Tesla shares rise 11 percent after Musk's shocking tweet

08 August, 2018, 09:23 | Author: Kathy Ellis
  • Elon Musk

"Gene Munster, a partner at the venture capital firm Loup Ventures, said that taking Tesla private "makes a ton of sense", for the following reason: "[Musk's] missions are big and make it hard to accommodate investors' quarterly expectations".

Asked on Twitter whether Musk would continue to be CEO under such a scenario, he replied there would be "no change". At market close, Tesla's market cap stood at $63.87 billion.

The Silicon Valley company faces a make-or-break moment in its eight-year history as a public company as competition from European automakers is poised to intensify with new electric vehicles from Audi and Jaguar, with more rivals to follow suit next year. Even as the world's 31st-richest person and Tesla's largest shareholder, Musk would be reliant on outside funding for any buyout since his fortune is highly illiquid. As he explained "Being public ... subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term".

In contrast, private companies have a smaller number of shareholders-generally fewer than 2,000-and are not available for purchase on public markets.

Musk views short sellers as people who don't understand his company [.] It's similar to the relationship between Trump and the media. This is not to say that it will make sense for Tesla to be private over the long-term.

"This is great news for any bondholder any way you spin it", said Ross Gerber, chief executive of Gerber Kawasaki Wealth and Investment Management who owns both the convertibles and the stock. He said in his letter to employees that he did not seek to expand his ownership. It would be one of the biggest go-private deals on record with a price tag of about US$72 billion, based on US$420 per share. "Our guess is there is a 1 in 3 chance he can actually pull this off", wrote Gene Munster of Loup Ventures, adding that Mr. Musk's proposed premium over Tesla's existing share price might not be enough to persuade shareholders to sell.

Call options, which convey the right to buy shares at a fixed price in the future, were particularly busy and logged significant price gains on the day.

Tesla Motors CEO Elon Musk is considering taking the company private, saying it would be less distracting that the "enormous pressure" of meeting quarterly financial targets. He made no mention in his tweets or his letter of where the funding for a deal would come from.

ROYALLY REJECTED: Meghan Markle ‘declines invitation’ to attend Emmy Awards in Hollywood
Late this summer, Meghan is expected to return to the US on a private plane to spend time with her mother and friends. Samantha tweeted on Friday, according to a screenshot published byThe Daily Mail .

Tesla stock was trading at about $355 a share before Musk's tweet.

Musk argued that his other major company, SpaceX, offered a good model for Tesla to emulate.

China's Tencent Holdings, which took a 5 percent stake in Tesla previous year, is another possible partner.

The US Securities and Exchange Commission (SEC) allows companies to use social media outlets like Facebook and Twitter to announce key information in compliance with its fair disclosure rules so long as investors have been alerted about which social media outlets will be used to disseminate such information.

However, some analysts were skeptical that Mr. Musk could engineer a buyout.

In fact, Tesla has turned a narrow profit in only two quarters since it became a public company in 2010. "Plus, this is short squeeze rocket fuel after a nice quarter".

Tesla shares rose 11 percent Tuesday, meaning short sellers lost about $1.3 billion in mark-to-market losses, according to estimates from Ihor Dusaniwsky, S3's head of predictive analytics.

Recommended:

  • China, Trade, and Technology

    China, Trade, and Technology

    That means the annual deficit would likely surpass last year's $552 billion total trade gap and hit the highest level since 2008. The deficit climbed $3 billion to $46.3 billion in June from $43.2 billion in May, the Commerce Department reported Friday .
    Basic income program cut 'devastating' for recipients

    Basic income program cut 'devastating' for recipients

    That system will be developed over the next 100 days and implementation will occur sometime after that, she said . That increase is down from the former government's scheduled increase of 3 per cent which was set for October.
    Unemployment Rate for College Dropouts Remains at 17-Year Low

    Unemployment Rate for College Dropouts Remains at 17-Year Low

    Despite many company executives complaining that they can not find workers to fill open positions, wage growth remains sluggish . Faucher writes that as that happens, job growth will slow down because businesses will find it more hard to recruit new hires.
  • Magnitude 7 quake  rocks Indonesia's Lombok island, tsunami warning issued

    Magnitude 7 quake rocks Indonesia's Lombok island, tsunami warning issued

    The powerful quake triggered panic among tourists and residents, and was also felt on the neighbouring holiday island of Bali. Hotels and other buildings in both locations are not allowed to exceed the height of coconut trees.
    Bill Belichick, Robert Kraft surprise Randy Moss at his Hall induction

