TSLA - Tesla Motors

[walkie518]

Is the CEO tweeting that he is "considering" taking the company private an SEC violation? Doesn't trading have to be halted before any such announcement is made, rather than after?

 

What announcement? He's not announcing anything just "considering" it. LOL  He's definitely on something.  He should hide his phone from himself before dropping acid.

 

trading has been halting pending an announcement...though you're right, perhaps he does an about-face should the number of shareholders who want to cash out is much larger then anticipated?

[Liberty]

Official blog post:

 

https://www.tesla.com/blog/taking-tesla-private?redirect=no

 

The following email was sent to Tesla employees today:

 

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

[Gregmal]

What. The. F***. I've never seen anything like this in my life. And as much as I think TSLA is a farce, I am rooting for Musk here. Guy has massive balls and fights for his shareholders like few I've ever seen.

[Liberty]

His idea basically seems to be that most shareholders will remain in, so the capital needed to buy out the others won't be more than what he can raise from a few deep pockets...

[sleepydragon]

How he is going to pay for it if most current shareholders would like cash instead of remain in the new private company? Saudi? Chinese?

 

[JayGatsby]

 

Elon Musk @elonmusk

Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote.

[sleepydragon]

I can hear the screaming from Einhorn

[Gregmal]

This is awesome only because if finally forces guys like Chanos and Einhorn to eat it and gives finality to the notion that they are wrong. So tired of the "we're not wrong we're early" bullshit. If you shorted couple years(or longer ago) and it went against you, you're friggin wrong.

[walkie518]

His idea basically seems to be that most shareholders will remain in, so the capital needed to buy out the others won't be more than what he can raise from a few deep pockets...

 

I don't know how this works? 

 

Musk, Abu Dhabi, and the Saudis (no filing yet?) look like 22%, 4%, and 4% of shares...likely they don't sell so we know that's the 30% not selling...

 

say 70% of base sells, if the deal values TSLA at $70B, Musk needs $49B before debt "secured"?

 

[Liberty]

His idea basically seems to be that most shareholders will remain in, so the capital needed to buy out the others won't be more than what he can raise from a few deep pockets...

 

I don't know how this works? 

 

Musk, Abu Dhabi, and the Saudis (no filing yet?) look like 22%, 4%, and 4% of shares...likely they don't sell so we know that's the 30% not selling...

 

say 70% of base sells, if the deal values TSLA at $70B, Musk needs $49B before debt "secured"?

 

He seems confident that a large fraction won't sell. Tencent owns a chunk too, and maybe he's confident that Fidelity and FMR and such won't sell. Probably can know that a lot of retail investors won't sell because it's such a cult stock.

 

It might blow up in his face, but his risk appetite isn't exactly normal (you don't start car companies and space rocket companies if it is)...

[Gregmal]

I also think that risk wise, this is probably as good a shot as any to take a swing on a short position. $40 upside best case scenario. More likely scenario is you fade this back to low-mid 300's. No position though.

[sleepydragon]

This is awesome only because if finally forces guys like Chanos and Einhorn to eat it and gives finality to the notion that they are wrong. So tired of the "we're not wrong we're early" bullshit. If you shorted couple years(or longer ago) and it went against you, you're friggin wrong.

 

At least Chano and Einhorn can say to themselves that their nightmare is finally over.

[Zorrofan]

How much of the stock is held by mutual finds? I believe, though I am not an expert, that mutual funds can not hold shares in a private company?

[Liberty]

Would be interested to see what this does to the convertible debt too..

[Spekulatius]

How much of the stock is held by mutual finds? I believe, though I am not an expert, that mutual funds can not hold shares in a private company?

 

Yep, same with ETF’s. There will be a lot of forced selling. I wonder how this would’ve financed . That much debt in a private company with limited access to capital? What about debt covenants on existing debt?

[rb]

Has anyone considered that this may just be an engineered short squeeze?

[nickenumbers]

If I hear hoofbeat sounds I force my brain to think of horses, not of the rare spotted zebra.

 

When I smell bullcrap, I should call it by its name, and not assume it might be "sweet potatoe pie."  AKA- Going Private.

 

 

I think this is more Elon High Quality Bull Crap.  I bought a small 300 day put option at 300 on the stock today.

 

Elon always runs his mouth before he thinks it thru..  All of your comments about convertible debt and the amount of capital needed to pull it off, and mutual and EFT not holding private companies, and his huge need for additional capital in the future...  All are brilliant examples of why I don't think he can pull it off.

