Tesla Apparently Taking Next Steps Toward Privatization

AUG 22 2018 BY VANJA KLJAIC 26

A dance between Tesla, Elon Musk, and Wall Street is happening, with a strong move to privatization as the ultimate goal

In a recent video report by Fox Business, Charlie Gasparino talks about the privatization move made by Elon Musk.

Gasparino is a well respected American journalist, but also a blogger, an occasional radio host, and author. He frequently serves as a guest panelist on the FOX Business Network, giving his opinion about the current trends and moves in the American business world.

This time, Gasparino discuss reports that Elon Musk – and consequently Tesla – are retaining bankers and advisors, providing the much-needed assistance in the move towards the privatization of the company, announced by Musk in a Tweet a few weeks back.

In the recent few weeks, several rumors were revealed about who the bankers might be. Allegedly, Morgan Stanley is the frontrunner and is moving towards being retained by Tesla. This was confirmed by Gasparino, citing several sources from within the ranks close to the company. Morgan Stanley could end up representing either the company, the board, or Elon Musk. But currently, there’s no confirmation that Morgan Stanley is involved. However, sources claim that “they are all but retained.”

Gasparino, citing own sources, reveals how Elon Musk has already retained Goldman Sachs and Silverlake Partners on a possible deal. Again, we can’t confirm this though.

Furthermore, there’s talk about the SEC being very cognisant about potentially blowing up this potential deal. Plenty have argued that Musk must be punished because of that “outrageous” tweet. However, nobody is willing to move forward with a decision that would punish the shareholders and potentially put the company at risk.

Whatever happens, there are plenty of strong signals that both Tesla and Elon Musk are on a path towards privatization. The alleged process of retaining both bankers and advisors is a strong sign of the potential move that lays ahead.

You can take a look at the complete video report above.

Categories: Tesla

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26 Comments on "Tesla Apparently Taking Next Steps Toward Privatization"

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Nick

You need to have nerves of steel to be a Tesla investor at the moment

ffbj

If you’re short.

Pushmi-Pullyu

Regarding “shorting” Tesla: Or be a candidate for the nuthouse.

ffbj

Well it looks as if it quacks, and walks, like a duck, so it must be one. But will it fly?

Pushmi-Pullyu

But, to mix metaphors/ parables, what if the “ugly duckling” grows up to be a Black Swan? 😉

https://en.wikipedia.org/wiki/Black_swan_theory

Seriously, given that Tesla is the first new auto maker in the USA to succeed since before WW II, I think Tesla’s success really is a Black Swan event!

Go Tesla!

SJC

Tesla has taken too many unwarranted risks.

Dav8or

It depends on how you define success. If you mean create and deliver compelling product that pushes the state of the art forward, then yes, Tesla has been a success. If you define success as a stable, profitable business that can stand on it’s own two feet, then no, Tesla has not been a success yet.

Many say GM is a failure because they went bankrupt after decades of returning handsome profit and had to accept a government bailout to continue. Fair enough, but essentially Tesla has been “bailed out” continuously from the beginning and now it looks like they are scrounging around to find yet another bailout. My definition of a successful car company is one that makes a profit for their investors and becomes an ongoing concern, not just perpetual start up.

BTW, GM took the bailout, repaid the money and returned to profitability pretty rapidly all the while Tesla is struggling. In my book, GM is still a successful car company.

REXisKing

I love this senile business analysis.
Not profitable in the short-term turns into 100% marketshare.

Dav8or

Don’t you think a company should achieve success before it is declared successful?? The company was incorporated in 2003, so 15 years have gone by with no profit and only debt. How long is your idea of “short term” A quarter of a century? Just as longs it takes to become profitable?

Yep, I’m a geezer. I still think companies that you invest your money in should make money, stand on it’s own and not continually beg for money. Then they should pay you back for your portion of ownership in the company. Super old school.

Pushmi-Pullyu

Super old school would mean the business strategy of investing profits in the future of the company, exactly as Tesla is doing. You’re not talking about “Super old school” thinking; you’re talking about the comparatively recent 1980’s style, corporate raider, golden parachute, obscenely inflated executive salaries, “Greed is good” thinking.

The kind of thinking which has ruined so many formerly stable companies over the past 30 years.

Pushmi-Pullyu

“If you define success as a stable, profitable business that can stand on it’s own two feet, then no, Tesla has not been a success yet.”

The only way to look at Tesla as not a success, is if you insist on looking at it only thru the tunnel vision of short-term thinking and short-term investments. By any rational standard, Tesla is a runaway success.

By your definition, three years ago Amazon.com wasn’t a “success” either. But any rational person could see that Amazon.com was a runaway success, despite (at that time) not being predictably profitable every quarter.

SJC

They better make sure they can fund expansion.

Cecil T

That was discussed on the last call at the beginning of August. Go listen to it.

