SoylentNews is people
SoylentNews
Elon Musk Considers Taking Tesla Private
Elon Musk Makes $82 Billion Gambit to Silence Tesla Critics
Seemingly out of the blue, Elon Musk proclaimed that he might pull his money-losing Tesla Inc. off the market. Taking the electric-car company private at the price he touted would amount to an $82 billion valuation, a monumental sum that left many investors wondering: Is this a joke?
It wasn't.
[...] "The reason for doing this is all about creating the environment for Tesla to operate best," Musk, 47, wrote Tuesday in an email to employees. He said wild swings in the carmaker's stock price are a "major distraction" to Tesla workers, who are all shareholders. And he said that being public "puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term."
To take Tesla private, Musk would have to pull off the largest leveraged buyout in history, surpassing Texas electric utility TXU's in 2007. And Tesla doesn't fit the typical profile of a company that can raise tens of billions of dollars of debt to fund such a deal.
[...] "The market doesn't believe him," said David Kudla, the CEO of Mainstay Capital Management, which is betting against Tesla. "His credibility has come into question over a number of things. If this were real, you'd expect the stock to go closer to $420 a share than it has." Most major buyouts also require a trip to the junk bond markets, where Tesla has fallen out of favor.
Tesla Shares Resume Trading, Musk Posts Blog on Why Company Should Go Private
"Tesla resumed trading on the Nasdaq exchange after a nearly two-hour pause on Tuesday afternoon, shortly after the company confirmed in a blog post that CEO Elon Musk is considering taking the electric car maker private at $420 per share."
foxbusiness.com/markets/elon-musk-fires-up-tesla-blog-to-explain-idea-of-going-private
(Score: 5, Insightful) by Alfred on Thursday August 09 2018, @08:58PM (6 children)
(Score: 0) by Anonymous Coward on Thursday August 09 2018, @11:11PM (2 children)
If he does this, he's likely to run it out of business in the near future. We're not talking about whims here, we're talking about a car company that's being run in a horribly inept way that's dependent upon loans in order to cover the cost of production because the guy at the top has a large mouth and keeps increasing the number of vehicles called for in future time periods without considering how to get there.
Frequently, investors are short sighted and want the profits now, but I don't see that. This looks more like an ego trip to get back at those people shorting the company and probably use some loophole to get the money for less than it's really worth.
(Score: 0) by Anonymous Coward on Thursday August 09 2018, @11:34PM (1 child)
Right now they can not make the cars fast enough. Ask ford/bmw/Chrysler/Toyota if they would like to have that problem. Every car they make has already been sold for months. It is a status symbol like the iphone. Not exactly the best car on the road but not exactly the worst either. It is a show off of how much wealth you have. People who buy that sort of thing want to show it off. Rarity and popularity play into that metric.
(Score: 0) by Anonymous Coward on Friday August 10 2018, @03:55PM
And they lose money on each sale due to incompetent management. It's not particularly hard to create a rare car that loses money. They're losing money trying to ramp up production to levels based purely on Musk's ego rather than on targets based on what the engineering and logistical projections allow for.
And the other manufacturers absolutely could have this problem, they're just not that incompetent. Most manufacturers have a carthat would be like that if they sold at a loss.
(Score: 2) by archfeld on Thursday August 09 2018, @11:41PM (1 child)
BINGO !! The market volatility and short sightedness of day traders, combined with the influence of currency speculation make long term planning and development almost impossible.
https://www.quora.com/What-is-the-average-holding-period-for-a-stock [quora.com]
For the NSA : Explosives, guns, assassination, conspiracy, primers, detonators, initiators, main charge, nuclear charge
(Score: 0) by Anonymous Coward on Friday August 10 2018, @03:58PM
There's ways of managing that though. Issuing fewer shares for larger sums of money tends to cut down on that sort of thing. Normally dividends do as well, but you have to be profitable and have something resembling a business plan for that to work.
The big problem in this case isn't the shareholders, it's Musk's own ego and ineptitude.
(Score: 2) by quietus on Friday August 10 2018, @01:05PM
You mean Amazon is a whimsy company? Or IBM, or Microsoft, or GM, or ... ?