THE. MOST. VALUABLE. AUTO. COMPANY. IN (most of). THE. WORLD.

[jkirkwood001]

Yowser. Bears - please excuse the pun - repeating from my post in the investor roundtable.

Excluding a couple of Chinese and Indian conglomerates, today Tesla became the most valuable automotive company in (most of) the world - more valuable than GM, Ford, Fiat/Chrysler, even more than BMW and Daimler:

 

[jkirkwood001]

Whoops, my bad. My screener excluded Toyota and VW because of low volumes today. Tesla third after those two:

 

[david_42]

I seen a few panic-stricken comments (all from companies heavily shorted on Tesla) that "No one in their right mind would fund a company that has been posting the losses Tesla has had."

Bear-skin rugs anyone?

 

[EV forever]

Musk did promise the "the short burn of the century"

 

[Quickstart88]

So what happen if you we hold our Stock after it's private. How will we know how much a share is worth?

No need to respond. I got my answer over in this other thread.

THE. MOST. VALUABLE. AUTO. COMPANY. IN (most of). THE. WORLD.

 

[Pluto]

Musk did promise the "the short burn of the century"

It would also be the largest LBO of all time.

 

[suwaneedad]

Musk did promise the "the short burn of the century"

It's funny, his first go-private tweet today struck me as his usual 'hey this would be fun to screw with people about' but when Tesla tweeted the employee memo within two hours, which was too well-written to have been drafted after Elon's tweet, I DO wonder whether his short burn of the century comment related to the go-private idea (and not the 5k ramp attainment).

His tweet today may have been motivated by the potential for a leak, which by all means he'd want to get ahead of, lest the stock price climb and his $420 offer not look like much of a premium. (Board needs to be able to cover its ass to defend against class-action lawsuits that the board decided to go private at too low a price.) Lord knows Tesla has been as leaky as the White House of late.

 

[suwaneedad]

It would also be the largest LBO of all time.

These headlines bother me, because the size of the buyout can't possibly be known yet. So much is owned by Elon/insiders/mutual funds/China/Saudis that there may not be much capital needed at all to take this thing private. The headline number of $72B is only relevant if everyone were selling; very few shares (as a %) will be selling I expect.

 

[suwaneedad]

So what happen if you we hold our Stock after it's private. How will we know how much a share is worth?

It becomes a highly illiquid security. His employee memo said that they'll handle it as they do today with SpaceX: every six months people have a chance to sell (and presumably in this case, buy). That value could be determined by a valuation firm (I'm not a fan), or by Tesla acting as an auctioneer of sorts, receiving offers to buy/sell at given prices and executing the desires wherever the market does meet (touchy, but IMO better than relying on some valuation firm with its own nasty biases).

The most likely scenario is that those who elect to hold onto the private (illiquid) security will do so until the company once again goes public (likely, per Elon) and then sell/buy whenever you like (just as you do today).

 

[pz1975]

If they truly treat a private Tesla like a private SpaceX, it may be difficult/impossible for investors that don’t own shares at the time of the sale to acquire shares later.

With SpaceX, anytime someone tries to sell their shares, the company has the right of first refusal to buy those shares. And from what I have been told, this always happens. They never allow anyone not currently an investor to buy SpaceX shares. I have been trying for 5 years (through Sharespost) and have never been able to buy any.

I wonder if private Tesla may do the same and essentially swallow up any shares that would have gone to market. I have no idea if this is true, but just throwing it out there as a possibility.

 

[Quickstart88]

It becomes a highly illiquid security. His employee memo said that they'll handle it as they do today with SpaceX: every six months people have a chance to sell (and presumably in this case, buy). That value could be determined by a valuation firm (I'm not a fan), or by Tesla acting as an auctioneer of sorts, receiving offers to buy/sell at given prices and executing the desires wherever the market does meet (touchy, but IMO better than relying on some valuation firm with its own nasty biases).

The most likely scenario is that those who elect to hold onto the private (illiquid) security will do so until the company once again goes public (likely, per Elon) and then sell/buy whenever you like (just as you do today).

Thanks for the feedback. So Tesla can higher a valuation firm to determine how much a share is worth? They can valuate it as $100 dollars or 1,000 dollars? How will they evaluate that being a fair value. I am still a little lost. Historically these valuation firm is fair or always undervalue the price?

 

[EV forever]

It's funny, his first go-private tweet today struck me as his usual 'hey this would be fun to screw with people about' but when Tesla tweeted the employee memo within two hours, which was too well-written to have been drafted after Elon's tweet, I DO wonder whether his short burn of the century comment related to the go-private idea (and not the 5k ramp attainment).

His tweet today may have been motivated by the potential for a leak, which by all means he'd want to get ahead of, lest the stock price climb and his $420 offer not look like much of a premium. (Board needs to be able to cover its ass to defend against class-action lawsuits that the board decided to go private at too low a price.) Lord knows Tesla has been as leaky as the White House of late.

My first thought when the go-private tweet popped up on my phone - someone needs to take his Twitter account away from him! Then as the story developed, I realized this was a serious and planned strategic move. Now I too firmly believe that he already knew this was coming when the tweeted out the 'short burn of the century' tweet. He said it would be 3 weeks to the short burn, but maybe, putting everything in place took a little longer than he anticipated.

 

[suwaneedad]

Thanks for the feedback. So Tesla can higher a valuation firm to determine how much a share is worth? They can valuate it as $100 dollars or 1,000 dollars? How will they evaluate that being a fair value. I am still a little lost. Historically these valuation firm is fair or always undervalue the price?

Valuation is one of those art/sciences that involves really big firms (EY, for example, S&P being another). In the end, their conclusion as to value is an opinion. It's completely normal in the private company world; it is just vastly different from the public company liquid stock market world. I would not say there is any conscious over or undervaluing decision by valuation firms, at least not one that anyone would admit to out loud. In short, owning a private company stock is not for the faint of heart. It may be the first time that many folks actually begin to value the liquid nature of their other (public) investments.

But bear in mind the 'market cap' concept in the public markets contains a similar fallacy. Just because the last share of TSLA today crossed the wire at $379.57 does not mean that all the shares could have bought/sold at that price. And yet we all readily accept that TSLA had a market cap of $379.57 x 169.8 million shares = $58.1B. That's a joke (to me).