Last week, Elon Musk did what Elon Musk tends to do. He tweeted that he planned to privatise his widely popular electric car company Tesla, and take it away from the public scrutiny that comes with a stock exchange listing. Like anyone who has just been told that a buyer is desperate to take something off your hands, this led to a skyrocketing in Tesla share prices.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
While Musk claims to have both negotiated a price and funding, that’s not how the stock market works. And it seems like his funding too is a mystery. As this saga drags on into its second week, one of the favourites has just ruled itself out of any scheme to take Tesla private.
Softbank Co’s Vision fund, which encapsulates nearly $100 billion earmarked for game-changing startups, has officially decided against backing Musk’s plan, according to The Economic Times. In 2017, there had been some interest from the Japanese entity about investing in the company, but it seems that the last year has put the company off.
In the last few months alone, Tesla’s stock price has fluctuated wildly as 2017 Q4 and 2018 Q1 results differed drastically from analyst predictions. Meanwhile, in March, one of Tesla’s automated driving cars was involved in an accident that killed a pedestrian. However, the company seems to be on upward trajectory after they “finally” hit long standing production milestones in July.
Softbank’s lack of interest also stems from their recent $2.25 billion investment GM’s autonomous vehicle unit Cruise. In addition to their consistent funding in ride-sharing companies like Uber, Grab, and India’s Ola, they are happy with their investments in the automotive industry. This attitude also reflects the changing ecosystem, as Tesla is no longer the only electronic car producer anymore.
Musk’s tweet has also come with unpredicted side effects. Due to his unilateral decision to take Tesla off the market, two groups of shareholders sued the company over Musk’s decision to apparently short-sell stakeholders. The American Securities and Exchange Commission has started an investigation into Musk’s behaviour following this recent tweet.