It was quite good for Tesla (TSLA) in August. The company reported better than expected earnings for the second quarter…
It was quite good for Tesla (TSLA) in August. The company reported better than expected earnings for the second quarter and investors were optimistic about what the company could do in the second half of 2018.
Tesla nevertheless understood less money than expected, tightened spending, and model 3 production improved with significant measures. Management maintained its perspective on profitable and free cash flow positions during the third quarter and fourth quarter.
The result sparked the stock, drove it through $ 360 and threatened to explode into new full-time levels. The shorts were in trouble and CEO Elon Musk probably thought he would throw gasoline on the fire. Instead, he threw cold water on it.
He tweeted that he intended to take Tesla privately at $ 420 per share and he had “secured funding”. Even more impressive, he sent the tweet during the trading day and confused almost everyone who followed the stock. Why is not the stock stopped? Has anyone hacked the Twitter Twitter (TWTR) account? If not, is he really?
All these questions and more popped up. Enthusiasts cheered the move. Long-term stock market veterans ̵
1; like Stephen “Sarge” Guilfoyle – were surprised that Musk would so arrogantly tumm its nose in the financial markets. “Yes, I’ll take a break when you make a twilight on our financial market,” he motivated. Some people cleaned up by shortening the warehouse as it crushed.
As a result of his actions, Musk was investigated by the SEC, fining $ 20 million and to renounce his role as Executive Chairman for the next three years. But should he just find a way to make it work? Perhaps his funding was not guaranteed after all. Perhaps it would be difficult to keep long-term investors who believe in Tesla aboard a go-private business.
Regardless, some say that he should have gone privately. Specifically, Tim Draper, a venture capitalist in Silicon Valley, and the early investor of Tesla and Musk’s other company SpaceX, said that Musk would have saved some trouble by doing so.
It was a “human” mistake to send tweet, Draper said at the Lisbon meeting last Tuesday. That said, he also motivated Musk to “have just taken it all privately.”
At this time, I’m not sure that private will take Musk and Tesla out of the spotlight. Such as Uber, a company, this size is difficult to lay low for long. But by being a private company, Tesla would be released from the many obligations it has as a public enterprise: Quarterly reports, SEC archives, exchange needs and many other obstacles would be eliminated.
But also Tesla’s access to public markets. Would that mean? Maybe no longer. During several conference talks this year with analysts, Musk has expressed its wish that Tesla will no longer rely on external money to finance Tesla’s operations. It is about vehicle manufacturing, R & D and expansion efforts.
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If Tesla’s cash flow will remain as strong as they were in the third quarter, it is up to debate. But if Tesla does not have to rely on capital increases via stock sales, maybe not need public markets longer. It can still raise the debt and there are plenty of investment money floating around the Bay Area and looking for a home.
Musk would have less headache as a private company, but it does not look as it will look like the case. We are still watching TSLA for a while as it seems.
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