Elon Musk took to his blog today to clear up all confusion related to taking Tesla private and why he tweeted “funding secured”. Tesla stock price has see-sawed since Elon tweeted his intentions to take Tesla private, even attracting a class-action suit accusing him for engineering a scheme to squeeze short-sellers.
Elon explained in his blog that Saudi’s Sovereign fund has been in discussions with the entrepreneur over the last two years for a possible take private move. Elon Musk now owns nearly 20% of Tesla, large institutions hold another 64% and the rest is with retail investors.
Assuming that 80% of current investors including Elon decide to roll their stake over to Private Tesla, the other 20% needs to be bought out. Given a choice, Elon will do what ever he can to remain the single largest shareholder in Tesla, which means the odds are quite high for Elon Musk to spend some dollars to increase his stake.
Morgan Stanley analyst Adam Jonas thinks Elon Musk may use his SpaceX stake as collateral to increase his stake in Tesla and help partly fund the buyout. And what he says makes logical sense.
“Elon Musk’s desire to potentially take Tesla private may require large amounts of new equity capital. We see scope for SpaceX to play a potentially crucial role in facilitating the required financing as well as the strategic narrative going forward,” analyst Adam Jonas said in a note entitled “How SpaceX Can Potentially Help Tesla Go Private” to clients Monday. “We believe investors should consider the potential role of SpaceX in the near-term financial options confronting Tesla and its shareholders.”
How much is SpaceX worth?
According to venture capital research firm PitchBook, SpaceX raised $507 million in a funding round in April this year, giving the Elon Musk led company a valuation of $25 billion
Elon Musk holds a massive 54% stake in SpaceX, giving him access to $10 billion to $15 billion. Elon can clearly use it to help him increase his stake in Tesla.
He is a bidder and he has money. May not be enough to complete the take private deal all by his own, but sizable enough to form a group and bid for Tesla.
“We do not have knowledge of how much of Elon Musk’s SpaceX shares (if any) are currently pledged as collateral for any existing loans,” he said. “Nevertheless, we believe this potentially substantial store of value for one of the largest and well known private companies in the world is highly relevant to this discussion.” – Adam Jonas
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Adam Jonas is a four star rated (tipranks) analyst. Much better than a lot of Wall Street analysts. Average Return +8.1%. (Since Jan 2009)
