Forums

Tesla to not go private after all

Tesla to not go private after all

Not sure how I feel about this, but here is the latest Blog from Musk:

Staying Public
Elon Musk August 24, 2018

Earlier this month, I announced that I was considering taking Tesla private. As part of the process, it was important to understand whether our current investors believed this would be a good strategic move and whether they would want to participate in a private Tesla.

Our investors are extremely important to me. Almost all have stuck with us from the time we went public in 2010 when we had no cars in production and only a vision of what we wanted to be. They believe strongly in our mission to advance sustainable energy and care deeply about our success.

I worked with Silver Lake, Goldman Sachs and Morgan Stanley, who have world-class expertise in these matters, to consider the many factors that would come into play in taking Tesla private, and to process all the incoming interest that we received from investors to fund a go-private transaction. I also spent considerable time listening to current shareholders, large and small, to understand what they think would be in the best long-term interests of Tesla.

Based on all the discussions that have taken place over the last couple of weeks and a thorough consideration of what is best for the company, a few things are clear to me:

Given the feedback I’ve received, it’s apparent that most of Tesla’s existing shareholders believe we are better off as a public company. Additionally, a number of institutional shareholders have explained that they have internal compliance issues that limit how much they can invest in a private company. There is also no proven path for most retail investors to own shares if we were private. Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was “please don’t do this.”
I knew the process of going private would be challenging, but it’s clear that it would be even more time-consuming and distracting than initially anticipated. This is a problem because we absolutely must stay focused on ramping Model 3 and becoming profitable. We will not achieve our mission of advancing sustainable energy unless we are also financially sustainable.
That said, my belief that there is more than enough funding to take Tesla private was reinforced during this process.

After considering all of these factors, I met with Tesla’s Board of Directors yesterday and let them know that I believe the better path is for Tesla to remain public. The Board indicated that they agree.

Moving forward, we will continue to focus on what matters most: building products that people love and that make a difference to the shared future of life on Earth. We’ve shown that we can make great sustainable energy products, and we now need to show that we can be sustainably profitable. With all the progress we’ve made on Model 3, we’re positioned to do this, and that’s what the team and I are going to be putting all of our efforts toward.

Thank you to all of our investors, customers and employees for the support you’ve given our company. I’m incredibly excited to continue leading Tesla as a public company. It is a privilege.

https://www.tesla.com/blog/staying-public

-Dano-

Xerogas | 24/08/2018

Dang. I was hoping they could go the way of SpaceX and avoid all the drama of being a public company. I fully supported the go-private notion.

carlk | 25/08/2018

Sounded like we it might not be that easy for us retail shareholders to convert our shares to the new private company. Going private is good for Tesla but not necessarily good for us. For my selfish reason staying public is fine with me.

mos6507 | 25/08/2018

A moment of clarity emerges. Musk must have finally gotten a full night's sleep.

Al1 | 25/08/2018

I was fully supporting Elon Musk, although I was concerned I would not be able to retain Tesla shares. I also agree they are much undervalued even at 420.

Glad I can remain with Tesla as an investor.

Al1 | 25/08/2018

That vision requires a lot of money of course, but all in all as long as Tesla continue to make amazing products they will be able to raise money.

kyle | 25/08/2018

This tweet from Elon says what to expect
https://twitter.com/elonmusk/status/1033229945382858753
In talking to our public investors, most were supportive of optimizing for long-term value creation over quarterly earnings. This was also a factor in remaining public.

Sounds like the major investors are not worried about achieving a goal if it is going to effect them negatively in the long term. For example they know they have the support of them, so if it causes more problems to push to make 5000 cars in a week when they are not quite ready for it, they probably won't do it. It might make for a rough road in the short run, but that'll set it up for being more valuable in the long term.

Madatgascar | 25/08/2018

@kyle, that was the point I was making before. Tesla’s investors have been incredibly patient and far sighted. The mad scramble at the end of each quarter has always been more of a self imposed effort to meet Elon’s unforced predictions and silence the nattering nabobs. Ignore them, be frank with the investors, and focus on the mission. Soon Tesla will need the kind of money only the market can give them, for the next big step forward.

sosmerc | 25/08/2018

It's unfortunate that Elon did not thoroughly evaluate the situation BEFORE making that dumb twitter about "funding secured". That one remark may cost him. But now he has a chance to get back to business. I do wish that he and the board would hunt for somebody capable of working alongside Elon to manage the company. I don't think it is healthy for everything to rest on one person's shoulder.
I guess we will find out in the next few weeks whether the public investors and institutions will indeed want to fund the future of Tesla.

ravisundaramam | 25/08/2018

Well, it is a golden opportunity for the shorts to cut losses, book their profits and get out of their way.

