Musk Pulls a Smoking 180, Leaves Go-private Plan in Rear-view

Steph Willems
by Steph Willems

Fear not, there’ll be plenty of moaning about short sellers in the weeks and months — and probably years — to come. Late Friday, Tesla CEO Elon Musk pulled an about-face, issuing a blog post in which he claimed a couple of weeks of study revealed he shouldn’t take his publicly traded automaker private.

Apparently, the trip from “funding secured” to “the funding totally would have been there”* (not a direct quote) takes 17 days.

In the post, titled “Staying Public,” Musk outlines the process that followed his fateful August 7th tweet, in which he outlined why he believed the company should go private at $420 a share. A later New York Times interview revealed a sleep-deprived Musk issued the unapproved tweet from his car while driving to work. Sources claim the tweet “blindsided” board members.

After commenting on the loyalty of the company’s investors, Musk describes working with financial advisors from Silver Lake, Goldman Sachs and Morgan Stanley to gauge interest from investors in funding his plan. There’s no mention of the Saudi sovereign wealth fund, which Musk pointed to as a possible source of funds in a blog post released immediately after his Aug. 7 tweet.

Per Musk:

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.

By issuing his intention to go private via tweet while remaining very vague about the source of the needed funding, Musk earned the wrath of shareholders and the scrutiny of the U.S. Securities and Exchange Commission. The SEC launched an investigation and reportedly issued a subpoena; several shareholders sued. As days passed without any new info on where these billions would come from, Tesla’s stock plunged.

On Friday, shortly before Musk’s blog post, CNBC ran a story stating the hiring of Morgan Stanley pretty much proved that the “funding secured” line was, at best, wishful thinking. Morgan Stanley is well-known for its “expertise for casting a wide net for financing,” CNBC noted.

It isn’t known how the SEC reacted to this latest development. In his post, Musk claims the automaker’s board backs him in this U-turn. The company’s environmental mission continues, Musk said, before closing the message with a word of thanks to investors, customers, and employees.

[Image: Tesla]

Steph Willems
Steph Willems

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  • Redapple Redapple on Aug 27, 2018

    Musk is one of those guys that CONSTANTLY has to be in the news. Add in:: -Over worked. -Out of his depth in Car Building. (as anyone knows who has spent years on the plant floor with real production related DELIVERABLES). It's really difficult. -Lack of sleep. -Ambien? End result?> Silliness. IGNORE HIM.

    • See 1 previous
    • Redapple Redapple on Aug 27, 2018

      @TimK TIM The Sears guy is smart. He is raping the company. Decapital izing it and putting the proceeds in his pocket. Opposite of muck. Who is burning hundreds of millions/year. There was a very interesting story on this in Vanity Fair a couple months back.

  • FOG FOG on Aug 27, 2018

    Elon's blog post is a plea to avoid jail time and the loss of his company. His tweet is equivalent to a offer to buy stock at 420 that was trading at 360 at the time. This is illegal. The fact that Elon was ignorant of these SEC regulations should not prevent him from prosecution. That being said there is not much to be gained by spending tax dollars on this as long as they can reign him in. It would be nice if they could force him out of control and put a real business mind in place.

    • See 2 previous
    • Vulpine Vulpine on Aug 27, 2018

      @FOG Let's see what the SEC actually concludes before we call him 'guilty', hmmm? Because if the SEC does not agree with you, then your allegation is patently false.

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  • Dukeisduke I've been waiting to see if they were going to do something special for the 60th Anniversary. I was four years old when the Mustang was introduced. I can remember that one of our neighbors bought a '65 coupe (they were all titled as '65 models, even the '64-1/2 cars), and it's the first one I can remember seeing. In the '90s I knew an older gentleman that owned a '64-1/2 model coupe with the 260 V8.
  • SCE to AUX "...the complete Mustang model lineup to peruse"Will the fake Mustang show up, too?
  • SCE to AUX We don't need no stinking badges.
  • SCE to AUX I've never been teased by a bumper like that one before.
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