Elon Musk’s Funding for Tesla Wasn’t So Secure
bloomberg.com
bloomberg.com
Laughed out loud at this.
I think what this is a case of is further evidence that shareholder agreements should require corporate oversight of twitter accounts for CEOs :)
Save for the fact that he explicitly insisted in conference calls and other places that Tesla doesn't need to raise money in 2018.
It surely has to bring into question Elon Musk's judgement to be involved with her.
There's no way he would ever admit this, but I bet one of his motivations for posting that tweet was to move the stock and hurt the shorts.
Musk seems to be one of those classic "force of nature" founders, whose will to overcome obstacles and prove everyone wrong is essential to getting off the ground, but could be a liability in a mature company.
"Oh, yeah? Try and stop me!" works great until you run up against someone who can actually stop you (often, the government).
Sounds like a violation of SEC rule 10b-5 and possibly illegal.
because, based on rational math, if you add this expense and minus that, the result is 0 in 3 months. QED
now that bankruptcy sounds unlikely, all the news articles are focusing on how a tweet could be illegal
(The money was on Tesla either blowing it out of the park, or going broke in 2019/2020.)
In other words: 3 months ago no one was saying Tesla would be bankrupt by August/September.
And here's the thing: if Musk was truly honest about Tesla not seeking financing or offering new stock in 2018, they are on track for bankruptcy by the end of the year based on currently available investor documents re expense, cash flow, assets, etc.. If those documents are wrong, it's incumbent on Tesla to update them, not on the rest of us to assume voodoo financial magic will save the day.
The point is, all the articles raising alarm bells saying Tesla is going bankrupt SOON, it will run out of funds, it will collapse. Because math.
Now, all the articles are focused on SEC rules for a tweet.
Well, yeah, and there are already lawsuits charging that.
> “These are very difficult cases to prove,” said Mr. Stark, who runs a cybersecurity consulting business.
https://www.nytimes.com/2018/08/13/business/dealbook/tesla-e...
No matter how rosy your income statement, if you run out of cash, the GAME OVER screen comes up and people laugh at the glowing biographies folks wrote about you and your company in $PREVIOUS_DECADE. And while your accounts payable will often deal with being fobbed off for a bit, it becomes harder to do this. And certain folks expect cash, now, and can force you to cough it up: foremost being the government, but also employees (hard to do things when people quit en masse) and key suppliers (if the electricity goes off, or the parts don't arrive, you have to shut down the line).
If you look at the real market the trend is clear: There has never in the history of the stock market ever been a time when investors were more willing to invest in money-losing companies to gamble on them hitting it big. Tesla is valued by the stock market as twice as valuable as the Ford Motor Company.
It baffles me why he publicly listed Tesla in the first place if he didn't want to "play stupid financial games".
Ok so he wants to take it private - is funding secured or not?
I would highly recommend not to admit this, because it's illegal as hell.
You would have to be suggesting that the whole board of Tesla has totally lied about every aspect of the business (expert sales numbers) to hid some kind of desaster.
That seems incredibly unlikely.
Furthermore, we have always known that he wants to go private. He has been talking about it and mentioning it for years. He clearly has liked the SpaceX model better. Did he prepare this evil plan for the last 5 years?
Nonetheless, I personally like the guy and wish him the best, we need more like him.
Not Musk bashing, I am genuinely curious as to why you think that?
Also, Bezos has Blue Origin.
FYI, Blue Origin has been at it longer that spaceX has existed. But SpaceX, spending at least 5X less money is landing orbital class rockets and whilst Blue Origin is doing suborbital flights.
not to argue, but both Blue Origin and SpaceX are private and don't disclose ther financial information, to my best knowledge. So where is this number coming from?
BO has never reached orbit, and doesn't say much about how much they've spent, so no one knows what their costs will be.
You couldn't be more wrong. They've had payload customers for their test flights. They also have 4 large customers signed up for their New Glenn rocket (in development).
Blue Origin is also developing VTVL rockets.
BO is expecting to have passenger flights by the end of 2018.
The space industry was terrible state and he disrupted it in many ways and is leading the charge on a new space industry totally chaining not just industry, but basically forcing change down governments throats including DoD, NASA and others.
Much the same could be argued about the car industry.
He simply thinks about problems differently. Listen to the interviews with the people that work with him, specially engineers.
Look at everyone else that is rich. At best, they donate their money helping poor people around the world. At worst, they use their wealth to buy lobbyists and lawyers to minimize their taxes.
Musk is doing something different. He's funding low-orbit satellites, rockets, electric cars, self-driving tech (and open sourcing the security side and patents to boot!), hyperloops, tunnels, solar panels, battery packs. I'm worried about some of it[1] but at least he's trying. It feels like everyone else in the world has this slow-moving kludge about them.
[1] I think autonomous devices should be highly regulated due to the risks of mass weaponization via cyber attack, for example.
Other billionaires are trying to make a difference in things that actually matter, like curing diseases or eliminating pollution. Hell, some of them are doing the same things that Elon is, but aren't so self-aggrandizing about it.
And their are others that recognize that hyperloops are a solution in search of a problem, that the hard part of tunneling isn't the boring but the post-boring activities (i.e., tube construction), and that self-driving isn't something you can solve in 6 months.
Yes and all his companies are growing and have a good return on investment. The public loans have been payed back.
There are so many companies who live of the government tit and rarely get called out because of it.
> Other billionaires are trying to make a difference in things that actually matter, like curing diseases or eliminating pollution. Hell, some of them are doing the same things that Elon is, but aren't so self-aggrandizing about it.
