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Taking Tesla Private

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Re: Taking Tesla Private

#221

Post by bvc35 »

peeters wrote: post #212
mrtron wrote: post #178

Earlier quoted context omitted.

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 yo…

I'm not qualified to make a diagnosis of any kind, but this at first glance suggests that he's a narcissist.

Re: Taking Tesla Private

#222

Post by BonesJustice »

S_A_P wrote: post #53
ChicagoDave wrote: post #40

Earlier quoted context omitted.

If a majority votes to take the company private, you would have the option of selling or accepting private stock (some non-voting class I'd assume) that you can trade. Voting class stock would be only offered to investors with >X% current holdings, probably the 5% the Saudi's just purchased. Employees may have a third class stock. As an investor, you'd be given paperwork to sell or accept the new stock in exchange fo…

Thanks. Your last sentence seems to sum up the motive here in my opinion, not so much to screw the short sellers, but to limit/stop the ability of them to influence the value of the company through whatever means.

Short sellers aren't the only ones getting screwed. If you had taken a long position by buying call options with a strike price over $420, you're not gonna have a good time.

For example, the bids on $430 call options expiring in January and June 2019 were down ~20% and ~25%, respectively. If Elon's plan goes to fruition, those options can (probably) never be exercised.

The further out the expiry and the higher the strike, the worse it gets. Liquidity just evaporated, and the spreads are getting wider.

Re: Taking Tesla Private

#223

Post by dragonwriter »

Element_ wrote: post #210
martin_bech wrote: post #118

Earlier quoted context omitted.

Or Apple, Google, maybe even Jeff from Amazon. Musk changes the rules of the game on a regular basis.

Just because those companies have massive market caps and cash reserves doesn't mean they can cut a check for 40B+ to buy a company that is burning cash. Hard to imagine any board signing off on that deal.

> Just because those companies have massive market caps and cash reserves doesn't mean they can cut a check for 40B+ to buy a company that is burning cash.

Cash reserves mean they can.

> Hard to imagine any board signing off on that deal.

Right, conservative (appropriately so!) corporate decision making means they likely won't, not can't.

Re: Taking Tesla Private

#224

Post by austenallred »

WJW wrote: post #214
austenallred wrote: post #209

Earlier quoted context omitted.

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.

There are fewer public companies all the time https://www.bloomberg.com/view/articles/2018-04-09/where-hav...

Re: Taking Tesla Private

#225

Post by leereeves »

gamblor956 wrote: post #164
gameswithgo wrote: post #98

Earlier quoted context omitted.

The free market of automobile manufacturing in which the USA has propped up both GM and Ford, and in the past Chrysler? The one in which the Japanese government is carefully intertwined with their automotive industry? The government is a customer of space x but they still compete against other companies for that business.

Tesla has also received a substantial amount of government support, including state and federal EV rebates for buyers of its cars (roughly $300 million), an extremely large handout from the state of Nevada ($1.3 billion), a large handout from New York ($1 billion), handouts from US Government ($500 million), carbon credits ($520 billion as of 2015). Collectively, Tesla's government support actually exceeds the govern…

> [GM has] since repaid those loans...though GM discharged much of its loan through bankruptcy.

What did you mean to say here?

That GM eliminated (not repaid) the loan through bankruptcy?

Or that GM discharged the loan then repaid it anyway?

Re: Taking Tesla Private

#226

Post by djanogo »

swalsh wrote: post #215
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...

"...which would effectively let the electric-auto maker pay off that obligation in stock instead of cash."

How does paying off the obligation with stock work?, whose shares would Tesla assign the bond holder?, if it assigns shares after market closes and when market opens if it's below $360, won't the bond holders sue?

Re: Taking Tesla Private

#227

Post by martinald »

qaq wrote: post #100
martinald wrote: post #38

Pretty enormous amount of money required. Say half of TSLA shareholders take the $420, that's approx ~$40bn required. Then there's another $10bnish of debt refinancing required, and probably many more billion for future product development and new assembly lines. I don't think Softbank could finance this, it would be well over half their entire fund. Saudi maybe - but still quite a chunk of change for them.

I would imagine he talked to his institutional investors it could be far less than half.

Looking at ownership summary, loads are held by ETFs, which I assume would have to divest as most track only public shares.

Re: Taking Tesla Private

#228

Post by microtherion »

Johnny555 wrote: post #89
patrickaljord wrote: post #78

Earlier quoted context omitted.

Isn't SpaceX success due to the fact that most of its orders come from the US government while Tesla has to compete in the free market and isn't that successful there?

That may be true, but the stability comes from it being privately held -- the SpaceX stock doesn't swing wildly every time some news about their competition with Boeing is released.

A profitable company has no need to be excessively concerned about its stock price. Of course, at some point, shareholders might consider putting on pressure, but that doesn't really seem to have happened even with Tesla. And in closely held companies, that kind of pressure is much stronger — it's not like Musk has $70B of spare change in his couch pillows, so he'll always have to deal with co-owners.

Re: Taking Tesla Private

#229

Post by mikec3010 »

peeters wrote: post #187
_uhtu wrote: post #162

Earlier quoted context omitted.

Wouldn't that assume that every short seller would lose $420 per share? They probably purchased their shorts at like ~$350 per share, so they'd only stand to lose 420-350=$70 per share, correct?

I'm a newbie when it comes to calls and puts, couldn't they just fill their shorts now (no pun intended, I seriously don't know the terminology) if they're worried about it? Tesla closed at $370.

What happens when $14bn in short interest tries to buy simultaneously?

Re: Taking Tesla Private

#230

Post by nopriorarrests »

cs702 wrote: post #90

No external financing might be necessary , because virtually all Tesla shareholders today (i.e., people who are net-long the stock) are true long-term believers in Musk's vision unconcerned with the company's short-term financial issues. (People who are concerned with financial issues are either avoiding the stock or shorting it.) These true-believer shareholders will want to hang on to their shares as the company go…

I need to double check it, but some of the largest institutional shareholders, like Vanguard Group, could only hold positions in public companies, so they will have to sell.

Retail investors can decide to go private, but tesla free float is very small, so they don't matter much in a grand scheme of things.

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