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Taking Tesla Private

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Re: Taking Tesla Private

#211

Post by derriz »

Not directly related to the thread, but I'm surpised by the extreme anti-short seller sentiment? Why is it important that they suffer?

Short-selling is what makes almost zero expense mutual/index funds available to mom n' pop investors. Fidelity are about to offer ZERO TER funds on the basis that short-sellers pay heavily to borrow stock from them.

It seems analogous to expressing hatred for umbrella sellers because you don't like rain.

When I lived in Ireland before the GFC banking collapse, I remember bank executives whipping up public support for a government ban on short-selling bank stocks on the basis of "protecting decent companies from shady speculators and evil gamblers". In terms of cost to society, it was the bank executives who inflicted massive damage and bankrupted the country, not short-sellers of bank stock.

Since then, I've been quite skeptical when people blame speculators and short-sellers for the behavior of markets. There's usually some basis for shorting.

Re: Taking Tesla Private

#212

Post by peeters »

mrtron wrote: post #178
ckastner wrote: post #58

I don't like the guy (and it's obvious from my comments), but this move is brilliant on so many levels. The short sellers just got taken to the cleaners, badly . By taking the company private, he's under less public and regulatory scrutiny. It's probably easier for him to raise money privately, and there seems to be sufficient interest. Tesla's employees, who are probably pretty much worn out, got a nice pay day. And…

Why don't you like the guy? I am always surprised that people could have a net negative opinion on someone who is trying hard to push technology forward in multiple directions. I agree this move is brilliant, and could be a huge competitive advantage when self-driving bad press liability kicks in.

I'm overall a fan of Tesla and SpaceX, but there are a number of valid criticisms you could make against Musk:

Occasionally childish relationship with his investors. Unfoundedly calling a diver a pedophile after he attacked Musk's rescue submarine as a dumb idea. He thinks he's an expert in any field he touches. Has an overall tendency on social media to promote Trump-style tribalism--you're either on team Elon or you're an idiot. There is no such thing as valid criticism of anything he does.

Some of these things also make him great. He assumes that everyone who looked at a problem before him was just too incompetent, corrupt, or complacent to solve it right, which can be a useful trait because it's often true. But when it's false it just makes him look like an asshole.

To be honest a lot of the hate just seems to come from how he responds to haters, so it's a bit of a vicious circle. If he just took a break from Twitter it'd probably benefit his image considerably.

Re: Taking Tesla Private

#213

Post by ranman »

Diederich wrote: post #107
peeters wrote: post #93

Earlier quoted context omitted.

So there's the real story. Who is this financer (or group) with ~40 billion in capital that is willing to bet long on Tesla? That's really interesting to me, if Musk is being truthful here.

Totally, totally random thought, but I figured I'd record it, even though it doesn't seem to make sense. Bezos?

I could be wrong, but I don't imagine Elon likes Bezos very much.

Re: Taking Tesla Private

#214

Post by WJW »

austenallred wrote: post #209
southerndrift wrote: post #109

Earlier quoted context omitted.

Going private, wouldn't it be a bigger distraction for everyone working at Tesla to wonder whether they can find a private buyer or not for their shares and what their shares are actually worth?

I can't imagine anything more distracting than a big number that goes up and down minute to minute changing the value of the equity they hold

So how do all the other companies do it then? It is not like Tesla is the only public company where some or all employees hold stock, and it is not the only one with a volatile stock price either.

Re: Taking Tesla Private

#215

Post by swalsh »

Keyframe wrote: post #155

Interesting. Bloomberg's Sebastian Boyd said: Incidentally, Tesla has a free-float of 127.5 million shares. At $420 a share, that would cost you $53.6 billion. The company already has net debt of of $8.8 billion and an adjusted net leverage ratio of 13 times. Were it to be bought in a management-led LBO, a back-of-the envelope calculation would give it a leverage ratio of over 90 times, worse on a trailing 12-month b…

An interesting perspective on why Elon might be pulling this move: https://www.barrons.com/articles/tesla-stocks-surge-puts-con...

Re: Taking Tesla Private

#216

Post by takeda »

nostromo wrote: post #46

This feels like a rushed announcement. First you throw out a tweet, later in the day you halt trading, then you make an announcement that you're "considering" something major, but that you haven't decided yet. Not only that, but Musk seems a tad bit paranoid. He's regularly talking about all those evil greedy short-term traders that attack the company -- which is a little silly since traders have given Tesla a larger…

From the beginning that I got interest in Tesla there were scary stories that they will fail, their cars are crap etc.

Now as I think of it, most likely authors of these stories did it to cause stock to dip so they can purchase at lower price and once it recovers sell.

The traders that are actually help the company purchased stock a while ago and are just keeping it. The get-rich-quick traders are the ones that are ones that are hurting the company.

His announcement mentions that they are thinking to leave option to hold private stock or purchase at $420/share. I think the idea is basically to get rid of those bad investors, since if you would opt to the private stock you wouldn't be able to sell it easily.

Re: Taking Tesla Private

#217

Post by gimmeThaBeet »

dangjc wrote: post #103

It's a sign public equity markets aren't structured well that companies aren't encouraged to think long term. The most successful companies in today's markets don't even allow common shareholders to control the company, ie Google and Facebook with their special classes of controlling shares. We might need to reconsider changing laws around choosing board seats or requiring shareholders to have minimum holding times i…

>If public equity markets don't work, the alternative is more and more of wealth creation happening privately

I say that's a fair point, for the reasons you describe, that there's less oversight, and more mammoth capital sources that have an appetite for VC at nearly any stage.

The "aren't encouraged to think long term" is an odd bit. You are right but at the same time it seems to be at least imo that we (the market) want these ownership structures. We want Page and Bezos and Zuckerberg and Musk, but we want to own it too. Snapchat and its S&P denial would be the battleground there.

So I think to paraphrase you latter idea "we might to formalize a public equity model that is more flexible around a founder/visionary, or we might need to be more explicit about who controls a company, and what can be done to change that control."

I suppose the balance to me is between making the burden of public markets lighter on companies with longer term vision, and exposing retail markets to a wild frontier that is imo only appropriate for more sophisticated parties.

Re: Taking Tesla Private

#219

Post by dragonwriter »

CydeWeys wrote: post #117
take4 wrote: post #75

Earlier quoted context omitted.

> CNBC reports that none of the Wall Street banks it contacted were aware of any transaction or had committed to funding a leveraged buyout of Tesla.

Does that prove anything though? Let's imagine a bank is working on this deal; why would they tell a reporter? It's common for companies to deny things to the press even when they're true.

> Let's imagine a bank is working on this deal; why would they tell a reporter?

There is a difference between not telling a reporter and denying it to a reporter.

Re: Taking Tesla Private

#220

Post by eanzenberg »

filmgirlcw wrote: post #108
eanzenberg wrote: post #25

Earlier quoted context omitted.

It only falls if Elon is bluffing. He’s guaranteed $420 / share.

He’s not guaranteeing anything. He hasn’t mentioned financing to do this, and it’s not a small amount of money to raise. Shareholder approval isn’t a given either. It’s probable that he’d get the votes if he showed the financing necessary for a $420 stock price, but it’s not a guarantee.

That's why I wrote "bluffing." If he is the shorts will come out way ahead as tesla goes below 200.
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