Should Elon Musk Have Taken Tesla Private?
According to Tim Draper (Silicon Valley VC), Elon Musk would have been better off taking Tesla private, avoiding many of the challenges that Tesla have faced this year.
Draper said that Elon Musk made a “human mistake” by Tweeting that he had “funding secured’ to take Tesla private in August. The Securities and Exchange Commission charged Elon Musk with misleading share holders, which cost Tesla $20 million and Musk his chairman role at TSLA.
Draper, the founder of Draper Associates and DFJ venture capital forms was an early investor in both Tesla and SpaceX. Draper said this in an interview, “We have to sort of say, hey look, he’s a human being, he’s doing the best he can,”.
Musk then continued to release a blog post in August explaining that Tesla would continue to be a public company. Since August, Tesla shares have been very volatile, falling to a 52-week low at the start of October and then rallying after a strong Q3 earnings report. As Tesla is a public company, the actions of Musk impact the trading of Tesla shares and the share price overall.
In an interview with journalist Kara Swisher, Elon Musk admitted that his tweeting has caused him to have some regrettable moments. Despite only being on Twitter for 15 minutes a day (Musk claims), Musk’s social media habit’s have cost him millions of dollars in lawsuits.
Swisher asked Musk if he was going to change how he uses Twitter, to which he replied “Not really. I think it’s mostly just if it’s something that might cause a substantial movement in the stock during trading hours. That’s about it.”
Musk said that tweets like the “funding secured” one hold his company back and act as “self-inflicted wounds”. Despite saying this, Musk is also reported as saying that the tweet was “worth it”, even if it cost cost him $20 million and his chairman role at Tesla.
This leads to the question, should Elon Musk have taken Tesla private?
Taking Tesla Private
By going private, the team at Tesla would have more control over the company’s future and day-to-day running. By going public, Tesla would not be under constant scrutiny due to financial information not releasing to the public. Many large luxury brands such as Rolex and Chanel are still private.
Taking the company private would mean that Musk can experiment with new ideas that are risky to shareholders and deliver on them. Instead of meeting quarterly growth targets, Musk and Tesla can focus on long-term revenue and innovation.
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