I can't disagree more although I'm long TSLA and support the privatization. As you correctly pointed out, Tesla pushed so hard at quarter end only because there is hard line quarterly report requirement as a public company. Without this requirement, Tesla's operations of course will be a lot more smoother, which only means their production ramp up will be a lot slower than it is now. You'd be naive to think they will keep the same ramp up speed by catching up at other times and just don't push too hard at the quarter ends. Why is this a good thing for share holders?
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Esme Es Mejor
Member
Re-IPO makes sense when company is larger, growth is slower & more stable, and Elon is no longer CEO. I think he’s made it clear he doesn’t want to run a public company.
Say Tesla is worth 650B then. Elon owns 20%. He feels Tesla is in a great position. It's really the only way for himself and a lot of shareholders to cash out.
It would allow him to get some percentage of 130billion in cash to fund mars, as he says he plans to do.
Elon could just cash out gradually during the private Tesla liquidity events.
I just think if Tesla goes private, I'm not sure if it will ever go public again in Elon's lifetime.
I think the logical train of events would be:
1. Tesla goes private
2. Within 5 years, Tesla and SpaceX merge.
3. Elon runs the merged private company until he dies.
JRP3
Hyperactive Member
Because pushing too hard, putting out products which aren't quite ready, missing unrealistic targets, pushing the workforce too hard, and exposing the company to constant attacks, is not good for the company, and thus the share holders. I'd rather see a slight reduction in the ramp up if it avoids all the other problems, which it should.
At no point does this allow him to distribute a large percentage of his accumulated wealth into Mars. I don't think he believes cash flows from operations can fund his ambitious plans. I think he believes he needs to jump start it by investing a large percentage of his vast fortune into Mars. Also, pretty sure he wants to die on Mars.
I don't think that's how Elon operates. There's no exact time where Tesla is fully valued. It's much more opaque than that.
Elon has already mentioned that he will increase his giving/spending when Tesla is a more mature company. He's never made mention of making a huge one-time cash-out of Tesla into Mars.
Damodaran's blog posts from the very first several years ago have been far off the mark. When a massive (valuation tanking) flaw in his first or second blog and model's assumptions was pointed out to him with clear supporting evidence, he dodged and weaved, acknowledging some of it, but, tossing out some gibberish to justify leaving his nonsensical assumption and valuation unchanged. Since that early blog, I've only glanced at later blogs, but, I still view the same pattern- sophisticated showmanship again and again fronting the same message- to not invest in the stock- with none of the flowery faux analysis standing up to examination via facts and reason. While I do not know his motives, I don't take what he writes about Tesla to be what he actually thinks. It's quite clear he's far too intelligent to believe what he is serving up (fwiw, I think the same of Chanos).
I don’t have time at the moment to expound on these thoughts in full but I’ll give the bullet points now.
There’s always been money and powerful people.
Some have used money/power to control and influence people through propaganda.
Propaganda in the way I’m using the word has a wide range of meaning, but in this case I’m using it as manipulating public opinion for your own purposes.
Technology has radically changed the landscape of propaganda and has exponentially increased its effectiveness.
Those who are using technology to hyperboost propaganda are at the forefront of one of the most concerning developments of our generation.
The use of technology toward propaganda has shaped some of the most surprising results in recent world politics.
Use of propaganda in manipulating public opinion about public companies has been used by hedge funds for their gain.
Hedge funds are likely to hire experts in the field of propaganda for the hedge fund’s gain, and those experts are likely to be using a hyperboosted propaganda modeled by the best propagandists in the world using technology to its fullest.
It could be possible that negative propaganda at its fullest can take down a public company like Tesla
If that is the case, what is the future of public companies if they could be at the mercy of hedge fund-hired negative propaganda hyperboosted campaigns that can seriously damage the company’s prospects, if not doom some of them.
Simply put, are shorts more powerful than ever before? And if so, should more companies consider going private if they are in the target of shorts? Or should these companies go head-to-head with the shorts-hired propaganda and defend themselves, and find a way to win by still being a public company?
There’s always been money and powerful people.
Some have used money/power to control and influence people through propaganda.
Propaganda in the way I’m using the word has a wide range of meaning, but in this case I’m using it as manipulating public opinion for your own purposes.
Technology has radically changed the landscape of propaganda and has exponentially increased its effectiveness.
Those who are using technology to hyperboost propaganda are at the forefront of one of the most concerning developments of our generation.
The use of technology toward propaganda has shaped some of the most surprising results in recent world politics.
Use of propaganda in manipulating public opinion about public companies has been used by hedge funds for their gain.
Hedge funds are likely to hire experts in the field of propaganda for the hedge fund’s gain, and those experts are likely to be using a hyperboosted propaganda modeled by the best propagandists in the world using technology to its fullest.
It could be possible that negative propaganda at its fullest can take down a public company like Tesla
If that is the case, what is the future of public companies if they could be at the mercy of hedge fund-hired negative propaganda hyperboosted campaigns that can seriously damage the company’s prospects, if not doom some of them.
Simply put, are shorts more powerful than ever before? And if so, should more companies consider going private if they are in the target of shorts? Or should these companies go head-to-head with the shorts-hired propaganda and defend themselves, and find a way to win by still being a public company?
Or there is a switch in valuation between public and private?
Who here thinks the stock market would give UBER anywhere the valuation that it has as a private company?
Times change, tesla changes too.
Who here thinks the stock market would give UBER anywhere the valuation that it has as a private company?
Times change, tesla changes too.
Esme Es Mejor
Member
Technology has also changed the landscape of capital & made it far easier for private companies to access capital. That’s why far fewer startups are seeking IPOs, and why the pool of existing public companies has been shrinking for years. Tesla may be the biggest to go private, but it certainly won’t be the first. And I suspect many public companies will follow their lead.
