
Elon Musk’s Funding for Tesla Wasn’t So Secure - jcfrei
https://www.bloomberg.com/view/articles/2018-08-13/funding-for-elon-musk-s-tesla-buyout-wasn-t-so-secure
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sokoloff
> [Cost of compliance] is a more common complaint from small companies than
> from giants like Tesla, though; Tesla can afford some lawyers. Also I am
> sorry to be rude but given Musk's Twitter proclivities I feel like they are
> maybe not spending all that much on securities lawyers?

Laughed out loud at this.

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SheinhardtWigCo
Maybe they’re running out of money faster than anyone realizes and this is a
desperate Hail Mary? That would explain the erratic and possibly illegal
nature of the announcement.

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snowwrestler
I think a more likely explanation is Elon's ongoing annoyance and anger toward
anyone who questions the eventual success of Tesla, and especially anyone
shorting the stock.

There's no way he would ever admit this, but I bet one of his motivations for
posting that tweet was to move the stock and hurt the shorts.

Musk seems to be one of those classic "force of nature" founders, whose will
to overcome obstacles and prove everyone wrong is essential to getting off the
ground, but could be a liability in a mature company.

"Oh, yeah? Try and stop me!" works great until you run up against someone who
can actually stop you (often, the government).

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cmurf
>I bet one of his motivations for posting that tweet was to move the stock and
hurt the shorts

Sounds like a violation of SEC rule 10b-5 and possibly illegal.

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snowwrestler
Only if you prove intent. Which is why Musk would never admit it.

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gamblor956
Intent is not required for regulatory violations. Moreover, the text of 10b-5
does not require any specific intent, only that the false statement or
omission be made in connection with the transaction of a regulated security.

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snowwrestler
> John Reed Stark, a former longtime lawyer at the S.E.C. who specialized in
> investigating internet fraud cases, said that commenting online about the
> prospects of taking the company private was inadvisable at best. But he said
> that a case of market manipulation would come down to Mr. Musk’s intent.

> “These are very difficult cases to prove,” said Mr. Stark, who runs a
> cybersecurity consulting business.

[https://www.nytimes.com/2018/08/13/business/dealbook/tesla-e...](https://www.nytimes.com/2018/08/13/business/dealbook/tesla-
elon-musk-saudi-arabia.html)

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slededit
That is a seperate crime which he may also be guilty of.

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snowwrestler
Thanks.

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tryitnow
I highly recommend reading "The Paypal Wars" \- I think Musk learned a lot
from his mistakes at Paypal, but I also think there are elements of his
personality that are still problematic for managing a going concern.

Nonetheless, I personally like the guy and wish him the best, we need more
like him.

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dagoat
> we need more like him.

Not Musk bashing, I am genuinely curious as to why you think that?

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mgiannopoulos
Not many billionaires putting their money on space exploration and renewable
energy? Sounds like a good reason.

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sdinsn
Lots of billionaires are. They just tend to keep to themselves.

Also, Bezos has Blue Origin.

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eduah
Which one are landing orbital class rockets again?

FYI, Blue Origin has been at it longer that spaceX has existed. But SpaceX,
spending at least 5X less money is landing orbital class rockets and whilst
Blue Origin is doing suborbital flights.

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nopriorarrests
>SpaceX, spending at least 5X less money

not to argue, but both Blue Origin and SpaceX are private and don't disclose
ther financial information, to my best knowledge. So where is this number
coming from?

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derekp7
For Blue Origin, they don't have any customers yet, so no income there. And it
is public that Bezos just sold what, about a gigadollars worth of Amazon
stock, presumably to dump into Blue Origin (which I think he's done about once
a year?).

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sdinsn
> For Blue Origin, they don't have any customers yet, so no income there.

You couldn't be more wrong. They've had payload customers for their test
flights. They also have 4 large customers signed up for their New Glenn rocket
(in development).

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Nokinside
TSLA market cap is like 3 years of Toyota's net income. Toyota also has enough
liquid assets that it could take Tesla private with cash using Musk's plan. It
would be no sweat decision if they would value the business $420 per share.

:)

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Leary
I bought shares after elon's tweet. Gonna sue him now.

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paulpauper
darn they put a paywall

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RayVR
I think any paywall based on # articles read can be bypassed with incognito
mode

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vsah
You can't get around Bloomberg's with just incognito, but if you block cookies
from bloomberg.com it can't count how many articles you read and gets stuck at
9 articles left.

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tanderson92
incognito doesn't allow cookies to be stored after exiting incognito, so in
fact it does allow you to read as many articles as you wish simply by closing
and re-opening the incognito tab. As another poster noted, FF incognito
doesn't track cookies across tabs.

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neo4sure
I find it hilarious that Bloomberg thinks it knows whats going on at Tesla.
They are desperately trying to give tesla one last black eye before it goes
private.

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kolbe
This isn't 'Bloomberg'. It's Matt Levine's Opinion, and his opinions (which
always come with ample justification, unlike yours) are very highly regarded.

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sheepmullet
The problem is he doesn’t provide a reasonable explanation for why Musk made
his comments.

It doesn’t take a genius to think, as the CEO of a public company, saying you
have funding confirmed when you don’t might land you in hot water.

So the most likely scenario is he understood all of this and said it anyway.

Why?

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tanderson92
It's not knowable at this time why Musk made his comments. As a writer the
best Levine can do is contextualize the situation and how it compares to norms
of corporate finance, try to probe at possible plausible explanations for
Musk's behavior, and evaluate the relative likelihood of each as well as the
potential pitfalls. Of course none of the proposed explanations are really
tenable. It isn't Levine's task to explain why Musk made the comments -- that
falls rather squarely on Musk, or, perhaps, the SEC.

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pbreit
Just in the first paragraph, author mis-represents "considering" as "planning
to".

No, he would not need to buy all the shares.

No, he was not suggesting a "firm offer to the board" was imminent.

No, he did not imply "having agreements".

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hcknwscommenter
If he had just left it at "considering," this would be a very different
conversation. Funding "secured" means that it definitively exists, i.e., there
is an actual agreement from some investor(s) to fund the operation.

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eduah
The only accusation here, then can be that he wrongly assumed the should be
able to parse him saying "Am considering taking Tesla private at $420. Funding
secured." to not mean Tesla the company has already finish due diligence and
agreed to sell and that Tesla the company has secured funds from the buyers
already.

The only reasonable interpretation of the above tweet, is to qualify the
second sentence with the first, i.e he personally is only considering a buy
offer and that he is secure in the funding ability of the buyer.

Choosing your interpretation, what he said in the second sentence, clearly
contradicts the first sentence in the same tweet. So why are you choosing the
clearly inaccurate, as due diligence is now taking place, narrowly legal
interpretation of two words, over all the other context that suggests your
narrow legal reading of those 2 words are not what could possibly have been
meant by him.

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hcknwscommenter
You are the one taking it out of context. You are forgetting the rest of his
tweet stream where he says "the only" thing in the way is a shareholder vote.
High level discussions about possible billion dollar business deals happen
every day. Without an agreement (e.g., term sheet), they mean nothing and
certainly don't mean "funding secured." If Musk had come back immediately and
said "I meant funding to be secured." It would have been a much smaller deal,
but instead he doubled and tripled and quadrupled down. And now we know for
certain that funding was most definitely NOT secured.

