.Can you share the tweet?
I actually found it, but maybe you donìt want to share your twitter handle.
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.Can you share the tweet?
I actually found it, but maybe you donìt want to share your twitter handle.
Are employees/ex-employees exempt from the limit of 2000 stockholders? There are many private companies granting stocks/stock options to employees. For example, SpaceX most likely has over 2,000 stockholders, given its size (7,000 employees) and 15+ years of existence.
The definition of the 2000 "stockholders" is explained in this post by bhzmark: TSLA Market Action: 2018 Investor Roundtable
So most employees might be recorded under one "stockholder".
My understanding the the special purpose fund Elon is referring to is not a public investment fund. Rather, it's a private entity used to hold private shares in the private Tesla company. Tesla will likely have first right of refusal so they can stop the sale of shares outside this entity. Elon mentioned liquidity events would only happen every 6 months. And given SpaceX's example, the valuation is set by an "independent auditor" (if something like that actually exists) and it also appears there's a transaction fee. Lots of bankers and red tape. Not anybody can buy either... you need to go through the bank that's stewarding the special purpose fund and arrange a buy, but they might have special requirements (ie., minimum amount, accredited investor, etc).
@schonelucht Thanks for posting that tweet. I had read it prior but forgotten about it. So, now I'm confused. It appears based on the 2017 Softbank story that Elon was demanding super voting rights (ie., majority) and that would make sense or else in a private company it would probably be a lot easier for the parties to pool together and kick out Elon if need be. So, Elon is probably very aware of this (especially watching Travis and Uber) and I'm confident he has a plan to avoid this. If he doesn't have majority voting rights in the new private company, than I would imagine he's got some plan to secure that via some manner.
@farzyness You make some great points here.
I do agree that a private Tesla would be less stress for Elon. But I do also think Tesla has entered a new life stage where it's not as dependent on Elon as it used to be. The Model 3 is a big deal and the Model Y will be as well. With these revolutionary products, Tesla as a company will do very well as long as it's led by competent leadership. It reminds me of Steve Jobs and how the iPhone really set up Apple to be on its own even without Steve. Similarly, as Tesla matures they will need Elon in an increasingly smaller way and what will be important is competent leadership. I think we need to ask at what point will Tesla be fine without Elon. And I'd argue that that point is probably between now and the next two years. That said, I'm not sure if making such a gigantic move by taking Tesla private so that Elon can have less stress is the greatest justification for doing so. I'd say that there are different ways to handle the public markets much more effectively than Elon/Tesla have been doing. I mentioned Amazon already. But Netflix is another good example. They manage short-term expectations well by setting long-term goals that they steadily march toward. And they know how to manage expectations well too. Tesla on the other hand, over-promises and often under-delivers... this is recipe for chaos in the public markets. If Elon can just relinquish some control to a stellar COO, there's a great chance Tesla can manage the public markets much better and that will allow them increased focus on the long-term while still keeping the benefits of being a public company.
I know what he wrote.
I've got paid by different Fidelity funds options a number of times during last 20 years. Selling these stocks happened to be of the same difficulty as public. Fees are no different than IRA. Red tape can come only in some countries which have specific legislation traps. There can be quite serious differences in taxation. This is the real problem.
That is why I think, that most sensitive would be to build publicly registered fund. Tesla can attract significant european attention, especially if they pull European factory.
We don’t know exactly what the structure will be but Elon appears to be using SpaceX as a model and in some other threads people reporting that to buy SpaceX shares required 5% transaction fees, high minimum purchase amounts, and lots of red tape.
I suspect Elon will make this new investment vehicle deliberately illiquid, in contrast to what neroden is proposing.
There are so many more reasons to apply a low-pass filter (removing the high frequency effects) to this company, than just short manipulation.
I suspect he doesn't want this traded (even by longs) on news-of-the-day, such as pallet fires, autopilot crashes, InsideEVs monthly production numbers, production delays, etc.
Also, making this both private and illiquid is the one path that I think will make full-self driving possible, as human deaths in that arena are inevitable and would destroy a public company, and also greatly affect a liquid, private one.
Of course, being both private and illiquid also creates a scarcity effect, which will uniquely benefit long-term holders.
There are so many more reasons to apply a low-pass filter (removing the high frequency effects) to this company, than just short manipulation.
I suspect he doesn't want this traded (even by longs) on news-of-the-day, such as pallet fires, autopilot crashes, InsideEVs monthly production numbers, production delays, etc.
Also, making this both private and illiquid is the one path that I think will make full-self driving possible, as human deaths in that arena are inevitable and would destroy a public company, and also greatly affect a liquid, private one.
Of course, being both private and illiquid also creates a scarcity effect, which will uniquely benefit long-term holders.
I believe he's trying to eliminate liquidity, yes, and I actually agree with that.
The problem is that there are an awful lot of regulations regarding what can be held in retirement accounts, who can hold private companies, and so forth. People WILL be squeezed out because they're not allowed to hold the illiquid stock.