So, technology has greatly increased the cost of being public (the propaganda you talked about), but made it much easier for companies to avoid those costs.
Singer3000
Member
I
So much about this is broken, from speed-of-light pricing arbitrage, newsbot/fake news based market abuse, self fulfilling short activity, executive short-termism. And latterly, VC money at a scale that is distorting society’s pact with capitalism.
Anyone that’s worked in a regulated financial institution will be pretty familiar with the controls in place for Private Account Trading, as well as bonus restrictions. I’d roll this out to the public market in general. So noone can sell a stock they haven’t owned for at least two weeks. And make executive pay at public companies be realised over a longer period of time, or else paid upfront with clawback mechanisms.
PA Trading rules are sometimes highly annoying. But they do mean that you only make active stock investments that you’ve thought hard about and are happy to hold indefinitely, which means you should be less easily swayed by poorly researched click bait.
I’d also go much further and ban things that I think distort the market: Short selling, and leverage against equities of all kinds.
I know this would hurt liquidity, put lots of finance jobs at risk and potentially mean bad companies take longer to die. But getting back to a paradigm of long term investment rather than short term trading is the prize.
That Musk thinks taking Tesla private is the only way to achieve this shift in thinking is a pretty sad state, given he: a) doesn’t draw a salary and is paid only in long term options, b) is making some of the largest and most risky long term capital investments I can remember, c) has been fairly transparent with the product pipeline many years in the future, d) has openly told day traders to sell the stock and focus their attention elsewhere.
At least at some level he seems to recognise the societal damage that could be done if retail are investors are locked out of his project: if Tesla meets its goals, it will wipe out countless millions of jobs in energy, transportation and logistics, with the benefits only accruing to society through lower product/living costs and with a very unevenly distributed financial payoff to a few large investors. He’s basically saying the stock market is broken, no one’s going to fix it, so I’ll do the next best thing.
No doubt I’ll upset someone here. But iterative financial engineering has morphed the stock market into a quite different animal than was intended. In my mind its purpose should be: 1) Allow companies access to a broad pool of capital for their growth initiatives, 2) allow society at large to invest, so that capital growth is not concentrated in the hands of a tiny minority, 3) provide stock liquidity, and informational transparency and equality, to optimise the price discovery mechanism. In short, society sharing the gains from long term productive investment, through the free market’s pricing mechanism.
So much about this is broken, from speed-of-light pricing arbitrage, newsbot/fake news based market abuse, self fulfilling short activity, executive short-termism. And latterly, VC money at a scale that is distorting society’s pact with capitalism.
Anyone that’s worked in a regulated financial institution will be pretty familiar with the controls in place for Private Account Trading, as well as bonus restrictions. I’d roll this out to the public market in general. So noone can sell a stock they haven’t owned for at least two weeks. And make executive pay at public companies be realised over a longer period of time, or else paid upfront with clawback mechanisms.
PA Trading rules are sometimes highly annoying. But they do mean that you only make active stock investments that you’ve thought hard about and are happy to hold indefinitely, which means you should be less easily swayed by poorly researched click bait.
I’d also go much further and ban things that I think distort the market: Short selling, and leverage against equities of all kinds.
I know this would hurt liquidity, put lots of finance jobs at risk and potentially mean bad companies take longer to die. But getting back to a paradigm of long term investment rather than short term trading is the prize.
That Musk thinks taking Tesla private is the only way to achieve this shift in thinking is a pretty sad state, given he: a) doesn’t draw a salary and is paid only in long term options, b) is making some of the largest and most risky long term capital investments I can remember, c) has been fairly transparent with the product pipeline many years in the future, d) has openly told day traders to sell the stock and focus their attention elsewhere.
At least at some level he seems to recognise the societal damage that could be done if retail are investors are locked out of his project: if Tesla meets its goals, it will wipe out countless millions of jobs in energy, transportation and logistics, with the benefits only accruing to society through lower product/living costs and with a very unevenly distributed financial payoff to a few large investors. He’s basically saying the stock market is broken, no one’s going to fix it, so I’ll do the next best thing.
SebastianR
Active Member
I think there are indeed important parallels: we seem to have a structural change of existing mechanisms to run societies on. From politics and how new experiments like liquid democracy show new political paradigms to the use of propaganda and its results in today's political landscape, not much of the "old ways" seem to be immune to dramatic disruption.
I agree. The bigger question posed by @DaveT is however, if modern capital markets are still the best tool to achieve their original purpose as outlined here:
Indeed, taking a company private might be today's most efficient defense. But the bigger question is: do we need new types of public financial markets?
A better tweet would have been, “I’m considering taking Tesla private at $420. Already in discussion with potential funders.”
I have seen smears on this scale -- and sadly, lots of them -- but never in the arena of business.
This is the scale of political or religious smears, demonizing minority groups in order to cause pogroms and lynchings. The smears spread by Hitler were larger, as are the smears spread by Netenyahu and those spread by Putin.
It's really extraordinary to see this targeting just a business.
I agree with all of this, and I'd add a "stamp tax" -- a percentage tax on any stock trade. This would eliminate all high-speed and day trading.
You can successfully ban short-selling, but banning leverage against equity is essentially impossible (it keeps popping up again in different forms, it will not die) so the best you can do is issue regulations about it. Margin accounts are almost certainly the wrong way to do leverage against equity.
Simply instituting a few seconds delay on each trade would break the really high volume traders.
If we were going to tax traders I would only be in favor of taxing the higher volume traders. Small time investors are nickeled and dimed now by brokerage firms (and unethical traders who intercept trades, buy stock, then resell it to the small trader at a few cents profit, this happens in milliseconds).
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