Hope enough of them exited and FUD drops a little.

Al1 | 25/08/2018

It was not that dumb after all. Elon Musk got an important vote of confidence, forced stakeholders to speak up. And gave Saudis a chance to make a formal proposal. They got the message and replied back. It is called upping the ante.

carlk | 25/08/2018

@Madatgascar That is true although Tesla just can not totally ignore public opinions and has to comply to at least somewhat what the Wall Street is asking. When a company is looked at, even wrongly, as a non-forming and failing business there are more consequences than just the stock price. It will hurt the company's ability to deal with the financial world, suppliers, customers and even for recruiting talents. That's really what those FUDsters are trying to accomplish.

mos6507 | 25/08/2018

[It was not that dumb after all. Elon Musk got an important vote of confidence, forced stakeholders to speak up. And gave Saudis a chance to make a formal proposal. They got the message and replied back. It is called upping the ante.]

Dumb if you consider that after the initial spike, it caused the stock to tank afterwards. One can only hope the SEC doesn't still slap him down.

I've also lost track of how many articles I'm now reading about how the cult of personality surrounding Musk is fading and with that, investor confidence. Musk doesn't really help the company by having a reality show style crackup in the public eye.

Mike83 | 25/08/2018

Articles like the UBS BS and the shorts paid for FUD show the losers are afraid of Tesla going profitable. The facts speak louder than the slander and fake numbers. Disgusting people

Al1 | 25/08/2018

And after tanking spiked again. Stock price to me is only relevant as a signal to buy, which is especially strong when it is below 300. SEC slapping him down, please... They will come up with something for sure, something like 75 k a small change for Musk and it will be unprecedented. Anything creating risk to Tesla in any form will cause a hurricane. Elon Musk is a symbol of american innovation and the most american company at times of gigantic trade deficit.

For articles about fading cult of personality, I have stopped reading them a few years ago. Too much nonsense. No intent to comment.

Ross1 | 25/08/2018

After being a lone voice of dissent, I

mos6507 | 26/08/2018

[Anything creating risk to Tesla in any form will cause a hurricane. [Elon Musk is a symbol of american innovation]

Sounds like Trump's warning of some sort of Orange Spring uprising if he gets impeached. So Musk is and should be above the law?

kkogan | 26/08/2018

kkogan | August 14, 2018
The reason EM torpedoed SA PIF bid for private takeover of Tesla is because it was turning into clearly hostile.
Hostile for obvious reasons, I hope, if you remember Tesla/EM vision for it.
He did not have a better option than tweeting.
It is just hilarious how 'Experts' of all types are trying to comment/explain/justify/predict on what's going on while their imaginations just stop functioning when somebody's actions contradict 'making more money' that way principle.

Al1 | 26/08/2018

Nobody should be above the law. Shorts included.

Al1 | 26/08/2018

PS I suggest you get some background about this whole SEC thing, so that you sound you actually know what you are talking about.

SO | 26/08/2018

One can have “funding secured” to buy a house but ultimately decide against it. Same thing here.

Shock | 26/08/2018

"It was not that dumb after all. Elon Musk got an important vote of confidence, forced stakeholders to speak up."

Really, that's how you read this? Funny, everybody else seems to think Musk spoke out of turn and has lost what remaining credibility he had left.

"For articles about fading cult of personality, I have stopped reading them a few years ago. Too much nonsense. No intent to comment."

Too late, for your unwillingness to comment betrays your thoughts on the matter. A well-studied phenomenon known as cognitive dissonance. I'm sure in many aspects of your life you are a thoughtful, objective person. But that's what a cult of personality does: it removes that from a subject and has them deify the character of their infatuation.

Anybody still in denial at this point about the cult of personality is well into it themselves. People with an ounce of shame would realize the last three weeks have been an epic cluster f, but instead of admitting Musk screwed the pooch badly they continue to bend facts and rationalize some way to defend the indefensible.

You lot will follow him over the cliff. And even then as you fall you may not appreciate the lesson.

SamO | 26/08/2018

"everyone else seems to think" . . . is this the WSJ editorial page and Exxon?

