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| Musk argued delisting would remove the "wild swings in our stock price that can be a major distraction for everyone working at Tesla", and the "quarterly earnings cycle [of a public company] that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term |
| Earlier today, I announced that I’m considering taking Tesla private at a price of $420/share. I wanted to let you know my rationale for this, and why I think this is the best path forward. First, a final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best. As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders. Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term. Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company. I fundamentally believe that we are at our best when everyone is focused on executing, when we can remain focused on our long-term mission, and when there are not perverse incentives for people to try to harm what we’re all trying to achieve. This is especially true for a company like Tesla that has a long-term, forward-looking mission. SpaceX is a perfect example: it is far more operationally efficient, and that is largely due to the fact that it is privately held. This is not to say that it will make sense for Tesla to be private over the long-term. In the future, once Tesla enters a phase of slower, more predictable growth, it will likely make sense to return to the public markets. Here’s what I envision being private would mean for all shareholders, including all of our employees. First, I would like to structure this so that all shareholders have a choice. Either they can stay investors in a private Tesla or they can be bought out at $420 per share, which is a 20% premium over the stock price following our Q2 earnings call (which had already increased by 16%). My hope is for all shareholders to remain, but if they prefer to be bought out, then this would enable that to happen at a nice premium. Second, my intention is for all Tesla employees to remain shareholders of the company, just as is the case at SpaceX. If we were to go private, employees would still be able to periodically sell their shares and exercise their options. This would enable you to still share in the growing value of the company that you have all worked so hard to build over time. Third, the intention is not to merge SpaceX and Tesla. They would continue to have separate ownership and governance structures. However, the structure envisioned for Tesla is similar in many ways to the SpaceX structure: external shareholders and employee shareholders have an opportunity to sell or buy approximately every six months. Finally, this has nothing to do with accumulating control for myself. I own about 20% of the company now, and I don’t envision that being substantially different after any deal is completed. Basically, I’m trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible, and where there is as little change for all of our investors, including all of our employees, as possible. This proposal to go private would ultimately be finalized through a vote of our shareholders. If the process ends the way I expect it will, a private Tesla would ultimately be an enormous opportunity for all of us. Either way, the future is very bright and we’ll keep fighting to achieve our mission. Thanks, Elon |
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Originally Posted by nakul0888
(Post 4441166)
Well this is interesting. If he takes it private how will tesla manage to raise the capital it needs to run ? Last time I checked it’s still burning money like a dumpster fire. Didn’t tesla made a loss of 700 billion already this year. ?If he takes it private he won’t be able to raise much money through sale of equity as compared to a public company. That means the other route is adding debt. That would be playing with fire. |
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Originally Posted by Doge
(Post 4441176)
If Musk can cool it with the loud twitter personality, things wouldn't be this way. |
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Originally Posted by nakul0888
(Post 4441166)
If he takes it private he won’t be able to raise much money through sale of equity as compared to a public company. That means the other route is adding debt. That would be playing with fire. |
| The SEC has reportedly been interested in Musk’s use of Twitter as the CEO of a major public company in other occasions in the past. He has often made announcements about Tesla that moved the market, but arguably none as relevant to the public market than an announcement that he is considering to take the company off the public market and structure it as a private company |
| Some investor-protection law firms have also announced that they are probing Musk’s actions and they are seeking collaboration from people shorting Tesla’s stock who took a loss from the rise in Tesla’s stock price that followed Musk’s tweets. |
| Saudi Arabia's sovereign wealth fund has acquired a significant position in Tesla shares, according to the Financial Times. The media outlet says the Saudi's Public Investment Fund bought a 3 percent to 5 percent stake in the electric car maker, according to people with direct knowledge of the matter. The stake is worth $1.9 billion to $3.2 billion at the company's current share price. |
| over time, Dell came to the realization that servicing all of its debt, making strategic acquisitions and boosting shareholder returns was more challenging for a company that couldn’t easily tap the public markets. |
| The stock was trading about $70 below that exit option and therefore, it rose toward the price target, but it has now fallen from pressure as some analysts doubt the plan could work and Tesla shorts question Musk’s funding. |
| The board expects to make a decision on whether to launch a formal review of Musk’s proposal in the coming days, and is speaking to investment bankers about hiring financial advisers to assist it in its review in such scenario. If the board launches a formal review of Musk’s bid, he would have to recuse himself, or a special board committee would have to be formed, according to the sources, who requested anonymity because the deliberations are confidential |
| Tesla wants to go private, wants to de-list and focus on long-term goals and rid itself of distractions |
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Originally Posted by alpha1
(Post 4443596)
However, is there a possibility that all this was to "leak" to market a potential buyback price and raise the share price to that level? |
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Originally Posted by Samurai
(Post 4442829)
Elon Musk's logic in going private is understandable. He is one of the greatest tech visionaries of our time. He doesn't really need 1000s of analysts/investors second guessing him, questioning his decisions, telling him what to do, etc. As smartcat mentioned, funds won't be a problem because Elon Musk is a proven entity. There will be PE companies standing in line to throw money at him, and he can accept their funds with the condition that they don't tell him what to do with their money. |
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Originally Posted by Jeroen
(Post 4443652)
But I don’t think you will find any investor that will invest without being told what is going to happen. |
| The Saudi Kingdom’s Public Investment Fund had approached Musk going back almost two years about taking Tesla off the market, confirming that the fund recently bought an almost 5 percent stake. Musk described a July 31 meeting in which the Saudi fund’s managing director expressed regret that Tesla hadn’t moved forward with a go-private transaction. “I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving |
| He said this is why he tweeted on Aug. 7 that he had “funding secured” to take Tesla private at $420 a share |
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Originally Posted by Samurai
(Post 4443608)
But why? If you want to do share buyback, you don't want the share price to raise too much. You want it to raise just enough that the majority will agree to sell it back. But not more. |
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