Yeah, after doing more reading I take back characterizing it as erratic. I’m an investor, and I think it’s probably a good idea as described at a very high level. Eliminating the quarterly earnings cycle reporting, and dealing with the market volatility can only help stability in the company. I’m really curious how they will handle the converted stock though. I’d expect them to do private valuations at a minimum for employee comp. They will have to retain some type of equity scheme to entice the engineers to work there.
And hey, if they don’t need the equity markets to get funding there’s little reason to remain public.
Fidelity runs a fund for SpaceX that employees can use to trade. I presume it’ll be similar in this case, except that any current “miscellaneous” shareholder will be put into the special fund. The SEC limits the number of investors in private companies, so presumably there will only be institutional investors at a high level, but you can have another fund indexed to the same price.
IIRC, it’s actually possible to invest in SpaceX today via some Fidelity fund, though only at a low level (SpaceX only constitutes a small fraction of the total).
It’s certainly a little unusual, but it does carry one benefit–the news was immediately available to everyone, so no one has the slightest claim to it being some kind of manipulation designed to benefit some parties (assuming no insiders traded on the news before it was public). Imagine the lawsuits that would result if it turned out that some investors got the news before others (because they got an email first, or whatever).
And since Tesla followed up the tweet with a longer explanation, it clearly wasn’t just some off the cuff thing, even if it kinda sounded like it.
Actually, it sounds like the exchanges had to stop trading Tesla stock because nobody knew what the hell Musk meant. At least one story I read questions whether he could be subject to fraud penalties if it was all bogus.
I’m certain that’s true, and I’d say it’s beyond erratic if it were bogus. I’m presuming the basics of the announcement are true: that investor support is lined up, and that there will be a shareholder vote at some point. These things don’t seem too unbelievable to me, though, and they’re certainly easy to verify for the SEC. Tesla basically just needs Musk and the top 4-ish institutional investors to vote yes. The institutional investors seem in it for the long haul so there’s not much reason for them to vote no. It may not even cost much money if most investors stay onboard.
Generally speaking, the SEC seems to take a “quacks like a duck” attitude to their regulatory enforcement. Given that investment media immediately picked up on the tweet, I don’t think anyone say they’re surprised that some Tesla news would come from Musk’s personal feed. Even if Tesla were not absolutely explicit that some news would come from Musk, the fact that his feed is followed so closely would seem to be adequate cover.
There was a similar (though smaller scale) incident with Netflix, and while there was an investigation nothing came of it.
That’s true. I think the difference here is that Musk has a gigantic twitter following, and the information was published on the main Tesla website as well. Here is from their 8-K:
That rule is likely intended to prevent companies from hiding important information while hiding behind the disingenuous figleaf of having disclosed it on some personal social media site hardly anyone follows; That’s not Elon Musk’s case.
I was thinking the same thing. Must have been shopping around for investors at the time. I’m pretty curious who the sugar daddy is, if there is one. Maybe they think they can pull it off without much extra cash. It doesn’t necessarily need any extra cash if they can convince all the shareholders to hang on.
In case anyone wants to read Musk’s prior comments on the same subject, see this letter to SpaceX employees from 2013 articulating the reasons not to make SpaceX public. I read the letter in the Vance’s biography.
It contains a bunch of SpaceX-specific stuff but the general arguments against being a public company are basically the same as the Tesla letter from today. Nothing he complained about has gotten better over the past 5 years; if anything, it’s gotten worse.
I bought a bunch of TSLA a couple years ago when it was trading around $190. If this deal goes through at the purported price of $420 a share I stand to make quite a nice profit.
I just found out the chargepoint across the street from my house is no longer free, but now “$3.00 estimated fee for two hours”. That explains why I’ve not seen the Leaf and Bolt there recently. The rates are set by the school district. Not really a big deal, it’s just that weird psychological thing of having it hurt to lose something you never really had.
Even at that price, it will be useful as a backup, because I plan on seeing how 110 charging goes before paying to bring something bigger into the garage. I’m concerned 110 won’t be enough in the winter, because the garage is not heated (other than an uninsulated duct passing through, but that’s a different thread).
I did find out that charging is free at work as a perk of having a parking permit, but there are no chargers convenient to my building. The nearest is a 2000 foot walk, which is also a reasonable backup plan.
