Furious Fridays

Elon Musk, Tesla and how CEOs affect share price

Today we’re talking about the markets, how CEOs affect share price and how public perceptions can make or break.

We look at Elon Musk.

Musk is a business magnate, investor and engineer.

  1. He is the founder, CEO, and lead designer of SpaceX;
  2. Co-founder, CEO, and product architect of Tesla, Inc.;
  3. Co-founder and CEO of Neuralink; and co-founder of PayPal.

 

 

  • In what has been a pressure-filled year for Tesla, the company’s third-quarter performance might be its most important test in 2018 – Musk said it will be great – “most amazing quarter in our history.”
  • But – JRE – Musk was filmed drinking whiskey, briefly smoking marijuana
  • It was the latest in a string of unconventional behaviour and bizarre acts by the billionaire
    • He has a very high IQ – Those people can come across as bizarre to some who don’t have high IQs
  • Even before Musk’s surprise August 7 tweet that he had funding “secured” for a go-private deal, Tesla had been under scrutiny from investors,
    • Analysts and short-sellers – it works to hit production targets and slow its cash burn.
    • Constant pressure from shareholders and analysts regarding near-term performance
    • He has said he wants to preserve a broad ownership of Tesla as a private company. That might be impossible for the mom and pop investors in the stock now who don’t qualify to invest in private companies as accredited investors. If they want to keep their ownership, it might have to be through a special purpose fund, something Musk has mentioned.
    • “Issues around regulatory approval – unclear how Tesla will allow retail investors who are not accredited investors to own stakes in a private Tesla

Musk stunned investors a month back with tweets saying he had funding to take the company private for $420 (A$589) per share.

  • Several followers questioned if it was against the company’s policy, while others mocked the CEO’s initial $420 bid, a number that has become code for marijuana
  • He then backed off from his plan, saying Tesla was better off as a public company.

 

Taking a company private – how it’s done

  • Simply going dark is a multistep process.
  • The exchanges need several days’ notice of the plan,
  • The public has to be informed at the same time.
  • Forms are filed with the regulators, one to notify it of the delisting and another to deregister the shares if the company has 300 or fewer shareholders.
  • Going private requires cash to buy out the minority shareholders, usually through a merger, tender offer or reverse stock split.

 

 

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