David Green

Tesla’s biggest bull Catherine Wood of Ark Investments says going private would be a huge mistake for Tesla.

https://www.cnbc.com/2018/08/21/tesla-investor-to-explain-to-board-how-the-stock-could-go-to-4000.html

Lou Grinzo

When someone downvotes a post like this one, which is basically a link to an article on CNBC, I wish they would leave a comment explaining why.

If you’re downvoting because you disagree with Wood’s analysis/opinion, then please tell us why, and in detail. (This isn’t Twitter with its limiting character count, after all.) If you’re downvoting because you don’t like anyone pointing out an expert disagrees with something Musk wants to do, then own it.

And notice that Wood is standing by her comment that Tesla’s stock could hit $4,000, so she is anything but a Tesla hater throwing rocks at the company at every turn.

stimpacker

Just guessing here.

1) David Green is well known here for posting anti-Tesla crap. So maybe anything he posts gets an automatic downvote from the bulls. I have no Tesla position so it wasn’t me. 🙂

2) CNBC is also known for publishing Tesla news with a negative bias. WSJ, NYT also. Although BI is the worst. So maybe the downvote was simply because it was CNBC? Wasn’t me either.

What constitutes “an expert disagrees with Musk…”?
Bob Lutz?

Still you’re right, but this is the Internet, trolls everywhere. No matter what you say, there’s always someone that will disagree very strongly. Best to ignore them. Pity the poor folks like the IEV editors where their real names and contact are known.

Pushmi-Pullyu

#1 and #2: bang on the mark. Both of those are sound reasons for down-votes.

GuyMan
Thx for link – Interesting discussion points, and my personal sense is that while being profitable in Q3/Q4 is somewhat of a given (I’m an optimist), long term, Tesla is going to need more cash – Another GF in China, Semi + Pickup Development, the will need another assembly plant, continued Super Charger expansion, more stationary storage expansions, etc. – All that will require MORE CapEx. – And going private, that’s going to be harder to get.. I’m sure Elon has considered all this – And showing consistent profitably on at least the M3 will go a long way to establishing more credibility, but they are going to need more cash than just M3 sales can throw off. They are still talking about significant expansions, and that’s either loans, or?? I’m not strong enough in finances to know if that will be easier to raise as a public or private entity, but stock markets exists, basically as a place for companies to raise capital, so it will be interesting to watch – As for TSLA hitting $4K, that isn’t going to happen… Finally, Wood’s references “their new chip” – What is she referring to?
Lou Grinzo

Sounds like a ref. to Tesla claiming to have developed in-house the world’s most advanced computer for autonomous driving:

https://electrek.co/2018/08/01/tesla-chip-most-advanced-computer-autonomous-driving-autopilot-hardware-3-update/

Pushmi-Pullyu

But keep in mind this isn’t a general purpose chip. It’s a chip specifically designed to run Tesla’s self-driving software. The idea that this makes Tesla a much more valuable company just because it is able to use this chip… well, let’s just say that is an opinion rather than a fact. And speaking as a computer programmer, it’s an opinion I find rather questionable.

Larry Al

@GuyMan
“Tesla is going to need more cash – Another GF in China, Semi + Pickup Development, the will need another assembly plant, continued Super Charger expansion, more stationary storage expansions, etc. – All that will require MORE CapEx.”

How much cash do you guestimate Tesla will need, and over what period of time. Elon has stated he believes they can find Tesla’s growth. I’m sincerely interested in your thoughts.

MDEV

How are your steel nerves short?

CDAVIS

The biggest challenge Musk will have taking Tesla private will not be raising capital to do it but determining who he wants to dance with post-private… sometimes having too many options can make things more difficult.

Would not at all be be surprised if Musk somehow manages to bring the existing party that wants to tag along and be his own main dance partner for the remainder gap.

Pushmi-Pullyu

Elon Musk has always been a master at finding investor money. That is one of the reasons why Tesla has succeeded and has grown so fast, where other EV startups, such as CODA, Th!nk, (Project) Better Place, and Faraday Future have failed.

I think it’s rather myopic to suggest that the Saudi fund is going to be the one-and-only source of funding which will allow him to take Tesla private. No, funding is going to come from several sources. For one thing, Elon would never give up control of Tesla by allowing a single source of funds, such as the Saudi fund, to have a controlling interest in Tesla.

CDAVIS

Perhaps my comment could have been better worded…

My comment “existing party that wants to tag along” was meant to mean the existing Tesla shareholders that want to transition their shares to private shares.

I was also suggesting that Elon may himself somehow finance the purchase of a large block of the remaining shares that elect not to transition to private… perhaps Elon picks up another 10% of Tesla.

Brianf

“Gasparino, citing own sources, reveals how Elon Musk has already retained Goldman Sachs and Silverlake Partners on a possible deal. Again, we can’t confirm this though.”

I’m not sure how much more confirmation anyone else needs, but Elon already said this in a tweet last week: https://twitter.com/elonmusk/status/1029171381584314368?s=19