Well as far as I am concerned Tesla makes very nice cars but is a crappy company that I would steer well clear of from an investment perspective. Given that it a junk bond rating of B3/Caa1 which tells you that there is a very good chance that this company will actually go bankrupt over the next 5 years. If that happens the shares will be worth a big fat zero. There is a very good reason behind this rating it has $10 billion of debt on its books Link1. It also makes a huge loss every quarter, equivalent to $16 per share and yet people are prepared to pay $375+ a share for the privilege. You know what - that is nuts at the price of $379 a share yesterday the company has a market capitilization of $64 billion making it bigger than Ford or General Motors.
So what happened yesterday was the stock was trading at a around $340 a share when Musk tweeted that he was thinking of taking the company private by offering those that want to cash out $420 a share that would value the company at a even crazier $70 billion valuation. The share promptly shot up to around $370 a share was suspended for trading for an hour then resumed trading closing around the $379 a 10% gain on the day. If he pulls this off then it really would be an amazing achievement because he needs to sell even more debt in a leveraged buyout to buy out those that wish to sell at the $420 price and also to buy out some existing debt holders at a preium to the current price of their debt.. So basically he need some people to be dumb enough to buy newly issued debt to fund. I would think a lot would want to cash out at $420 a share, of course he owns around 19.9% of the stock so will not be buying himslef out but that still means he may need to raise $40 billion or perhaps even $50 billion. I suppose anything iis possible but ultimately you are going to need to persuade a lkot of sophisticated investors to tske a big risk to buy that debt and with a junk bond rating that is going to be very difficult.. Nonetheless in a singly tweet Musk added around $6 billion to his company's valuation yesterday so we can call it the $6 billion tweet. In my view this company has a great brand name, a visionary leader and good support but it is worth more like $15 billion maximum end of (and probaly substantially less than that).
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