Musk ended the "mystery" of whether or not Tesla would
be going private late last night, and in keeping with his
high-quality corporate communication decisions, decided to announce in
an 11 PM EDT blog post that Tesla would stay public.
a tweet and blog - which has yet to appear in 8K
format on EDGAR - published on
Tesla's website Friday night...
the chairman, CEO and largest shareholder of Tesla said he had met
with the board and "let
them know that I believe the better path is for Tesla to remain
public. The Board indicated that they agree."
this month, I announced that I was considering taking Tesla
private. As part of the process, it was important to understand
whether our current investors believed this would be a good
strategic move and whether they would want to participate in a
investors are extremely important to me. Almost all
have stuck with us from the time we went public in 2010 when we
had no cars in production and only a vision of what we wanted to
be. They believe strongly in our mission to advance sustainable
energy and care deeply about our success.
are so important, in fact, that Musk decided to release this news
not just late on Friday, but literally in the middle of the night,
quite a radical departure from his "going private" announcement
which hit Twitter just after noon on a Monday.
prompted the reversal? He explains:
worked with Silver Lake, Goldman Sachs and Morgan Stanley, who
have world-class expertise in these matters, to consider the
many factors that would come into play in taking Tesla private,
and to process all the incoming interest that we received from
investors to fund a go-private transaction. I
also spent considerable time listening to current
shareholders, large and small, to understand what they think
would be in the best long-term interests of Tesla.
after "working" with advisers for less than three weeks, over that
course of time, Musk concluded the following:
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:
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.”
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
here Musk makes a critical change in the narrative, one which will
be a key focus in the upcoming SEC crackdown on the company
(assuming the SEC is not paid off to look the other way of
course), as well as litigated in the numerous market manipulation
cases to emerge in the coming weeks:
said, my belief that there is more than enough funding to take
Tesla private was reinforced during this process.
other words, in less than three weeks, Musk went from "funding
secured" to it was "my
belief there was enough funding." Good
luck with that defense.
for the entirety of Tesla blog, Dean Asbel summarized
consulted with the top investment management companies in the
world and they told me there was no way in hell I could find
investors dumb enough to take this company private."
way of putting it: after Musk failed to "burn the shorts" with the
announcement of the going private deal - as we discussed
previously, the short interest has only grown in the past 3 weeks
- with the stock sliding ever since, Musk decided to try and "burn
the shorts" again, this time by retracting the going private
course, that's not how he phrased it, and concluded his blog as
considering all of these factors, I
met with Tesla’s Board of Directors yesterday and let them
know that I believe the better path is for Tesla to remain
public. The Board indicated that they agree.
forward, we will continue to focus on what matters most:
building products that people love and that make a difference
to the shared future of life on Earth. We’ve shown
that we can make great sustainable energy products, and we now
need to show that we can be sustainably profitable. With all the
progress we’ve made on Model 3, we’re positioned to do this, and
that’s what the team and I are going to be putting all of our
you to all of our investors, customers and employees for the
support you’ve given our company. I’m incredibly excited to
continue leading Tesla as a public company. It is a privilege.
investors should ask is why Musk admits that he met with the board
and made a decision yesterday (Thursday), yet
waited until just before midnight on Friday to inform the
general public about what had been decided.
rounding out the night's bizarre stream of communications, in a
added: "In talking to our public investors, most were
supportive of optimizing for long-term value creation over
quarterly earnings. This was also a factor in remaining public."
blog post was accompanied by a press
release and a perfunctory one paragraph
statement from the company‘s Board of Directors that amazingly
stated that they not only reviewed plans from Musk, but that they
still "fully support" him:
the past several weeks, we put in place a process led by a
Special Committee of the Board to evaluate a proposal Elon was
considering to take Tesla private. Yesterday, we held a Board
meeting, during which Elon reported on the work he and his
advisors have been doing in connection with this effort. Elon
communicated to the Board that after having done this work and
considered all factors, he believes the better path is to no
longer pursue a transaction for taking Tesla private. After
discussing this, we dissolved the Special Committee. The
Board and the entire company remain focused on ensuring Tesla’s
operational success, and we fully support Elon as he continues
to lead the company moving forward.
decision to keep the company public comes
less than three weeks after
Musk announced on Twitter on August 7 that he had "funding
secured" for a transaction to take the company private at $420 per
while the reversal ends speculation about how Musk would raise
money to take Tesla private, it
will not ward off scrutiny of the erratic CEO’s bizarre actions. The
mini "going private" drama has led to a subpoena from the U.S.
Securities and Exchange Commission, the break up between Musk and
his former girlfriend Grimes, and a bizarre feud between the Tesla
CEO and rapper Azealia Banks. Musk’s behavior, including a tearful
interview with the New York Times that touched on his lack of
sleep, has also led to calls for Tesla to hire a chief operating
officer to help reduce stress on the CEO. However, in response to
an open letter from Ariana Huffington imploring him to change the
way he works, Musk responded that "is
not an option."
reaction from Wall Street Monday morning should be an interesting
one. Off Wall Street analysts and
Financial Twitter have already responded:
summarize: the company would like its investors - who are
"extremely important" to Musk - to believe that within three
weeks, it first had "secured funding", then hired advisors, then
reviewed a potential transaction, then got a subpoena from
the SEC, then carefully explored all potential avenues and then,
as a group, arrived at the conclusion that it would be better off
nobody in the investing will believe that, what matters now is
what the regulators believe, and alternatively, what they decide
for Tesla, just days after the going private transaction, we
predicted that "TSLA will be that one stock that sees class
actions suits by both shorts and longs."
shorts have already started suing, claiming Musk defrauded them
via glaring market manipulation which the SEC is now
investigating. Now it's time for the longs to join.