10 August 2018_By Engineer at campuscad
CEO Elon Musk of Tesla tweeted couple of days back “Am considering taking Tesla private at $420. Funding secured “.
American electric car startup is struggling with the production timelines of its mass production sedan Model 3 (only $35K) and cash flow.
Tesla current stock value at Nasdaq is around $358 a share and market capital of $60 billion and by making it private at $420 will get enough cash to move ahead and also increases market capital value. Tesla was private 7 Years back. Dell (laptop and desktop maker) went Private in October 2013 and again go public this year(July 2018).
Note: Tesla Current Market cap is more than General Motors ($53 Billion) and Ford($39 Billion).
Is it necessary to go private?
Elon sent an email back on 7th August 2018 to Tesla employees titled “Taking Tesla private“.
Summary of an email is “to assure Tesla employee that Making Tesla private would create a best operating environment and less distractions due to stock up downs. Quarterly earnings cycles puts lots of pressure on Tesla to perform well for short terms, which is hampering long term goals set by Tesla”.
Advantages of Privatization!
No necessity to hold liquid assets (Assets that easily converts into real cash like Bonds) by investors. Investors can specify exit dates and find out buyers for stocks for themselves AND most important Less regulations & More Money in the pockets of Share holders and CEO’s.
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