Tesla: "Staying public"

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In a very concise manner, Elon Musk announced his intention to keep Tesla on the stock market. By posting a tweet reading "Staying public" on the company's Twitter and linking to a blog post on Tesla's website, the carmaker's CEO tried to shut down all the discussions about a potential privatisation that he sparked a few days ago. 

In an unusually personal tone, he stated that Tesla's investors are important to him and, alluding to their consistent loyalty to the company, he mentioned that almost all of Tesla's investors have been shareholders since 2010: a time when no Tesla car had been produced and all Elon had was a vision.

In the 530-word blog, posted at around 9.30pm local time, Elon also explained the reasons that led him to take privatisation off the table.

Firstly, he cited the will of the current investors in Tesla - apart from stating that investors believed Tesla is better off as a publicly traded company, he went on to give examples of how privatisation would fence off retail investors and give rise to internal compliance issues for institutional investors. 

Secondly, he mentioned how going private would be a time-consuming process that would distract the company from its mission of advancing sustainable energy. He acknowledged that Tesla is not yet financially stable and explained that ramping Model 3 is the company's main focus now; as it would make Tesla profitable. 

Finally, giving up the slightly apologetic tone which permeates through most of the post, he claimed that his belief that there is more than enough funding to take Tesla private was reinforced during the process. This bold statement, in classic Musk-fashion, is not necessarily confirmed by the markets: soon after his notorious "funding secured" tweet, which was later explained as a reference to the talks he had with Saudi Arabia's sovereign fund, the Saudi fund was reported as investing in Tesla's rival, Lucid Motors

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.
— Elon Musk in his latest blog on Tesla.com

Additionally, an unlikely reporter, the singer Azealia Banks claimed that Musk was lying about having any funding secured and that he was scrounging for investors when she ran into him at his home in California, right after the infamous tweet was posted. Another interesting detail is that, although Musk gave plenty of information on the reasons that led him to stop the pre-privatisation process (which apparently included advising from Silver Lake, Goldman Sachs and Morgan Stanley), he did not explain what pushed him to consider privatisation in the first place.

It will be interesting to see what the next day holds for Tesla: will stock prices return to their pre "funding secured" levels? Will the SEC investigate the incidents of the last month more closely, and will the lawsuits filed against Tesla for fraud be settled, dropped, or pursued further? It is the dawning of another interesting era for Elon Musk's Tesla. 


Photo Credit: Steve Jurvetson