Because the "actual shareholders" think that public or private, Tesla is going to be the dominant force in transportation.

$420 is way too low.

Al1 | 26/08/2018

Shocked, you seem to know what everybody else thinks. Congratulations.

There are few good advices about being successful on the stock market and a lot of bad ones. But worst advise of all is to follow everybody else. Looks like that's exactly what you are going to do. Good luck with that.

Elon Musk's credibility with me relies on his performance and achievements. He created product impossible to make, then created another one, and another one and another one. And all impossible to make. Then he ramped up production from 1000 cars 1 model to 7000 cars and 3 models within few months. Another impossible mission.

Tesla will be profitable not sometime in future, but within next two quarters.

And your conclusion? That Tesla is at the edge of the cliff, ready to jump off it.

You guys are in denial. A well studied phenomenon called cognitive dissonance.

SO | 27/08/2018

@Shock - let’s not kid ourselves. You are more obsessed with Musk and the Tesla “cult” than most.

mos6507 | 27/08/2018

[He created product impossible to make]

None of this was ever impossible. All that's been missing is the will (and money) to do it.

Mike83 | 27/08/2018

Shorts are really doomed.

SamO | 27/08/2018

If it was possible, then why can't VW do it? Why did VW offer up to $20B to join up with Tesla.

Not because they are in the lead, I'll tell you.

Not because they know how to make EVs . . . they most certainly do not.

Not because they know how to make software.

This was VWs last chance and as a result, they are heading for bankruptcy.

Sad not sad.

blue adept | 27/08/2018

@sosmerc, @mos6507

"It's unfortunate that Elon did not thoroughly evaluate the situation BEFORE making that dumb twitter about "funding secured". That one remark may cost him."

"One can only hope the SEC doesn't still slap him down."
"So Musk is and should be above the law?"

You both seem to have missed the part in Musk's blog entry where he wrote:

"THAT SAID, MY BELIEF THAT THERE IS MORE THAN ENOUGH FUNDING TO TAKE TESLA PRIVATE WAS REINFORCED DURING THIS PROCESS."

Ergo, it's not that the funds/money wasn't available (it most definitely is), it's that THE SHAREHOLDERS didn't want to take the company private and voted against such a move, so I really don't see any viable 'cause' for the SEC, or even those shorts that filed suit for that matter, to pursue any action at this point.

blue adept | 27/08/2018

@Shock

'Personality', cult-ish or otherwise, will only get you so far...At some point you'll have to actually provide some form of evidence or proof that validates that you warrant the respect/reverence you receive from others.

In Musk's case, he's been worthy of praise since his early 20's when he co-founded Zip2 with his brother.

He's since gone on to be the founder, CEO, and lead designer of SpaceX; co-founder, CEO, and product architect of Tesla, Inc.; co-founder and CEO of Neuralink; co-founder of PayPal; founder of The Boring Co., and is currently estimated to be worth approximately $24 BILLION at this point.

I mean, the guy IS pretty much the poster child for the American success story but, hey, I guess haters are gonna hate, huh @Shock?!

blue adept | 27/08/2018

As for myself, I still would've preferred for the company to have been taken private.

fritter63 | 27/08/2018

well, he *burned* through that idea quickly......

carlk | 27/08/2018

just an allusion

For Tesla's good I'd like to see it taken private but stay public suits my own selfish reasons better.

carlk | 27/08/2018

Follow up what you said I'd like anyone who are saying it's a cult tell me if there is another person who has started four companies all worth hundreds of millions and two tens of billions. And all these were achieved before the person has even passed half of his adult life. Even more so tell me a person who set a goal to save the mankind but got crucified by the ignorant fools instead in the last two thousand years.

mos6507 | 27/08/2018

[THAT SAID, MY BELIEF THAT THERE IS MORE THAN ENOUGH FUNDING TO TAKE TESLA PRIVATE WAS REINFORCED DURING THIS PROCESS.]

It's his belief, which could be correct or not. It's not secured until it's...secured.

[if there is another person who has started four companies all worth hundreds of millions and two tens of billions.]

Jeff Bezos is worth more than all of Tesla's holdings combined.

mos6507 | 27/08/2018

Musk's holdings I mean...

Mike83 | 27/08/2018

Such a braggart. No one cares about your FUD

SamO | 27/08/2018

Jeff Bezos exploits minimum wage workers like the Walmart Klan while Elon Musk changes the world. Grow a pair if you think bank balance has anything to do with "doing good."

