Musk’s Plan to Take Tesla (NASDAQ:TSLA) Private Does Not Make Sense
- The SpaceX Model May Offer a Clue as to Musk’s ‘420’ Tweet to Take Tesla Private
Elon Musk’s plan to take Tesla (NASDAQ:TSLA) private does not make sense because it was poorly communicated and calls for a Ultra high valuation
The suggestion that current shareholders could continue to own the company is “a combination of financial engineering that many of us do not really understand.
“I, like a great many others, am confused by what is motivating” the go-private plan and “why it was communicated in the way it was. I just can’t interpret it. It does not make sense to me,” said 1 Wall Street money manager Thursday.
The SpaceX Model May Offer a Clue as to Musk’s ‘420’ Tweet to Take Tesla Private
The SpaceX Model
Mr. Musk Tweeted that he hoped “all” investors would remain shareholders after the buyout rather than follow the conventional approach of cashing out.
He looked no further than his Space Exploration Technologies Corp. aka SpaceX for a way to keep Tesla shareholders on-board.
For years SpaceX has run an internal stock market for employees and other shareholders, allowing it to remain closely held. They can privately sell shares to sophisticated investors such as Fidelity Investments through liquidity events, according to a letter from Mr. Musk to employees.
Tesla could use a similar structure to go private without requiring stockholders to cash out.
The SEC in now in the mix
US regulators are examining how Tesla CEO Elon Musk announced his plan to take the EV, battery and solar panel maker private and whether his statement was truthful.
Mr. Musk announced his plan on Tuesday on Twitter, an unusual move that has drawn scrutiny from the US Securities and Exchange Commission aka SEC.
The agency declined to comment and Tesla did not immediately respond to requests for comment.
|HeffX-LTN Analysis for TSLA:||Overall||Short||Intermediate||Long|
|Neutral (0.08)||Neutral (0.06)||Neutral (0.15)||Neutral (0.03)|
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