Musk Decides To Stay Public, Raising As Many Questions As Answers

• by Thom Forbes , Featured Columnist @tforbes, August 27, 2018

Remember when Elon Musk mused about perhaps taking Tesla private? Forget it ever happened. Musk blogged late Friday that he has informed his board of directors that he believes “the better path is for Tesla to remain public. The Board indicated that they agree.”

And the market is rejoicing, right? Not quite -- at least so far this morning.

"Shares in Tesla Inc. fell just over 3% on Monday after it abandoned a plan to take the electric carmaker private, with some analysts suggesting it should either replace chief executive Elon Musk or appoint another strong senior manager," reads the lede to the Joshua Franklin and Sonam Rai story for Reuters.

“Musk said his change of heart came after talking to Tesla investors and realizing that taking the company private would be harder than he originally thought,” reports Jethro Mullen for CNN Money.

“Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was ‘please don’t do this,’” he wrote on the Tesla blog.

The announcement Friday “capped a tumultuous series of moves that drew in Wall Street’s biggest investment banks, prompted an investigation by regulators and raised fresh questions about Mr. Musk’s leadership,” writes the New York Times’ David Gelles. 

“In that time, according to five people close to the events, Mr. Musk came to realize that his thinking had been overly simplistic. While going private might have removed some problems, it would have introduced new ones. Among his concerns were ceding too much control to private investors -- including conventional car companies and Saudi Arabia, a symbol of big oil -- and shutting out smaller investors who might be unable to retain a stake,” Gelles continues.

Once he’d reached his decision, he had to take it to the Tesla board. It “convened Thursday at the company’s factory in Fremont, Calif., in a conference room where Elon Musk often spent the night. His sleeping bag was still on the floor,” write Liz Hoffman and Tim Higgins for the Wall Street Journal. “… He was joined in the room by board members, lawyers, bankers and advisers, members of a Wall Street transaction machine put into motion by the entrepreneur’s idea. 

“ … As the team hustled to put form to his idea, lining up investors willing to put up the tens of billions of dollars required for the deal, Mr. Musk was having doubts, according to people familiar with this thinking. A buyout, even if accomplished, would force some of the technology mutual funds that had been ardent supporters to trim their stakes. It might mean allowing competitors inside his tent -- one of the investors his bankers had lined up was Volkswagen AG, people familiar with the matter said,” Hoffman and Higgins add in a piece filled with details gleaned from inside sources.

“Unfortunately for Musk, abandoning the plan to go private won’t put an end to the legal headaches his proposal has spawned. Tesla is facing both shareholder lawsuits and an investigation from the Securities and Exchange Commission. These are likely to continue. Indeed, Musk's decision to abandon the proposal only underscores critics’ contention that Musk wasn’t telling the truth when he said he had ‘funding secured’ to take Tesla private,” writes Timothy B. Lee for Ars Technica.

“What are the takeaways from all this?” asks Michael Hiltzik in the Los Angeles Times.

“We can start with management. Musk is widely esteemed as a ‘visionary,’ but he hasn’t shown that he can run a car company -- which is what Tesla is, despite all the persiflage about its being a technology or software company. In fact, he has shown the contrary. The manager of a manufacturing firm knows the value of preparation, planning, quality assurance, and lots of other boring stuff; Musk’s interest is in soaring ideation.”

Ouch. And that’s just Hiltzik’s “start.”

In a piece for The Atlantic, Marina Koren reflects on a New York Times interview with Musk published Aug. 16 that began with the CEO at his home in Los Angeles “struggling to maintain his composure,”  

“‘This past year has been the most difficult and painful year of my career,’ he said. ‘It was excruciating,’” wrote David Gelles, James B. Stewart, Jessica Silver-Greenberg and Kate Kelly.

“As I watched the responses to Musk’s tell-all roll in, I tried to imagine what would happen if a female CEO of a major company gave a similar interview. How would she be perceived?” Koren writes.

Or, as Julia Ioffe (@juliaioffe) succinctly tweeted Saturday: “I’m still waiting for someone -- anyone -- to call Elon Musk ‘difficult.’"