Tesla bought out: saviour or curse?

As a Canadian, I prefer to buy American over Chinese.

I prefer that the company is true to the environment vs an oil company double dipping.

I would prefer that Elon leave and put his effort into more and new and other ventures. Perhaps another car start up. As long as this one continues leading in no emissions transportation.

 

Tesla's mission is a big part of why I follow the company. If they got absorbed by an oil company it would literally defeat their purpose.

 

Out there in the real world investors understand that Elon Musk and Tesla are leaders in the next generation of transportation and energy -- some of the largest markets in the world -- and have created one of the most innovative enterprises on the planet.

Other automakers shackled with massive amounts of capital tied up in outdated ICE technology are far more likely to end up teetering on the edge of bankruptcy than Tesla but if there is a black swan event investors will line up to shovel money at Elon and Tesla so they can continue on their path.

 

Actually you can look it up. It is called market capitalization. Today it was 52.46 Billion US Dollars.

That is the market's estimate as to how close Tesla is to bankruptcy. The closer that capitalization number is to zero then the more the market thinks that Tesla is close to bankruptcy because in bankruptcy the debt, which is more senior in the liquidation stack, can't be fully paid and the equity goes to zero.

The market capitalization is the expected value of the discounted future cash flows. So the buyers and sellers debate every day as to how likely those values are, including some likelihood of that value being zero in bankruptcy. Buyers and sellers of derivatives like short sellers or long option buyers also influence that market capitalization. You can think of market capitalization as the weighted average of everyone's expectation.

 

If Tesla slumped to $100/share and had trouble with China, and had trouble getting loans, I could see Warren Buffett buy them. He is very hands off, loves a value and could use his stake in BYD to get into China. He has been investigating more and more in tech, bought 10% of BYD 10 years ago, and has a too much money sitting around that he can't spend.

 

Wasn't there some thread about this like 2 months ago.....

 

Tesla has been providing excellent shareholder returns, just compare past and present stock valuations. If you want cash, you must sell some of your stock. The companies which bring in profits actually perform worse because they have to pay taxes on retained profits. 100% plowback is the most efficient strategy for an investor.

 

Apple could simply write a check. ...but Elon wouldn't cash it, according to his statements in the past.

Apple could take the worry out of Tesla's future, provide growth opportunities in new markets, unleash engineers to upgrade Tesla's software (since Tesla's OS in the car is Linux based) and silence a lot of critics.

It won't happen. But, if it did, I wouldn't worry. Heck, we might even get CarPlay added

 

True words of an Apple fanboy... Even if I had the option for CarPlay I think TeslaOS is a lot more sleek, clean, and functional in the M3.

 

No, I don't want him to go away, but most likely if they are bought out they would tie his hands so it would be a waste of talent. Go somewhere where he can do whatever he dreams about again.

 

Stock value has very little to do with solvency. Lehman Brothers was worth $60b a year before they folded.

As you stated, stock price is based on expectation. The value for Tesla is based on the expectation of what it will be in the future, not what it is today.

 

Their market cap is too large to get bought out right now, the stock is so future-priced there's now way another company would take the risk. Tesla also has a strong position in capital markets, they could get a lot more money to ensure survival if they need it.

 

It's a recurring theme. I've seen multiple posters (assuming they aren't the same person) and multiple threads over the years.

The key thought in rebuttal is always that Elon Musk is the primary shareholder for Tesla and wouldn't sell. Another company could buy minority stake in Tesla by buying every share on the market and get up in the 40-49% range but Elon would prevent them from getting to 50%.

 

Elon knows better than to sell, which in part is why he's as aggressive as he is IMO. The last time we had the possibility of viable long range EVs, GM sold the company with the IP to Texaco after killing the EV1 and all of it's tech. Chevron bought Texaco, and sued anyone else making large format NiMH batteries, which pretty much killed long range EVs at the time.

Patent encumbrance of large automotive NiMH batteries - Wikipedia

Compare Side-by-Side

Being this aggressive is also why there's a lot of volatility and acrimony. Tesla's likely going to beat the tar out of traditional automakers or go bust trying, which I support 100%.

 

Yeah, this thread's going to end well.

 

Stock value has everything to do with the market's expectation of solvency.

 

Year 9 for me.