    Bill Belichick, Robert Kraft surprise Randy Moss at his Hall induction

    Moss paid homage to Green, who likely who have presented the Vikings Ring of Honor member at his induction ceremony. In applying what I learned in football for the rest of my life I've discovered we all win.
    US  actions regarding pastor Brunson disrespectful to Turkey: Erdogan

    US actions regarding pastor Brunson disrespectful to Turkey: Erdogan

    He was also charged with supporting outlawed Kurdish PKK militants. "It's pretty straightforward. On Tuesday, a court rejected his appeal to be released during his trial.
  • Nevada County Strike Team on the Mendocino Complex

    Nevada County Strike Team on the Mendocino Complex

    The two fires, which have threatened more than 9,000 structures, have not merged, but officials are counting them as one. The fire is entering its third week, with 163,000 acres burned and more than 1,000 homes lost.
    Meghan Markle latest: Duchess's first birthday present revealed

    Meghan Markle latest: Duchess's first birthday present revealed

    She told her biographer Andrew Morton that after her engagement to the Prince of Wales: "I cried like a baby to the four walls". Meghan isn't the first royal to receive an animal-friendly gift. "She's been welcomed by Harry's close friends".
    States vow to press fight against Trump's vehicle  fuel rules

    States vow to press fight against Trump's vehicle fuel rules

    Reforming Corporate Average Fuel Economy (CAFE) standards is a huge tax cut for American auto buyers, up to a $7,200 per vehicle. And when they fail they are prohibitively expensive to fix and often require someone akin to a rocket scientist to troubleshoot.
  • The Full Details Of The Browns’ Corey Coleman Trade Are Out

    The Full Details Of The Browns’ Corey Coleman Trade Are Out

    Now Coleman will need to take that step with the Bills, where he will need to get acclimated to Buffalo's offense in short order. Buffalo entered training camp with Kelvin Benjamin as its top receiver and questions down the rest of its depth chart.
    Trump tackles Russian lawyer claims head on

    Trump tackles Russian lawyer claims head on

    Add Donald Trump as an interest to stay up to date on the latest Donald Trump news, video, and analysis from ABC News. The Post reported a few weeks later that Trump Jr.'s initial misleading statement had been "dictated" by Trump.
    Iranians blame own government for USA  sanctions, price hikes

    Iranians blame own government for USA sanctions, price hikes

    The U.S. move has dismayed America's European allies trying to preserve the nuclear deal. Another added, "The Iranian people are seeking the same thing".


Popular

Facebook might add your banking info to Messenger
They haven't been entirely successful, the Journal added, with at least one bank (JPMorgan) declining due to privacy concerns. When news of the potential partnerships became public, Facebook shares increased by about 3.5% through midday.

Fire Whirl in Carr Fire Reached 143 miles per hour
The report says the death of the 10-year veteran highlights the need for better risk assessment, communication and supervision. Mr Veverka, 34, said: "Right now, it's pretty much guaranteed we'll go from fire to fire to fire, until everything is out".

Paul Pogba angered by José Mourinho's view of World Cup exploits
Pogba made 37 appearances in all competitions for Manchester United last season. Pogba endured a turbulent time at Old Trafford last season.

Jankto joins Sampdoria as Torreira nears exit
Jankto had previously been linked with Arsenal , but it now seems he will act as the replacement for Torreira , who is a reported target for Unai Emery in North London.

Willian: I'm a Chelsea player and I always made it clear
Manchester City's pursuit of Jorginho faltered because Chelsea had a more pressing need for the Italy midfielder. Chelsea winger Eden Hazard has also been linked with Real, but did attend training with the Blues on Monday.

Twenty killed in plane crash in Swiss Alps
Police said Sunday they had determined that the 17 passengers and three crew members on board the plane all died. Initial investigation showed the plane did not lose any parts or break up before it crashed in the Swiss Alps.

China appeals for U.S. calm after new tariff threat
Last month, Washington and Beijing imposed a first round of 25 percent tariffs on 34 billion dollars worth of each other's goods. But they have rejected changing technology development plans they see as a path to prosperity and global influence.

After LeBron James is critical of Trump, the president tweets back
In the interview, James said he "would never sit across" from Trump, though he would talk to former President Barack Obama. One, because I believe our president is trying to divide us.

Google 'working on censored search engine' for China
Most are based at Google's headquarters in Mountain View, though others are reportedly spread out across the United States. Google programmers and engineers have reportedly made an Android app that's already been shown to the Chinese government.

Community Shield 2018, Chelsea vs Man City
I saw three games - he gets it, the team in a short time plays like he wants. "Always Chelsea is a big rival". We have very good midfielders, but maybe a midfielder with different characteristics".