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Elon Tweets He's Considering Taking Tesla Private at $420
- Thread starter T3l5aFan
- Start date
For Tesla, it means that they can focus on growing their business in the most efficient way possible. A private Tesla does not need to peak production at the end of each quarter, perform financial gymnastics to satisfy Wall Street.
The other bonus is that there wouldn't be a financial incentive for short sellers to unleash negative articles, headlines, etc. on a daily basis.
SSonnentag
埃隆•馬斯克
That I can understand, but what about the, "My hope is *all* current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment." from Elon? How would that work?
I have my shares split between TFSA and an RRSP.
Kinda torn on this TBH. While I like the idea of going private to get rid of all the negative press, going private means less public info from Tesla, at least in regards to production.
Plus, a 420 buyout is the highest price I could get for my shares thus far. On the flip side: I’m fairly confident that’s not the highest that stock will go.
*sigh* I welcome opinions on this, although I’m leaning towards keeping all my shares right now.
Kinda torn on this TBH. While I like the idea of going private to get rid of all the negative press, going private means less public info from Tesla, at least in regards to production.
Plus, a 420 buyout is the highest price I could get for my shares thus far. On the flip side: I’m fairly confident that’s not the highest that stock will go.
*sigh* I welcome opinions on this, although I’m leaning towards keeping all my shares right now.
It just seems so unlikely that it's true that there is a fully funded opportunity to take the company private at a $70 billion valuation. If any portion of his statement is untrue (and reading the blog post it seems that most of it is just conjecture), then tweeting it out of the blue and causing the stock to spike was at best highly unethical, and at worst an actual crime.
My advice to anyone who holds TSLA is 100% to sell if you can truly get $420 / share. Ask yourself if you would pay $420 / share to buy the stock. If you really would, then perhaps it makes sense to hold (although your liquidity would be greatly reduced), but at the price it's trading today, it seems to me that even the most unrealistic expectations for how the company will grow are already priced in.
My advice to anyone who holds TSLA is 100% to sell if you can truly get $420 / share. Ask yourself if you would pay $420 / share to buy the stock. If you really would, then perhaps it makes sense to hold (although your liquidity would be greatly reduced), but at the price it's trading today, it seems to me that even the most unrealistic expectations for how the company will grow are already priced in.
Lasairfion
Member
I highly doubt that Musk on a whim decided to illegally tweet false information in order to bump up stock prices (that were rising in high percentages anyway). It seems fairly clear to me that he has the backing of a major investor (or multiple investors) who would like a nice interest payment for the next few (profitable) years. His alluding to the severe burn for shorts is likely, in retrospect, evidence of such. Nice of him to warn them.
I'm no stock/share specialist. I don't really even agree with the practice of shareholding. However, personally, I think that privatising Tesla back makes a lot of sense at this juncture and will do the company a lot of good in allowing them to spend and invest where they need without jumping hoops for a bunch of people who clearly don't understand the business model.
If it were possible to hang onto Tesla shares without impacting the various strange tax and legal requirements (like potentially needing some type of FSA approval in the UK) then I think it would be a sensible idea. Tesla is looking to do some serious and smart growth to hit the numbers they want over the next 12 months. I think that when Model 3 is churning profit, Model Y is announced, and Gigafactory Shanghai is powering ahead (not even covering what Tesla Energy is considering), $420 is going to be well undervalued. If you don't want to ride that train, then cash out. But then if that's the case, what were you investing in Tesla of all companies for?
I'm no stock/share specialist. I don't really even agree with the practice of shareholding. However, personally, I think that privatising Tesla back makes a lot of sense at this juncture and will do the company a lot of good in allowing them to spend and invest where they need without jumping hoops for a bunch of people who clearly don't understand the business model.
If it were possible to hang onto Tesla shares without impacting the various strange tax and legal requirements (like potentially needing some type of FSA approval in the UK) then I think it would be a sensible idea. Tesla is looking to do some serious and smart growth to hit the numbers they want over the next 12 months. I think that when Model 3 is churning profit, Model Y is announced, and Gigafactory Shanghai is powering ahead (not even covering what Tesla Energy is considering), $420 is going to be well undervalued. If you don't want to ride that train, then cash out. But then if that's the case, what were you investing in Tesla of all companies for?
Companies come to the capital markets to obtain funding and grow their businesses. If Musk has the funding he needs, what point is there to have a public listing, particularly with everything he’s noted as distractions.
It may sound like potentially the largest LBO in history of ~$70B but with private equity dry powder clocking in at $1.3T (feel free to take this with a grain of salt), I think there could be quite the possibility that he’ll take Tesla private. No quarterly calls, no more making decisions based on short-term horizons, no more trying to appease global equity market analysts and their investment houses. Knowing that PE firms are not interested in making a mere 100% and are gunning for multiples on their investments, perhaps they see an opportunity that not many others presently do.
It may sound like potentially the largest LBO in history of ~$70B but with private equity dry powder clocking in at $1.3T (feel free to take this with a grain of salt), I think there could be quite the possibility that he’ll take Tesla private. No quarterly calls, no more making decisions based on short-term horizons, no more trying to appease global equity market analysts and their investment houses. Knowing that PE firms are not interested in making a mere 100% and are gunning for multiples on their investments, perhaps they see an opportunity that not many others presently do.
