Private Tesla. Why Elon Musk wants to buy shares in a company?

ECONOMY

American company Tesla can turn into a closed joint stock company.

Previously Elon Musk announced on Twitter that it is considering the repurchase of shares at $420. Later, the head of Tesla, said that no final decision yet. But he explained why it is important for the company.

1
What does Tesla

The company was founded in 2003. Originally it was called Tesla Motors, but in early 2017 changed its name to Teslа.

First, the company specialized in the production of electric vehicles, but later also engaged in the creation of solar panels and other energy-storage systems.

2
Reasons to make Tesla private

According to Elon musk, the transformation into a private company will help the successful development of the Tesla. Now her progress is hampered by several negative factors:

the fluctuation rate of the stock;

• the status of a public company requires Tesla to provide quarterly financial reports that “turns into strong pressure on the company in favor of the adoption of decisions which can be right for one block, but are not necessarily best in the long term”;

• a large number of those who have incentives to make attacks on the company.

3
The market reaction

Your tweet about a possible buyback Musk published in the morning, so the market is actively played his statement.

So, at the close of trading on Tuesday, August 7, Tesla stock has risen to $379,57 per share. This is about 10% higher than the previous day, when the stock was worth $341,99.

Earlier on Tuesday, the British newspaper the Financial Times reported that sovereign Fund Saudi Arabia has accumulated a stake in Tesla for about $2 billion.

 

4
Costs repurchase of shares

The stated price of $420 per share is roughly 10% higher than the price at the close of trading on Tuesday. Although still at the beginning of the day on 7 August, this price was higher by about 20%.

According to various analysts ‘ estimates, the redemption of all shares of Tesla can cost from $82 billion to $85 billion Later on Tuesday, Elon Musk wrote that investors supported the idea of a buyout of Tesla.

Now he owns about 20% stake in the company.

5
The financial position of Tesla

Tesla previously reported financial results for the April — June 2018. The company has managed to increase revenues from $2.79 billion in the second quarter of 2017 to $4 billion in the same period this year.

But the quarterly loss, the company also increased — almost doubled. Thus, in the second quarter of 2018, the company lost $717,5 mln vs $336,4 million a year earlier.

However, Elon Musk is still assured investors that by the end of 2018 the company to return to sustainable profit and will begin to repay debts. He also apologized to the analysts, whose questions earlier in may called “boring” and “stupid.” After the apology, the shares of Tesla rose 16%. While Bloomberg praised Mask, writing that he behaves like a “real CEO”.

6
The prospects of the company

For the second quarter of 2018, the company sold 40 740 electric cars of all models is almost twice more compared to the same period last year (a little over 22 thousand). Thus Model 3 was the best selling brand of almost 18 440.

Tesla has managed to increase the release of Model 3 to 5 thousand a week. However, she did this six months later the promised date. The company hoped to achieve such level of production in late 2017, but due to a series of problems in the process.

Against this background, it became known about the plans to dismiss about 9% (about 4 million) employees.

But the head of Tesla Elon Musk is still at the end of the second quarter announced plans to reach the level of production of 6 thousand Model 3 a week by the end of August.

7
The reaction of the American authorities

Analysts have wondered how to the tweet, the Mask will include the Commission on securities and stock exchanges, which restricts the publication of information about public companies. Posts in social networks cannot be considered as official financial data, but they obviously affect the stock price.

8
The possible Union of Tesla and SpaceX

Elon Musk has stated there are no plans to merge Tesla and SpaceX.

The company will remain independent. However, the entrepreneur would like to make a structure like Tesla SpaceX, when the company exists on the money of private investors.

Arina Ruxin

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