[NBL0303]

This is awesome only because if finally forces guys like Chanos and Einhorn to eat it and gives finality to the notion that they are wrong. So tired of the "we're not wrong we're early" bullshit. If you shorted couple years(or longer ago) and it went against you, you're friggin wrong.

 

I don't have a dog in this and I see what you are saying - at some point you are wrong because of opportunity costs, etc. But people were saying this for a the last few years about Valeant and a few other noteworthy examples (short-sellers has losses for a few years and were told that the market had proven them wrong) - people shorted it for multiple years while the stock in question did nothing but soar. But, with either a long or a short, if your reasoning and value are correct, then you will ultimately be correct but it can take more than two years for your investment to pay off. If you are a value investor, even on the short-side, you are not wrong simply because the market has moved further away from what you consider the intrinsic value of your investment. Shorting, however, it is harder to see it through, and the unlimited downside means that when you are wrong, but think you're right and ride it out for many years, the losses can be extreme - so from that perspective I see what you are saying.

 

But it is possible that Chanos and Einhorn and other shorts will take a bath on a $420 buyout AND that their fundamental valuation reasoning about the company was correct - and the financial difficulty they foresee will happen in a private company context.

[Gregmal]

This is awesome only because if finally forces guys like Chanos and Einhorn to eat it and gives finality to the notion that they are wrong. So tired of the "we're not wrong we're early" bullshit. If you shorted couple years(or longer ago) and it went against you, you're friggin wrong.

 

I don't have a dog in this and I see what you are saying - at some point you are wrong because of opportunity costs, etc. But people were saying this for a the last few years about Valeant and a few other noteworthy examples (short-sellers has losses for a few years and were told that the market had proven them wrong) - people shorted it for multiple years while the stock in question did nothing but soar. But, with either a long or a short, if your reasoning and value are correct, then you will ultimately be correct but it can take more than two years for your investment to pay off. If you are a value investor, even on the short-side, you are not wrong simply because the market has moved further away from what you consider the intrinsic value of your investment. Shorting, however, it is harder to see it through, and the unlimited downside means that when you are wrong, but think you're right and ride it out for many years, the losses can be extreme - so from that perspective I see what you are saying.

 

But it is possible that Chanos and Einhorn and other shorts will take a bath on a $420 buyout AND that their fundamental valuation reasoning about the company was correct - and the financial difficulty they foresee will happen in a private company context.

 

In regards to the bold, this could occur, but that is irrelevant. As an investment manager, your job is to get it right, not to "be right". There is a big difference and it's not something I'm sure guys like Einhorn and Ackman understand.

[JayGatsby]

His idea basically seems to be that most shareholders will remain in, so the capital needed to buy out the others won't be more than what he can raise from a few deep pockets...

What's the source for this? Can't a private company only have 500 shareholders?

[rkbabang]

This is awesome only because if finally forces guys like Chanos and Einhorn to eat it and gives finality to the notion that they are wrong. So tired of the "we're not wrong we're early" bullshit. If you shorted couple years(or longer ago) and it went against you, you're friggin wrong.

 

I don't have a dog in this and I see what you are saying - at some point you are wrong because of opportunity costs, etc. But people were saying this for a the last few years about Valeant and a few other noteworthy examples (short-sellers has losses for a few years and were told that the market had proven them wrong) - people shorted it for multiple years while the stock in question did nothing but soar. But, with either a long or a short, if your reasoning and value are correct, then you will ultimately be correct but it can take more than two years for your investment to pay off. If you are a value investor, even on the short-side, you are not wrong simply because the market has moved further away from what you consider the intrinsic value of your investment. Shorting, however, it is harder to see it through, and the unlimited downside means that when you are wrong, but think you're right and ride it out for many years, the losses can be extreme - so from that perspective I see what you are saying.

 

But it is possible that Chanos and Einhorn and other shorts will take a bath on a $420 buyout AND that their fundamental valuation reasoning about the company was correct - and the financial difficulty they foresee will happen in a private company context.

 

I’d much rather be wrong and make money than be right and lose money.  “See! Look I was right!” Doesn’t get you anything. That and a dollar won’t even buy you a coffee.

[Spekulatius]

This is awesome only because if finally forces guys like Chanos and Einhorn to eat it and gives finality to the notion that they are wrong. So tired of the "we're not wrong we're early" bullshit. If you shorted couple years(or longer ago) and it went against you, you're friggin wrong.

