Re:Elon Musk Makes $82B Gambit to Silence Tesla Critics
by vannevar on Wednesday August 08, 2018 @09:45AM
(#17715867)
If the company needs a massive infusion of cash (as many analysts believe), and obtaining it from a public offering or large investors is not possible at a valuation Musk is comfortable with, he has little choice but to write a big check himself under cover of taking the company private.
Re:Elon Musk Makes $82B Gambit to Silence Tesla Critics
by nickik on Wednesday August 08, 2018 @10:44AM
(#17716362)
I think they story that they need a 'massive infusion of cash' is simply false. I have no idea why anybody would believe that. It is not in accordance with their own guidance or what we know from their production numbers and cashflow numbers.
It's clearly not false to state that the company will need a lot of money to scale going forward, compared to the money needed in the past. The only question is whether that money comes from revenue, debt, or investment. The revenue projections don't come close to covering it in the short term, and the company has already taken on quite a bit of debt with respect to its assets, making it unclear whether it could get loans for the amount of cash needed to scale up to "real car company"-sized manufacturing capacity.
Maybe they don't need money, and Musk is just taking advantage of undervaluation to make a great deal. But it's certainly not crazy to think that they do need money, and if so, taking the company private may be the only viable option.
Re:Elon Musk Makes $82B Gambit to Silence Tesla Critics
by dnomad on Wednesday August 08, 2018 @01:14PM
(#17717586)
> Maybe they don't need money, and Musk is just taking advantage of undervaluation to make a great deal. But it's certainly not crazy to think that they do need money, and if so, taking the company private may be the only viable option.
This doesn't make any sense. Companies don't go private because they need money unless it's a private buy-out. There is no indication at all that TSLA would have any trouble accessing the debt markets. In fact what we see is TSLA turning away investors like the Saudis who are eager to increase their exposure to the firm. If TSLA was so desperate for money why would they be turning away some of the biggest investors in the world?
Re:Elon Musk Makes $82B Gambit to Silence Tesla Critics
by jandrese on Wednesday August 08, 2018 @10:57AM
(#17716468)
Basically Musk is tired of short sellers writing story after story in the financial rags about how Tesla is on the verge of total collapse any day now. He figures if he goes private they'll be forced to pick a new target (or just write even more articles about Uber).
Re:Elon Musk Makes $82B Gambit to Silence Tesla Critics
by SeanAppleby on Wednesday August 08, 2018 @01:05PM
(#17717524)
Public opinion is swayed by the large volume of articles like these, and public opinion is important when you're running a high end, large scale b2c enterprise while making an emotional appeal that buying your product is something they should feel good about for their contribution to pushing the world in a better direction.
Re:Elon Musk Makes $82B Gambit to Silence Tesla Critics
by mikestew on Wednesday August 08, 2018 @09:57AM
(#17715988)
As a fellow shareholder, I’m curious what your plan is from there. Just take the $420 and call it a day? Probably the route I’ll go, and then take the money and look for other opportunities.
Re:Elon Musk Makes $82B Gambit to Silence Tesla Critics
by toomuchtodo on Wednesday August 08, 2018 @10:08AM
(#17716078)
My plan is to accept a swap into their private equity fund vehicle [+], and essentially hold forever. I don't blame anyone who takes the cash and runs, but I’ve been in since IPO and I’m going to ride this till the end.
Re:Elon Musk Makes $82B Gambit to Silence Tesla Critics
by mikestew on Wednesday August 08, 2018 @11:06AM
(#17716531)
Thanks, I haven't caught up to what the private equity plan is. My years to retirement can be counted on one hand, and we've way too much TSLA already for folks of our "maturity". I'll likely reduce our stake, but hold on to some for old-time's sake. Bought shortly after IPO, and it's treated us well, so I can't bear to sell all of it.
Re:Elon Musk Makes $82B Gambit to Silence Tesla Critics
by pooya13 on Wednesday August 08, 2018 @08:13PM
(#17720749)
Help me understand your theory... So in your mind, Elon's genius master plan is to give money to current share-holders that will leave and don't stay as investors when Tesla goes private, in an attempt to raise capital for the company? I'm not a math surgeon but that does not add up...
Re:Elon Musk Makes $82B Gambit to Silence Tesla Critics
by vannevar on Thursday August 09, 2018 @03:24PM
(#17727572)
Here's a scenario: Musk doesn't have to buy every share at $420 (interesting choice of price points, that); in theory, he could sell a lot of shares privately at say, $250/share, then use some of the proceeds to buy out a respectable number of public shareholders to maintain appearances, and swap the rest of them into a fund. The remainder of the money from the private sale, he can use to fund growth. Tesla's public share price soars, giving Musk symbolic public vindication, and once the deal is done, there's no public visibility on the private share value. Basically, a way of doing an effective down-round. Obviously, this all depends on convincing enough existing holders to swap into the fund, and that in turn depends on maintaining the Musk reality-distortion field. Any slip, or acknowledgment of what's really going on, and those shareholders may spook.
Re:Elon Musk Makes $82B Gambit to Silence Tesla Critics
by pooya13 on Saturday August 11, 2018 @12:02PM
(#17740190)
With 250$ per share he can buy 0.2 * 250/420 = 12% of the shares. And in that case he would not have any shares left. Again buddy, this does not make ANY sense.
Re:Elon Musk Makes $82B Gambit to Silence Tesla Critics
by vannevar on Monday August 13, 2018 @11:31PM
(#17755406)
And yet today that's exactly what he said he's going to do (though he hasn't disclosed the price of the private interest he's selling, only a rough estimate of the total proceeds). Musk disagrees with your math though; he expects to buy 1/3 of the shares, not 12%. But I'm sure he hopes it will be less. And of course he's not doing it all himself. He'll have shares left, he's just going to have to take a haircut.
Well, a few reasons are listed in articles like this: https://www.bloomberg.com/graphics/2018-tesla-burns-cash/
It's clearly not false to state that the company will need a lot of money to scale going forward, compared to the money needed in the past. The only question is whether that money comes from revenue, debt, or investment. The revenue projections don't come close to covering it in the short term, and the company has already taken on quite a bit of debt with respect to its assets, making it unclear whether it could get loans for the amount of cash needed to scale up to "real car company"-sized manufacturing capacity.
Maybe they don't need money, and Musk is just taking advantage of undervaluation to make a great deal. But it's certainly not crazy to think that they do need money, and if so, taking the company private may be the only viable option.
> You can’t really bet against bonds that could soon no longer exist.
https://www.bloomberg.com/view/articles/2018-08-08/elon-musk...
TL;DR Tesla going private at $420/share wipes out the bond debt. Their just-hired Chief Accounting Officer oversaw Seagate going private in 2000.
https://www.reddit.com/r/teslamotors/comments/95gv0l/dave_mo...
This doesn't make any sense. Companies don't go private because they need money unless it's a private buy-out. There is no indication at all that TSLA would have any trouble accessing the debt markets. In fact what we see is TSLA turning away investors like the Saudis who are eager to increase their exposure to the firm. If TSLA was so desperate for money why would they be turning away some of the biggest investors in the world?
Actually there are a lot of indications that junk bond markets have little appetite for Tesla offerings:
https://www.bloomberg.com/news/articles/2018-03-28/tesla-bon...
https://www.thestreet.com/investing/tesla-junk-bonds-sending...
Just look at the last 10Q and the rising debt.
Disclaimer: TSLA shareholder, intend to vote to go private
[+] https://twitter.com/elonmusk/status/1026890900885184514