Tesla shares climbed as much as 13pc on Tuesday night after its mercurial co-founder Elon Musk announced he was considering taking the electric car maker private.
In a series of tweets Mr Musk, who has repeatedly complained about Tesla’s treatment on the public market and clashed with analysts, said he had already secured funding for the plan.
The company later released a statement, in which it said a final decision had not yet been made on whether to take Tesla private.
Well, that’s one way to boost the share price ahead of a capital raising. You know, say you’re going private, but haven’t quite decided, stock price jumps, have a rights issue instead claiming circumstances have changed.
What would be interesting to know is what the bond covenants say. Do holders have a change of control put on them? That would mean they’ve got to refinance all the debt at the same time. No, I don’t know. But it would, to me at least, indicate that the going private is less likely than the public capital raise.
And onto entire speculation. I don’t think – not that I’ve particularly studied it – that Tesla can get to mass market without more capital. But I also think that it’s only one more decent slug and they could. Thus it’s actually worth, for the long term perspective, destroying the current share price with a screw the fanbois massive rights issue. One that’s fully underwritten of course so they’re guaranteed the money.
But then there is a reason why I didn’t become a banker…..