 

I don't have a dog in this and I see what you are saying - at some point you are wrong because of opportunity costs, etc. But people were saying this for a the last few years about Valeant and a few other noteworthy examples (short-sellers has losses for a few years and were told that the market had proven them wrong) - people shorted it for multiple years while the stock in question did nothing but soar. But, with either a long or a short, if your reasoning and value are correct, then you will ultimately be correct but it can take more than two years for your investment to pay off. If you are a value investor, even on the short-side, you are not wrong simply because the market has moved further away from what you consider the intrinsic value of your investment. Shorting, however, it is harder to see it through, and the unlimited downside means that when you are wrong, but think you're right and ride it out for many years, the losses can be extreme - so from that perspective I see what you are saying.

 

But it is possible that Chanos and Einhorn and other shorts will take a bath on a $420 buyout AND that their fundamental valuation reasoning about the company was correct - and the financial difficulty they foresee will happen in a private company context.

 

In regards to the bold, this could occur, but that is irrelevant. As an investment manager, your job is to get it right, not to "be right". There is a big difference and it's not something I'm sure guys like Einhorn and Ackman understand.

 

It’s a probability game. Sometimes you are right, but it doesn’t work out or facts change, sometimes you are wrong and you still can make money. right am bearish on TSLA based on its financials, bt I don’t think I would short this stock ever. Puts are a different matter, and I think it’s reasonable to buy some. If it doesn’t work out, you hopefully small bet will be worthless, if you Artenreichtum, you could make multiples of you bet.

[Jurgis]

if you Artenreichtum, you could make multiples of you bet.

 

Darwin would be proud.

[Gregmal]

This is awesome only because if finally forces guys like Chanos and Einhorn to eat it and gives finality to the notion that they are wrong. So tired of the "we're not wrong we're early" bullshit. If you shorted couple years(or longer ago) and it went against you, you're friggin wrong.

 

I don't have a dog in this and I see what you are saying - at some point you are wrong because of opportunity costs, etc. But people were saying this for a the last few years about Valeant and a few other noteworthy examples (short-sellers has losses for a few years and were told that the market had proven them wrong) - people shorted it for multiple years while the stock in question did nothing but soar. But, with either a long or a short, if your reasoning and value are correct, then you will ultimately be correct but it can take more than two years for your investment to pay off. If you are a value investor, even on the short-side, you are not wrong simply because the market has moved further away from what you consider the intrinsic value of your investment. Shorting, however, it is harder to see it through, and the unlimited downside means that when you are wrong, but think you're right and ride it out for many years, the losses can be extreme - so from that perspective I see what you are saying.

 

But it is possible that Chanos and Einhorn and other shorts will take a bath on a $420 buyout AND that their fundamental valuation reasoning about the company was correct - and the financial difficulty they foresee will happen in a private company context.

 

In regards to the bold, this could occur, but that is irrelevant. As an investment manager, your job is to get it right, not to "be right". There is a big difference and it's not something I'm sure guys like Einhorn and Ackman understand.

 

It’s a probability game. Sometimes you are right, but it doesn’t work out or facts change, sometimes you are wrong and you still can make money. right am bearish on TSLA based on its financials, bt I don’t think I would short this stock ever. Puts are a different matter, and I think it’s reasonable to buy some. If it doesn’t work out, you hopefully small bet will be worthless, if you Artenreichtum, you could make multiples of you bet.

 

It's a probability game if you are strictly an academic, which guys like Einhorn clearly are. There is something else, in layman's terms called gut instinct, and that's what separates the best from the rest. Knowing something changed and pivoting, sometimes without even knowing what exactly changed, just knowing that "something" did. I guess it could also be called market timing. I mean Einhorn's "big one" was his Allied Capital short. But in reality he was early as hell, and needed a once or twice in a century type of event to even make money on it. Truth is he could have shorted pretty much any financial company and had the same results. So he wasn't even really right IMO.

 

I'm about as bearish on Tesla as anyone. I've shorted it in the past from time to time. But it's clear to anyone with any sort of investing acumen that it wasn't worth shorting, probably back in 2014 or 2015. These guys, just don't get it. They have zero ability to adapt and like Berkowitz with SHLD and Ackman with VRX and HLF and pretty much everything else he's ever owned, run their mouths about how right they are so it's great to get the rare event when they have to face reality and have a nice big slice of humble pie.

[Spekulatius]

if you Artenreichtum, you could make multiples of you bet.

 

Darwin would be proud.

 

Hehe, the spelling corrector got me.