Motor Mouth: Here’s who can afford to take Tesla ‘private’

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Well now that didn’t work out, did it?

Tuesday, Tesla’s embattled CEO, Elon Musk, tweeted out the latest in a long line of ill-advised, narcissistic missives, this time seemingly, at the drop of a hat, announcing that he was taking his company private. The most analyzed tweet since, well, let’s be honest, pretty much anything from @realDonaldTrump, the reason posited by pundits for Musk’s hubris has ranged from straightforward (he really does mean to take Tesla private) to the delusional (he was trying to take the public’s mind off his “pedo” tweet) to the downright egotistical (he was just trying to screw the company’s short sellers that he loathes so much).

As I implied in the lede, if those were Musk’s intentions, he has failed spectacularly. In the few days since the tweet-induced surge in TSLA stock on August, 7th, for instance, Tesla’s share price has pretty much returned to where they were before, all those fanboy analysts’ predictions of the shorts finally caving in proving, once more, to be nothing more than wishful thinking.

Worse yet, according to the Financial Times, the short sellers, once they got over their initial shock, have actually become emboldened, seeing the same sort of panic in Mr. Musk’s actions as George Soros saw in the British government before he pounced in the most famous short position — the British pound — in history. According to Mark Spiegel, managing member of Stanphyl Capital Partners, “There’s not enough stupid money to buy this company at an $80 billion valuation.” In other words, Mr. Musk had better take Tesla private now because the sharks are no longer just circling, they can actually taste the blood in the water.

As for any attempt to justify this as a light-hearted attempt to take people’s mind off his infamous “pedo” tweet — calling out a worldwide hero as a pedophile will cause even a ‘national treasure’ like Mr. Musk some concern — that pretty much evaporated with two words: “Funding secured.”

Now the American Securities and Exchange Commission (SEC) is involved. John C. Coffee Jr., a professor at Columbia Law School, tells the New York Times that if Mr. Musk isn’t as secure as his tweet indicates, “that’s potentially a very material misrepresentation, and a very straightforward violation of Rule 10b-5” of the securities law — in short, securities fraud.” Now securities law can be more confounding than most, but the substance of the issue would seem to be this; Mr. Musk might have got away with trying to jazz up his stock and/or lifting company spirits if he hadn’t claimed to already have a “secure” backer. One can always, ‘think’ about modifying one’s corporate structure. However, claiming one has the funding necessary already in place is claiming to a material fact and, lying about this kind of thing brings about the kind of SEC scrutiny that makes a prolonged rectal examination seem welcome by comparison.

If, however, Mr. Musk does have a moneybags backer, then the question then becomes “who can it be?” If one is to believe virtually every financial news outlet in the world, none of the notoriously leaky major hedge finds or investments banks has bought into Mr. Musk’s dream. If not the traditional sources of capital, who then? Though, this be admittedly complete conjecture, Motor Mouth will look at the few Tesla suitors that have been talked about since this latest downturn in the company’s financial fortunes started late last year.

Elon Musk during his presentation at the Tesla Powerpack Launch Event at Hornsdale Wind Farm on September 29, 2017 in Adelaide, Australia. Mark Brake / Getty Images

Saudi Arabia

Much has been made in the last week of the coincidental investment by Saudi Arabia’s sovereign wealth fund in TSLA stock. The country’s Public Investment Fund (PIF) certainly has the funds. Though the number $80 billion, based on Mr. Musk’s wish of a US$420 per share buyout, has been bandied about, the number would more likely be less than that amount. Mr. Musk owns about a fifth of the outstanding stocks and has reiterated that he wants private investors to be able to continue with Tesla. As big as the number left would be, the PIF, with more than $250 billion in assets, could afford it.

The problem would be the optics of taking their monies. Saudi Arabia is literally the face of “Big Oil.” Now, factor in Saudi Arabia’s reputation as one of the most repressive regimes in the world and Mr. Musk and his investors/fanboys will have to do some serious ethical gymnastics to justify this one.

Apple

The idea of Apple buying Tesla is an old one. Nonetheless, with the company having just passed the US$1 trillion market cap mark, reportedly sitting on a quarter trillion in cash and, most importantly, is in the midst of developing automobile autonomy — most easily instituted, as most experts posit, with electric cars — the world’s most valuable company would seem to be an obvious suitor.

One big roadblock is that Doug Field has reportedly just returned to Apple. You might remember Mr. Field; He was Tesla’s former senior vice-president of engineering who was ousted last May when production of the Model 3 was being especially problematic. Mr. Musk famously took on his duties while continuing his CEO and head of marketing duties. According to the Financial Times, “His move to Apple will reignite speculation that the world’s most valuable company still harbours ambitions to design and build its own complete vehicles.” It might be safe to assume, then, that while Apple might have an interest in buying Tesla, Mr. Musk’s meglomania might not be as welcome. But, then, that might be his master plan. After all, 20 per cent of a US$420 billion buyout is one hell of a sayonara.

Norway’s Sovereign Fund

This one is my positing alone. But it makes a lot of sense. Norwegians absolutely love their Teslas. OK, they love their Tesla subsidies. But, whatever the case, Models Ss and Xs are very popular in the land of the midnight sun.

The sovereign fund also wants to diversify away from the oil money that is making the country so rich and also — yes, it’s a little hypocritical — use that fossil fuel to promote green initiatives. The fund is huge, soon to hit the US$1 trillion dollar mark, so it could buy Tesla from petty cash.

Admittedly, it’s a long shot, but, Musk has if nothing else, proven himself unafraid to take long shots. And methinks he might need one to get out of this latest mess.

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