Tesla: the Musk and Mohammed show
Was Tesla founder Elon Musk “winging it” when he tweeted that he may take the New York-listed carmaker private for $70bn, “with funding secured”. Judging by the hand he showed this week, very possibly, said The New York Times. On the basis of “past discussions” and “a meeting this year”, Musk seems convinced that the Saudi sovereign wealth fund, PIF, will back a bid to delist Tesla in one of the largest private buyouts yet seen. But while the Saudis have indeed built a stake of almost 5% in the carmaker, both they, and Tesla’s own “blindsided” board, seemed unprepared for the scale of his announcement – suggesting that Musk’s definition of “secured” rather “differs from everyone else’s”.
A lot could ride on that, said Tabby Kinder in The Times. Musk already faces two lawsuits accusing him of “making false statements on Twitter” to boost Tesla’s shares, which jumped 10% on the buyout story. One alleges that his tweet was a “nuclear attack” designed to “completely decimate” the many shortsellers who have been betting big that Tesla’s overvalued (in their opinion) stock will crash. Regulators are also investigating Musk’s “unorthodox” use of Twitter. And there is talk that any Saudi deal could prompt a national security review.
PIF has become “one of the flashiest capital pools in recent years”, as the Saudis seek strategic hedges against the oil price, said Lex in the Financial Times. Commitments to the likes of Uber, Softbank, Blackstone and now Tesla, demonstrate the “modern ambitions” of the fund’s chief cheerleader, Crown Prince Mohammed bin Salman (dubbed MBS by most). Both “brash and unpredictable”, Musk and MBS “make a good match”. Still, “it is not obvious that Tesla shareholders are any closer to a genuine buyout bid”.