Update On TESLA, Inc.
Summary
- Elon Musk is open to a merger.
- I wrote on February 26, 2019 that Elon Musk might sell Tesla (or merge).
- Tesla, Inc stock is currently fairly valued at around $600.
I wrote on February 26, 2019 that Elon Musk might sell TSLA, some day. https://seekingalpha.com/instablog/305275-middat-yildiz/5275198-musk-tweet-tied
I specifically wrote, "Tesla is (going to be) a takeover target. Musk is going to get tired and move on to greener pastures, which is for him, more challenging endeavors, like sending men to Mars and beyond."
Today, on December 1st, Elon Musk said, "We are definitely not going to launch a hostile takeover, but if somebody said it would be a good idea to merge with Tesla, we would have this conversation." https://electrek.co/2020/12/01/elon-musk-tesla-tsla-merging-with-other-automakers-after-valuation-surge/
Why is Elon Musk open to a merger for TSLA?
1. TSLA needs more engineers, or something else we don't yet know. Other manufacturers might have something TSLA does not have, and Elon Musk knows what it is. With high TSLA stock price, any electric vehicle company could be in play.
2. Eliminate the competition. One reason mergers are done is to eliminate the competition, increase market share (occupy space), and reward the upper management of both companies financially, even though some empirical evidence shows that most mergers eventually lead to value destruction. https://www.nber.org/digest/aug03/big-firms-lose-value-acquisitions
Reasons why most mergers destroy shareholder value - Martin Roll
3. Elon Musk has already held merger talks and preparing the market.
4. He wants to reduce his time at Tesla, begin a succession road map. Merging with one or two other EV companies will bring in new management and broaden the pool of qualified candidates.
5. Other EV manufacturers will vie to be bought by Tesla. This will allow Elon Musk to run a hard bargain and lower the acquisition cost.
In the same article, https://seekingalpha.com/instablog/305275-middat-yildiz/5275198-musk-tweet-tied
I wrote, "Tesla has the first mover advantage, and everyone knows its name. Every owner I've talked with loves his/her Tesla. The share price of TSLA will bounce back from tonight's decline. So it is buy!" when TSLA share price was $59.57. Trading around $580 today it is fairly valued. TSLA however is still a buy, because every TSLA owner just loves the car.
Analyst's Disclosure: I am/we are long QS, TSLA.
Currently own TSLA and QS, but may buy and or sell equity and equity options on any of the stocks mentioned and not mentioned here at any time.
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