownership?<p>Edit: this is probably not the case, sounds like speculation is of a hostile takeover.
Very scary to see Tesla fall into the hands of a despotic nation that is cracking down on free speech<p><a href="https://www.newsweek.com/saudi-arabia-orders-16000-students-leave-canada-amid-diplomatic-row-1060547?piano_t=1" rel="nofollow">https://www.newsweek.com/saudi-arabia-orders-16000-students-...</a>