Garlan Garner
Banned
Tesla hasn't had a profitable quarter in a long time.....or maybe...ever. Tesla isn't that expensive....comparatively speaking.
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Why would GM or Ford step up now? They see the trajectory, if they want Telsa, they'll wait for the stock to crash or BK. They don't need Tesla's permission to acquire.
They have never made a profit. Here are the approximate net income numbers:
2014: $294 million loss, 2015: $888 million loss, 2016: $674 million loss. As a tech startup company this is not unusual. But Tesla is not a tech company, its a car company that happens to make high tech cars. For a car manufacturing company these numbers are not ideal given the production problems, parts problems and loss of key personnel.
Krugerrand
Meow
If you say so, but last I checked there’s but a couple companies on the planet with enough dough to buy Tesla, and they aren’t the ones you mentioned.
Garlan Garner
Banned
Lets just look at GM for instance. The 2017 numbers aren't out yet.
Tesla is only valued at 308B. GM could buy tesla (51% of their stock value) with 2016 profits alone.
Krugerrand
Meow
Lets just look at GM for instance. The 2017 numbers aren't out yet.
Those don't mean anything. How much cash do they have in the bank? Or was I right and they’d purchase with food stamps.
Exactly. Ford and FCA could as well. Most people don't understand all you need is 51% to own it. And if the production and parts problems are not resolved the stock will not be $300 + per share.
Lets just look at GM for instance. The 2017 numbers aren't out yet.
Tesla is only valued at 308B. GM could buy tesla (51% of their stock value) with 2016 profits alone.
3Victoria
Active Member
Right. That Solar division has been a yuuuge profit center...
Garlan Garner
Banned
Yes....the do mean something. Anyone can get a loan matching their profits.
A company should NEVER use their own money to purchase another company. That would be suicide. Even if GM had enough cash to buy Tesla....they wouldn't ever use their own money.
EVNow
Well-Known Member
There is ZERO chance anyone called hitman007 will post anything close to FUD.
Garlan Garner
Banned
That's absolutely true, however company takeovers are frowned upon.
Colin Kapernick really didn't do anything wrong, however what he did was frowned upon. Poor man can't even get a job now.
If GM just took over Tesla without their permission....they would never get another substantial loan again.
Garlan Garner
Banned
If GM purchased Tesla....all of their corvettes could be produced at 1 mile per gallon. They could put rocket engines in those things.
The Bolt allowed for GM to make their new Corvette Z06. Every car makers FLEET must meet an avg mpg as required. GM didn't really push the bolt for anything other than what was required. That Z06 is now rated a "supercar".
Now if they purchased TESLA....that corvette would be unbelievable. LOL
The Bolt allowed for GM to make their new Corvette Z06. Every car makers FLEET must meet an avg mpg as required. GM didn't really push the bolt for anything other than what was required. That Z06 is now rated a "supercar".
Now if they purchased TESLA....that corvette would be unbelievable. LOL
Garlan Garner
Banned
Revenue....? Fire everyone and buy Tesla. LOL.......
Again. like I stated. ANYONE can get a loan in the amount of their Revenue generated. "Cash on hand" is a measurement used by those who don't have any money. like me.
Come on @kbecks13 lets not be so serious as we wait for our Model 3 estimates to be pushed out even further. lol
insaneoctane
Well-Known Member
By the end of Q2, Tesla could be profitable if they chose to. But they are not trying to be profitable. It's not their priority. Expanding supercharger infrastructure and service capacity and manufacturing capital and developing self driving technology and battery technology and.... has been their priority. Not your typical short term profits minded American company. Refreshing and worth investing in if you ask me.
Garlan Garner
Banned
I understand exactly what you are saying when you say.....They aren't trying to be profitable. That might be deeper than what we are talking about here.....especially without a business 101 class, lol
Elon Musk predicts profit at Tesla in 2018, and much more
Predictions from EM are magical....Perhaps its time for some results rather than predictions.
Predictions from EM are magical....Perhaps its time for some results rather than predictions.
Many posts here show a serious lack of understanding of how corporate finance works. It’s not like going to your credit union to get a loan to buy out Vinnie’s Pizzeria
When a company decides it wants to acquire a publicly listed company, it does so my acquiring *all* outstanding shares, not 51%. At 51% you will gain control of the board, but you don't own the company. It is still publicly listed.
None of the numbers listed in the table above mean anything in this process. The market capitalization of a public company is the value of all its outstanding shares. This is (at least) what an acquirer will have to pay in order to buy the company. As of market close Friday, Tesla’s market cap was 52 bn and GM was 59 bn, so GM is not worth significantly more than Tesla in the only measure that counts. BTW, Ford and Fiat Chrysler are in the low 40s. Yes, they are worth less than Tesla.
Now let’s say Company XYZ decides it wants to acquire Tesla. In fact, it will need more than 52 bn because shareholders will expect a premium to give up their Tesla stock. After all, they own it because they expect it to outperform the market, otherwise they’d have that money in an index fund.
Where does XYZ get 50+ bn? One thing they do not do is walk into their friendly investment bank and get a loan. No investment bank has that kind of liquid assets sitting around…they put money to work earning a return. What the investment bank does is arrange for XYZ to raise the money in the capital markets.
