Tesla’s (NASDAQ: TSLA) Elon Musk moved the stock past $375 last week when the CEO tweeted a go-private idea. He wants to take the company private and buyout stockholders at $420. That 420 is code for marijuana is irrelevant. Musk’s lack of secured funding to complete this deal should give short-sellers confidence.
Timeline
Tesla reported quarterly earnings that missed estimates by $0.24 but beat on revenue. It affirmed production targets, setting the stock at a $300 bottom. On August 7, media circulated reports that Saudi Arabia wealth fund would take a stake in the company. So when Musk posted the privatization idea, the fund managers were likely shocked and caught off-guard.
According to SimplyWall.St, TSLA stock is worth $443, above Musk’s buyout proposal of $420.
Tesla cannot have it both ways: either it goes private or it continue to attract investors buying its stock. The enormous growth potential for the EV company requires billions in funding annually to make up for the shortfall. Going private still works, just as it did for Dell going private. For now, though, Tesla has no secured promises from investors who will say they would buy a large stake in the company.
Apple (NASDAQ: AAPL) could invest in Tesla but it probably will not want to. It already has its own ambitions. Plus, Musk once ridiculed the quality of engineers hired by Apple. Apple may not forget such insults.