I'm sure you are much poorer than either.

blue adept | 27/08/2018

Come on guys...

Stop throwing sticks and stones at one another and turning this forum into another school grade school playpen, everyone is entitled to their own opinion and their own allegiances, no sense in dissolving a conversation into a brawl of inconsequentialities and nuanced discrepancies.

blue adept | 27/08/2018

* grade school playpen

blue adept | 27/08/2018

@carlk

If it were a matter of VW assuming a large stake (as I've read somewhere), maybe even control over Tesla then I, too, would prefer for it remain 'public' (even though it would be so much more beneficial to be 'private', though not at the hands of VW).

carlk | 27/08/2018

Neither VW nor Apple, as some are suggesting, should take control of Tesla whether it's private or public. Why would you want them to ruin Tesla with their way of doing things?

blue adept | 27/08/2018

@carlk

That's my point...I wouldn't.

carlk | 28/08/2018

Yes Exactly.

Al1 | 28/08/2018

Toyota's investment into Uber values the company at 72 billion.

https://www.bloomberg.com/news/articles/2018-08-28/toyota-raises-bet-on-...

Quite interesting isn't it? Where are you fundamentalists?

Rocky_H | 28/08/2018

I heard an interesting description of this process. It mentioned that Musk seemed to view this going private thing as an engineering problem that he could solve. That's how he approaches almost everything. But the very reason he dislikes the restrictive straight-jacket nature of having to be a public company and deal with the Wall Street junk is the very reason why it's not just some easy switch to flip or problem to solve to get out of it. Rules aren't just problems to solve. They are, unfortunately, rules. And as much as he wanted to just do things a certain way, like flipping all of the individual public share holders over to holding private shares, those things just aren't allowed to be done.

So it wasn't so much about the amount of money being available to do it, but was rather than the solution he had envisioned just couldn't be done that way.

Mike83 | 28/08/2018

I read they have more than enough money(over $30billion) to go private but Elon saw how many of us small guys would miss out on the growth. We are lucky he is honest and appreciates owners and small investors. The BS from Murdoch's WSJ and marketwatch and others have more to do with their fears of losing in their fossil fuel investments IMHO. Same old same old.
I don't feel the need to protect the Shorters who are out to harm Tesla and it's owners. Fight the FUD.

carlk | 28/08/2018

Rocky_H
***It mentioned that Musk seemed to view this going private thing as an engineering problem that he could solve. That's how he approaches almost everything. ***

There are rules and there are human factors. In an ideal world these should all follow the physics that have only one truth. Unfortunately we are living far from the ideal world.

SamO | 28/08/2018

the facts we know are as follows:

1. The Saudis offered to back taking Tesla private

The evidence is Elon's tweet, his later blog post, the offer presented to the board with Saudi funding and the blog post about staying public.

2. Elon accepted their offer to present an offer to the board.

3. Due diligence was performed including creating a committee of the board and an actual presentation by Silver Lake, Goldman Sachs and Morgan Stanley.

4. Elon met with Tesla’s Board of Directors and let them know that the better path is for Tesla to remain public.

There is no "fraud" investigation. There is no doubt that Elon had an funding secured.

We are going to look back later and go "where's the beef?"

mos6507 | 28/08/2018

[Why would you want them to ruin Tesla with their way of doing things?]

Because it may come down to Tesla getting bought out or going bankwupt. In other words: exit strategy.

You think big companies are too big to fail? (Yahoo)
You think big companies can't get bought out? (Fox)

So there's what Tesla may want to do and there's what it may need to do to survive.

In retrospect a lot of people are now saying it was a mistake for Tesla itself to save SolarCity because by doing that it absorbed SolarCity's debt and took away a lot of Tesla's own runway. The acquisition has yet to payoff in any shape or form. Likewise, any prospective buyer has a build-vs-buy decision to make. VW group seems to be doing pretty well developing their own tesla killers on their own without resorting to buying Tesla. And it looks like even Hyundai and Kia are capable of producing the $35K car that Tesla can not, just not at the same scale. So I don't think anyone's going to be beating down Tesla's door to buy them out. Apple is the only one I can see doing it because they have so much excess cash they could burn. "Saving" Tesla, another American company, would be good PR for them.

sosmerc | 28/08/2018

"We are going to look back later and go "where's the beef?" ....or maybe "Show me the money" !

Pages