Elon Musk Explains Why He's Thinking of Making Tesla Private

09 August, 2018, 09:10 | Author: Mary Valdez
  • Flags fly over the Tesla Inc. Gigafactory 2 which is also known as RiverBend a joint venture with Panasonic to produce solar panels and roof tiles in Buffalo New York

The Securities and Exchange Commission (SEC) has inquired with Tesla about CEO Elon Musk's tweets regarding his plans to take the company private, The Wall Street Journal reported Wednesday. He called the funding "secured" for what would be the biggest-ever corporate buyout, but he hasn't disclosed details.

James Anderson, a leading fund manager at the Edinburgh-based Baillie Gifford, which owns $4 billion worth of Tesla stock, told The Times that while the company's prospects were uncertain, its value was "much higher than $420 a share, probability-adjusted".

Taking Tesla private would allow it to focus on revolutionising the automobile industry, Musk believes.

Musk later explained in an email to company employees why he is considering taking Tesla private but also said "a final decision has not yet been made".

Ultimately it will be up to the shareholders whether Tesla remains public or goes private, but the SEC is now curious about how Tuesday's events unfolded. "And if you stay as a shareholder you get less information than before and you depend more and more on Elon Musk".

The board members said they were "taking the appropriate next steps" to evaluate the proposal.

Elon Musk's tweets early on Tuesday caused plenty of speculation and controversy.

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Just last week, he revealed he had been working 110 hours a week to deliver on short-term promises he had made to Wall Street, a load he traced to his boorish behaviour toward two analysts earlier this year. In short, Musk believes going private can place the focus back on long-term planning, which is now viewed through the lens of how it will affect short-term quarterly finances.

SoftBank is now not interested in a deal for Tesla after earlier this year taking a stake in General Motors Co's self-driving unit, Cruise, Reuters reported earlier.

There still are near-term execution risks around ramping up Model 3 production and the ability to generate cash, Jonas believes. Bloomberg News, which first reported on that meeting, said the talks failed to progress due to disagreements over ownership.

Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts suggested that less transparency would be welcomed by Musk. "How could Tesla possibly fund such a large transaction?"

A statement was issued by six members of the electric carmaker's board after Mr Musk tweeted to say he had the funding to de-list the company.

Names excluded from the board statement were Musk; his brother, Kimbal Musk; and Steve Jurvetson, a venture capitalist and early Tesla backer who's been on leave since previous year.

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