MTL_HABS1909
Active Member
Called RBC and they said there is no way to hold shares in a fund like Elon is proposing in a TFSA. Not sure how accurate that is, but that’s the answer I got.
Note: There will most probably be a squeeze as short sellers try to exit their positions. The longer Tesla “longs” hold, the higher the price will go. I wouldn’t sell at $420.
ACA Man
Member
So he said $420 is the number to go private and yet he said this last year.
Elon Musk calls Tesla's stock overvalued; shares drop
Elon Musk calls Tesla's stock overvalued; shares drop
Exactly. The public markets of become extremely onerous in terms of regulation & reporting. It's clear that Elon is personally miserable in having to deal with that nonsense. Imagine... no quarterly meetings; no short sellers tossing FUD; no quarterly sales drives; no pressure to deliver short term results. It won't be a panacea, but Tesla has a longer term focus, and that's just not something that the public markets deal with very well.
I love my Tesla car and I think most of those short sellers are unethical, but...
Being a public company forces discipline on a company. We all know that Elon/Tesla make all sorts of statements that are never kept, like vehicle release dates, SC construction, vehicle production numbers, vehicle features, etc that are reached months/years after the initial announcment. Most investors do have far too much of a short term focus, so being able to focus on the long term has value. But going private is not a panacea for that.
Even if things go very well in the future I doubt that any investors will be receiving much cash flow in the, as you put it, "next few (profitable) years". Tesla may start earning positive "operating profits" but I don't know that they will be true GAAP profits for a while. And given their growth plans I doubt that they will be cash flow positive for a decade, as building several more gigafactories, car production factories, etc. requires a lot of initial capital investment.
Someone like the Saudis may put a lot of cash in, but the Saudis haven't shown themselves to be particularly shrewd investors. It sounds like this could be a trophy asset for MBS who wants to make it look like he is diversifying the Saudi economy. It looks like his planned Aramco IPO has gone pear-shaped so he is looking for something else to distract folks, not unlike how Elon introduces a semi and new roadster when people are focussed on poor produciton numbers for the Model 3.
We don't really know how it would work but oftentimes these private structures have onerous requirements, like requiring you to be an accredited investor (net worth > $1M, etc) and they can be harder to do across borders, meaning that such an investment may just be available to Americans.
I started a thread about this in the Investors section "Going Private = Forced Liquidation" for many Investors
I did a bit of research last night and from the sounds of how it's planned to go down, it will not be TFSA nor RRSP eligible for us. Here's a list of Designated Stock Exchanges that are eligible and if it goes private it will not trade on those. There's a possible exemption for public Canadian companies that go private, but that's obviously not the case here
I started a thread about this in the Investors section "Going Private = Forced Liquidation" for many Investors
I did a bit of research last night and from the sounds of how it's planned to go down, it will not be TFSA nor RRSP eligible for us. Here's a list of Designated Stock Exchanges that are eligible and if it goes private it will not trade on those. There's a possible exemption for public Canadian companies that go private, but that's obviously not the case here
Thanks for starting that thread. There's a lot of unknown. If we are forced to liquidate it'd be good to know in advance because there might be an opportunity to sell above $420 if there is a big short squeeze.
But, like you, I've been accumulating for years and really want to hold on. I think transferring from TFSA to private should be workable. But RRSP would result in a 50% tax hit.
Not sure I buy the logic that it has been miserable for Musk to deal with running a public company. Firstly, the company has been able to raise over $4 billion in equity, at valuations only really possible because of the willingness of the public markets to buy into a really good story that was often not backed up by fundamentals. Secondly, he's very much the architect of his own misery by his lack of discipline when it comes to making rash promises and projections that he must know are not achievable, not to mention simply running his mouth when it would be better for the company if he stayed away from twitter. He has basically run one of the most successful stock promotions in history. In a way he's a lot like Trump -- he seems to thrive in the chaos about which he spends a lot of time complaining
Not to mention that it's hardly plain sailing running a private company with over 500 shareholders, since you are forced by the SEC to comply with lots of similar reporting requirements. As others have also mentioned, private companies can't sell stock to random people off the street. You generally have to be an accredited investor, which rules out many retail investors who could currently buy TSLA.
Don't get me wrong, there is a lot to like about Tesla as an investor. The brand is hugely valuable and despite the iPace, e-Tron, etc., they do have a very big lead in electric vehicles. But this doesn't mean that the company is not constrained by the realities of needing to produce vehicles profitably, telling the truth about its future plans (Tesla Semi, Solar Roof? -- both basically sidelined as far as the reality of having a production line in the case of the former and customers being able to buy them in the case of the latter).
Sadly we live in a world in which everyone has to be 100% for something or 100% against it. My view is I generally like Tesla, but Musk is becoming somewhat toxic for the company, and it's just not right that he's allowed to make false or misleading statements with impunity.
I'll partially buy into this. Certainly the public market made Tesla possible; the money wouldn't have come any other way. The fact that they're looking to move private is a huge indicator of the level of confidence that Tesla management has in the company and their ability to execute. It will always be tougher to sway a few large, highly educated investors, than a bunch of schmos who can be sold a good story.
I do believe that the BS associated with with public ownership is an emotional drag on the company, and on Elon in particular right now. You can only fight on some many fronts without getting fatigued. You don't see Elon going off the deep-end on Twitter wrt SpaceX. I think it all gets to him and then he lashes out. He's a human being and once in a while he forgets diplomacy and tells people that they're idiots.
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