Chevy Volt a Failure - GM to Layoff 1,300

Tesla stock halted: Tesla shares halted after string of Musk tweets on possibly taking company private

Also, just heard Harvey Pitt (former SEC head) being interviewed about it. It smacks of securities fraud. He's complained about the shorts. Throws something like that out there and sends the price of the stock flying on it. I'd assume he wasn't trading on it, so they won't have him on a pump and dump. But the securities fraud aspects of that sort of thing (trying to manipulate the market) are at the heart of the 1934 act that established the SEC. I'll post the Pitt interview if they put it online.

As an aside, I think the SEC is a feckless, useless organization, that does more harm to markets than good (a different post). But if they do what they purport to do, they had best be looking VERY closely at his statementa. For example, as Pitt said, if he doesn't have financing already lined up the way he said (and reporters from several news organizations have been calling around and nobody knows squat about anything like that -- it would be a huge amount of money), it's a fraudulent statement.

 

Here is the Harvey Pitt interview.

Elon Musk's tweet could be securities fraud: Former SEC chairman

There was an interview with Jeff Sonnenfeld afterward, in which he was even more brutal. ... basically, "nobody announces something that way. It's the same old BS with Musk, trying to create a shiny object to distract people from his shitty company. I'll post that interview if they put it online.

 

G ole mighty this is such BS. The company has $12 billion of debt, all junk rated. It needs billions more to survive because it is burning through cash. Who is going to finance that buyout at a premium (and the premium will be greater than he said, because shareholders will hold him hostage)?

Basically, he's a petulant baby who doesn't want a public company, because he can't handle the scrutiny that comes with being publicly owned.

 

Yup. If it were a leveraged buyout, which it would almost certainly have to be because of the amount of wasteful debt he’s accumulated in that company, it would be the biggest LBO in history. $70 or $80 billion, I believe. It would harken to the rjr Nabisco deal in the 1980s, which ended up swimmingly well. A lot of investor money is at stake, he apparently has done no due diligence, likely has no bank letter promising the financing, and has no realistic plan. Compare to what Michael Dell had to do, and how he went about it, when he took his company private. And on top of it, the idiot made A pot joke of it.

 

Sorry if few people care the way I do. But this has been such big news and I find it fascinating -- Musk and the Tesla tweets about going private.

A few thoughts:
1) This has to be the least suitable company ever for a leveraged buyout. The company has no EBITDA. If he hates dealing with the shorts, as public company, can you imagine him dealing with creditors that can seize his assets? Not that anyone is going to finance this mess. It is more than twice as big as the biggest LBO in history, I believe. But he is an impetuous shithead. He was happy to take people's money in return for equity in his company. When you sell 80 percent of a company, guess what? If you stay on to run the company, you owe those owners of the company A LOT. He wants to be unanswerable to anyone.
2) Why would you announce it that way and drive up the premium? He is working against his shareholders, who he has a fiduciary duty to. Why anyone would trust him to steward their money is beyond me.
3) I can't overstate what a dishonest slimeball Elon Musk is. One, he created a short squeeze in the most dishonest, pump up a stock way possible. Although, some very prominent shorts were loving it, because they have deep pockets and they can smell the fraud and desperation. Secondly, he has convertible bonds due early next year, and he is going to owe a lot of money that will deplete a large percentage of the borrowed money he has left (after all of his cash burn). It has to be what is stressing him out most. They are running out of cash and they could owe $900 million payable immediately in February of next year when those convertible bonds come due. There is an exception -- if he can keep the stock price over $360 or so (I believe that is the number, I may be a bit off), the people he owes can take what they are owed in equity, rather than demanding cash payment. THAT is the most obvious motivation for his tweets. He is trying to pump up his stock price for that reason and that reason alone. And that is securities fraud.

Honestly, I think the market should regulate itself -- except in the case of fraud (which this may qualify as), which should be criminally illegal. I know as a fact that a number of well-known hedge funds initiated shorts yesterday on those tweets. They saw it as the time. And eventually, I have no doubt they will be rewarded, and there are at least some odds that Elon Musk will go down the way Bernie Ebbers, Aubrey McClendon, etc. did. But the SEC does exist (whatever I think of it), and if they are going to lay the bullshit on the public that they create a level playing field and protect people (even as their interventions unlevel the playing field in reality), they had best be investigating him right now. And there should be possible criminal charges on the table if it is found that two material things he said in his tweets are NOT true: 1) he had no financing lined up, 2) he had no "investor support" for "the plan" (which I think is bullshit, because there is no plan, so the SEC should be demanding that plan ASAP, where that support came from, etc. --with no delays so he can try to do his Houdini act.

 

SEC Probes Tesla CEO Musk’s Tweets

 

The SEC Is Intensifying Its Probe of Tesla

Stormy weather in Fraudville.

 

FYI, he would have raised money by now if he was able to. It's what he does. He has used hype, shiny objects and the inflated stock price to raise fresh capital every instance he reasonably could add to the coffers. Now, the company is running out of the billions it has borrowed. Whatever has been going on with that, there is no way to know because he is full of it (pronouncements about how he doesn't NEED to borrow). I personally am betting that he is being prevented from accessing the capital markets -- and it could be one of several reasons. In any case, it's going to be that much tougher to find new creditors to keep funding this farce when the current bonds are trading below par and are junk rated, there is $900 million of convertible debt due in 7 months. ... and there is an active SEC investigation.