Bloomberg published an opinion piece this week explaining why Elon Musk’s latest tweets about taking Tesla private show why the company shouldn’t be publicly traded.
Bloomberg’s Liam Denning published an opinion piece recently titled “Elon Musk Just Showed Exactly Why Tesla Should Be Private,” which discussed Elon Musk’s recent tweets in which he claimed that he has secured the funding to take Tesla private.
In the article Denning states:
Is Musk serious? Who knows, but telegraphing your takeout price while you’re only “considering” things is, well, unorthodox. That $420 figure had many speculating on Twitter it was just a joke about MJ, not M&A. But Tesla eventually followed up Musk’s string of tweets with a blog post laying out a rationale for a deal that would, if done as a straight buyout, be worth $68 billion, factoring out Musk’s existing stake.
The blog post went up almost three hours after Musk lobbed this into the mix, without an accompanying SEC filing or an ex-ante trading suspension (that didn’t happen until the tweet had been up for more than an hour). It makes a mockery of public-market disclosure. Last week’s bromides about Musk’s composure on Tesla’s earnings call – technically known as “the bare minimum” for any other company – haven’t aged well.
That’s why, even though this bizarre afternoon raises yet more red flags around the company, it would be a mercy if Tesla did actually go private.
A couple of years ago, I wrote it would have been better if Tesla could have been an Uber-like unicorn rather than a listed company. Besides no longer having to worry about pesky stuff like the best way of disclosing material events (for example), the company could dispense with its panoply of short-term targets on things like Model 3 production, cash flow and profits.
Denning’s article notes that Musk’s latest media-frenzy inducing tweetstorm comes just a week after Tesla claimed that positive cash flow is imminent despite burning through over $700 million in one quarter:
The second problem is that this all got strewn across social media haphazardly less than a week after Tesla reaffirmed profitability and positive cash flow are apparently imminent. Achieving that, rather than taking Tesla private, would be the ultimate riposte to short-sellers. So why do this now?
An intriguing element of all this is Tesla’s idea of letting investors that didn’t want to cash out stay in a private entity, possibly with periodic gates to sell. This would appeal to die-hard Tesla bulls dismayed at the thought of being capped out at a mere 143 times adjusted 2019 earnings. And since they clearly don’t mind another red flag being put on the pile – the stock rallied further after trading resumed – holding shares without the strictures of a public company wouldn’t bother them. The only thing they might miss is the adrenaline rush of trading their way through an otherwise boring Tuesday afternoon.
Read the full article in Bloomberg here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan_ or email him at lnolan@breitbart.com
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