I agree that other people are doing good things also (the minority) but Elon is not really doing that. The reality is that society has aggrandized him. Every tweet of his causes a massive storm of tech blog entries, news articles, stock analysts and so on.
Elon for the most part like to make stupid insider jokes do stuff without technology. Everything else seems to be a sort of secondary less interesting things.
He did something almost impossible with SpaceX and Tesla. Boosters that go up and land back again? That’s nuts. Doing it at a peanut of existing cost. That’s takes some entrepreneurial and engineering skill. A high end pure electric car? That seems like a suicide business. It is however a very highly desirable car. It drives on highways by itself is just science fiction brought closer to reality.
Sure the guy says a lot of crap, sometimes his timelines are way off, he could be a bit sexist too. The world probably puts him on a pedestal.
You can’t however take away his accomplishments. He’s putting his money where his mouth is and trying to push the world towards sustainable energy/transport and first steps towards possibly another earth.
I'm trying to gauge whether "almost impossible" is literal or figurative here, given that (the) Eagle did the same sort of thing on the moon in 1969 without refurbishment between landing and take-off. Also, Blue Origin is relatively close in competition to Space X even though it might not seem like it to many. Almost impossible?
Musk executes on ideas. I think he gets too much credit for having all the ideas. Similar to Jobs in that sense.
:)
Or marketing company.
How is Tesla any different from any other company out to make money?
I sort of wish many of the places i worked/work at went private... the market is a joke.
It doesn’t take a genius to think, as the CEO of a public company, saying you have funding confirmed when you don’t might land you in hot water.
So the most likely scenario is he understood all of this and said it anyway.
Why?
Two people familiar with the chain of events said that in a conversation with an informal adviser about the mess he had gotten himself into, Mr. Musk said he had taken to Twitter impulsively. He said he had done so because he was not the kind of person who could hold things in, and was angry at the company’s critics. [0]
[0] https://www.nytimes.com/2018/08/13/business/dealbook/tesla-e...
That's only your opinion of what it means '[to be] bloomberg'. If you have a good argument for why that is the case, then give it. But unless you do, I'll stick with the definition of an oped[1], and that Matt Levine himself took the job because Bloomberg gave him the creative freedom to write what he'd like to write in the manner that he likes to write.
>Not sure why you attacked the guy for giving his opinion.
I didn't attack him. I just noted the large difference in how much support Matt Levine gave for his opinion, and how little the poster gave for his.
[1]"An op-ed ... is a written prose piece typically published by a newspaper or magazine which expresses the opinion of a named author usually not affiliated with the publication's editorial board." (wiki)
No. It's a matter of fact. He works for bloomberg. He gets paid by bloomberg. Hence it is bloomberg. Now if it was an non-bloomberg employee wrote an op-ed piece for bloomberg, nytimes or any other publication, then you would be correct.
> But unless you do, I'll stick with the definition of an oped[1], and that Matt Levine himself took the job because Bloomberg gave him the creative freedom to write what he'd like to write in the manner that he likes to write.
Right. He works for bloomberg. He represents bloomberg. He is a bloomberg employee.
> [1]"An op-ed ... is a written prose piece typically published by a newspaper or magazine which expresses the opinion of a named author usually not affiliated with the publication's editorial board." (wiki)
That's my point. Matt Levine is affiliated with the editorial board. He is affiliated with the founder of bloomberg itself - michael bloomberg, who pretty much handpicked his op-ed staff. You do realize that michael bloomberg himself writes op-eds for bloombergview right? Are you saying that doesn't represent bloomberg?
Yes. If an op-ed is written by Dimon or Tim Cook or anyone not affiliated with bloomberg, then you are right. It isn't bloomberg. But someone who works for bloomberg writing an op-ed is bloomberg.
Hope that clears it up for you.
No, he would not need to buy all the shares.
No, he was not suggesting a "firm offer to the board" was imminent.
No, he did not imply "having agreements".
This certainly means that if you only need a shareholder vote then you have everything else in place. "Only reason" by definition means there is no other reason this couldn't be.
So again, just for clarity, he didn't say the only to be done is the vote, he said the only reason why he currently expects the deal might not happen is if rejected by share holders.
The first half suggests that he might go through with the transaction of taking Tesla private, meaning, acquiring sufficient stock for cash that it falls below the SEC reporting thresholds and delisting it from stock exchanges.
The second half of the statement states that, whatever he decides, he has already lined up the funding necessary to carry out contemplated action in the first statement.
People don't interpret the "funding secured" to mean that he has a going-private deal locked up. They do interpret it to mean that he has locked up whatever financing he would need to go private, were he to choose to do so. And the problem is that his follow-up blog post, tweets, and Tesla statements indicate that neither the going-private transaction, or the funding for such a transaction, has been finalized--or even has progressed to the point of concrete terms being discussed.
If it was, then nothing happens (except a strongly worded letter from the SEC on proper disclosure methods). If it wasn't, however, then at the very least he's going to have to pay restitution to all the investors (both long and short) who lost money as a result of the tweet. At worst he's going to prison.
The only reasonable interpretation of the above tweet, is to qualify the second sentence with the first, i.e he personally is only considering a buy offer and that he is secure in the funding ability of the buyer.
Choosing your interpretation, what he said in the second sentence, clearly contradicts the first sentence in the same tweet. So why are you choosing the clearly inaccurate, as due diligence is now taking place, narrowly legal interpretation of two words, over all the other context that suggests your narrow legal reading of those 2 words are not what could possibly have been meant by him.