I hope he can allow as many people as possible to continue. I think a "public unlisted" company with restrictions on trading the stock is the cleanest way to eliminate liquidity while allowing as many investors as possible to stay.
From John Gruber (daring fireball.net):
Doug Field who oversaw Model 3 production knows more about the Model 3 vehicle and production process than almost anyone at Tesla, besides Elon. And know, just a couple months after leaving Tesla, he is back at Apple and supposedly working on Apple’s car project.
I can’t imagine Elon is very happy about this. Doug Field was a trusted lieutenant for Elon, and someone he relied on heavily in many regards. And now Doug Field has left to go to Apple to make a possible competing car.
Gruber also makes an interesting point:
In other words, Apple is not about making a component of the car like the infotainment or the autonomous driving function. Rather, Apple’s approach is to make the product, meaning the car.
Though probably unlikely, I do wonder with Apple hiring Doug Field so quickly, Elon also was also about to find out more about Apple’s plans. And while I’m sure Elon is confident Tesla can withstand and beat out Apple in the car business, still there might be some concern over how the public markets might react when Apple releases a car and how much it might hit TSLA stock. As a private company, Tesla’s private valuation would likely more more stable and somewhat insulated from events that tend to influence public sentiment.
Doug Field is back at Apple
Here’s some interesting hiring news I’ve heard through the little birdie grapevine:1 Doug Field — who left Tesla in May after overseeing Model 3 production — has returned to Apple, working in Bob Mansfield’s project Titan group. Apple spokesperson Tom Neumayr confirmed with me only that Field has returned to Apple, but no one should find it surprising that he’s working on Titan.
Doug Field who oversaw Model 3 production knows more about the Model 3 vehicle and production process than almost anyone at Tesla, besides Elon. And know, just a couple months after leaving Tesla, he is back at Apple and supposedly working on Apple’s car project.
I can’t imagine Elon is very happy about this. Doug Field was a trusted lieutenant for Elon, and someone he relied on heavily in many regards. And now Doug Field has left to go to Apple to make a possible competing car.
Gruber also makes an interesting point:
But I think it’s an interesting hire, primarily because it suggests to me that Apple still has an interest in making actual vehicles, despite reports that the company has scaled back the project to merely make autonomous systems for inclusion in vehicles made by other companies. That rumor never really made sense to me anyway — Apple’s modus operandi has always been to make the whole widget. Apple makes products, not components.
In other words, Apple is not about making a component of the car like the infotainment or the autonomous driving function. Rather, Apple’s approach is to make the product, meaning the car.
Though probably unlikely, I do wonder with Apple hiring Doug Field so quickly, Elon also was also about to find out more about Apple’s plans. And while I’m sure Elon is confident Tesla can withstand and beat out Apple in the car business, still there might be some concern over how the public markets might react when Apple releases a car and how much it might hit TSLA stock. As a private company, Tesla’s private valuation would likely more more stable and somewhat insulated from events that tend to influence public sentiment.
Doug Field is back at Apple
mershaw2001
I'm short the short sellers
Hi Dave
I think that if apple came out with its own electric car, it might be one of the first companies that would partner with Tesla on the supercharger network. I have always been surprised that no other company would "validate" tesla by opting in to their network of superchargers, and to some degree that makes sense: the incumbents want tesla to die and so would not be inclined to give Tesla revenue in the form of supercharger licensing.
Apple isn't an incumbent ice manufacturer and doesn't have the same risk. If they came online with a sweet EV, they would want a supercharger network and would do best to license it immediately from Tesla. Being two bay area companies both trying to grow market share, I think that there might be a little less competition between the two companies. Also, the intended (grey vs red on the supercharger map) supercharger network is a bit hotter in the bay area compared to other cities and that would help out apple.
I think that if apple came out with its own electric car, it might be one of the first companies that would partner with Tesla on the supercharger network. I have always been surprised that no other company would "validate" tesla by opting in to their network of superchargers, and to some degree that makes sense: the incumbents want tesla to die and so would not be inclined to give Tesla revenue in the form of supercharger licensing.
Apple isn't an incumbent ice manufacturer and doesn't have the same risk. If they came online with a sweet EV, they would want a supercharger network and would do best to license it immediately from Tesla. Being two bay area companies both trying to grow market share, I think that there might be a little less competition between the two companies. Also, the intended (grey vs red on the supercharger map) supercharger network is a bit hotter in the bay area compared to other cities and that would help out apple.
marvinat0rz
Member
Would just like to give a big thanks to DaveT and all the other contributors in this thread. Sound analysis as always, and many insightful points.
Esme Es Mejor
Member
It looks obvious to me why Musk wants to go private. What’s tough for me to see is why it isn’t obvious to Damodaran.
It's because he doesn't see the obvious negative propaganda campaign that's being waged against Tesla. It appears he thinks Tesla bulls and Elon are being paranoid and making it up.
Per ER, Tesla is entering a phase of perpetual profitability and cashflow positiveness. Shorts would be continually grinded as stock will continue to tear up... So why exactly is Musk concerned about shorts?
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