There are two options: issue stock and issue bonds. Issuing stock seems like the easy way to go but an issue of this size dilutes the ownership of existing shareholders and will likley cause the stock price to fall. And if XYZ pays dividends, it will have to pay dividends on the new shares. The corporate version of taking a loan is issuing bonds. There is no such thing as "getting loan for the amount of your profits. " The bond market looks at the proposed issue in the context of XYZ’s financials, determines the risk of getting their money back and sets the interest rate as a spread off US Treasuries.
A hostile takeover is not frowned upon by anyone other than the company being acquired. It has no bearing on whether the acquirer will get financing in the future. It does mean that the premium to current share price will be higher, especially if insiders own a significant portion of the target
There is no way that any of the Big 3 automakers could raise anything close to the amount of money necessary to acquire Tesla but Apple could pay with cash. If you want a lesson in how things can go wrong, check what happened when the ego manic who ran Porsche tried to acquire Volkswagen. Spoiler alert: he miscalculated and was taken over instead.
But all this misses the most important point. If Elon and the other insiders don’t want to be acquired and XYZ persists, Elon will simply walk from the company and many employees will follow. Like it or not, Tesla is Elon Musk, both in the public eye and in the eyes of the employees. So XYZ is left with the assets of Tesla and all its debt but not the people who made it. Pyrrhic victory.
And if Tesla fails imminently as some here insist, who would pay anything for what's left? If you were smart enough to cancel your model 3 order, you could use your refund to buy the assets.
Oh yeah....I've worked on Wall Street for 30 years.
When a company decides it wants to acquire a publicly listed company, it does so my acquiring *all* outstanding shares, not 51%. At 51% you will gain control of the board, but you don't own the company. It is still publicly listed.
None of the numbers listed in the table above mean anything in this process. The market capitalization of a public company is the value of all its outstanding shares. This is (at least) what an acquirer will have to pay in order to buy the company. As of market close Friday, Tesla’s market cap was 52 bn and GM was 59 bn, so GM is not worth significantly more than Tesla in the only measure that counts. BTW, Ford and Fiat Chrysler are in the low 40s. Yes, they are worth less than Tesla.
Now let’s say Company XYZ decides it wants to acquire Tesla. In fact, it will need more than 52 bn because shareholders will expect a premium to give up their Tesla stock. After all, they own it because they expect it to outperform the market, otherwise they’d have that money in an index fund.
Where does XYZ get 50+ bn? One thing they do not do is walk into their friendly investment bank and get a loan. No investment bank has that kind of liquid assets sitting around…they put money to work earning a return. What the investment bank does is arrange for XYZ to raise the money in the capital markets.
There are two options: issue stock and issue bonds. Issuing stock seems like the easy way to go but an issue of this size dilutes the ownership of existing shareholders and will likley cause the stock price to fall. And if XYZ pays dividends, it will have to pay dividends on the new shares. The corporate version of taking a loan is issuing bonds. There is no such thing as "getting loan for the amount of your profits. " The bond market looks at the proposed issue in the context of XYZ’s financials, determines the risk of getting their money back and sets the interest rate as a spread off US Treasuries.
A hostile takeover is not frowned upon by anyone other than the company being acquired. It has no bearing on whether the acquirer will get financing in the future. It does mean that the premium to current share price will be higher, especially if insiders own a significant portion of the target
There is no way that any of the Big 3 automakers could raise anything close to the amount of money necessary to acquire Tesla but Apple could pay with cash. If you want a lesson in how things can go wrong, check what happened when the ego manic who ran Porsche tried to acquire Volkswagen. Spoiler alert: he miscalculated and was taken over instead.
But all this misses the most important point. If Elon and the other insiders don’t want to be acquired and XYZ persists, Elon will simply walk from the company and many employees will follow. Like it or not, Tesla is Elon Musk, both in the public eye and in the eyes of the employees. So XYZ is left with the assets of Tesla and all its debt but not the people who made it. Pyrrhic victory.
And if Tesla fails imminently as some here insist, who would pay anything for what's left? If you were smart enough to cancel your model 3 order, you could use your refund to buy the assets.
Oh yeah....I've worked on Wall Street for 30 years.
Garlan Garner
Banned
That's not exactly true.
I've been a part of both sides of an acquisition. I have personally.
Lastly....Elon Musk isn't Tesla. He's doing some wonderful things with Tesla, however some of his statements are not doing them any favors.
I don't see Tesla falling at all, and I don't remember reading anything about someone saying that it will fall. Tesla will survive no matter what they do promise, say, do, or don't do. For example: it doesn't even matter if the following statement is true:
Elon Musk predicts profit at Tesla in 2018, and much more
Elon Musk: Robot software will make Tesla worth as much as Apple
Tesla's Elon Musk says Model 3 is still on track
They are the primary game in town and unless they get caught in some kind of scandal or something like that.....they will be here for as long as they want.
"We don't think earnings matters," Brian Johnson, an analyst with Barclays, advised clients in a note Wednesday ahead of Tesla reporting. "...The stock seems so disconnected from any form of fundamentals, and right now is purely driven by momentum -- making earnings less relevant."
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