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Chicago, IL –August 13, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Tesla (TSLA - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Is Elon Musk Crazy, or Crazy Like a Fox?
It’s been an interesting week to say the least for electric car manufacturer Tesla, and behind it all are the words and actions of its eccentric-genius CEO Elon Musk. To say that Musk’s behavior has been non-conventional would be a dramatic understatement. His announcement via Twitter on Tuesday that he was considering taking Tesla private at $420/share and had “funding secured” sent the shares skyward from $350 to $380 - although since then speculation about whether and how a deal of that sort might happen and scant details from Musk or Tesla itself about his plan to finance the deal have caused the stock to pull back to $355/share.
What’s Normal?
Typically, in a situation like this in which a public company was publicizing that they were considering a major corporate action, management would contact the listing exchange and ask for a trading halt so that they could make the appropriate announcement and let the markets digest the information in an orderly fashion before trading resumes. At roughly the same time, the company typically files form 8-K with the SEC, which is intended to notify investors of a significant event.
Musk’s tweet came during market hours with no halt requested until the NASDAQ exchange requested it from the company.
Did Musk Violate Securities Laws?
In a word, no. At least it doesn’t seem that way, though he is dancing pretty close to that fire.
The SEC decided all the way back in 2013 that social media was a legitimate way for public companies to disseminate information, provided the company formally notifies investors where information will be available. Tesla has complied with these guidelines.
There has been much speculation about the phrase “funding secured” all the way down to parsing the semantics of the word “secured” instead of “confirmed” or “committed”, but at the time being, there’s no indication that Musk said anything that is materially false - which would be a violation of securities laws.
Merry Prankster
The notoriously confident Musk even continued to taunt those with short positions in Tesla with a prank aimed at famous short seller David Einhorn in which he mailed the hedge-fund manager a box of actual short pants.
Einhorn, himself a clever individual and semi-pro poker player who often donates his winnings to charity, got in a dig of his own when he replied via Twitter that the shorts “did come with some manufacturing defects,” an obvious reference to reports that Tesla’s Model 3s were being assembled hastily in the push to ramp up production and were consequently of lower quality than the company’s previous Model S and Model X.
Is the Financing “Secured”?
That’s the million-dollar question. (Actually, it’s the 72-billion-dollar question.)
Funding for the proposed deal does not have to involve a single buyer or lender committing the full $72 billion dollars. ($72 billion is an estimate, as the actual number of shares involved depends on the exercise of outstanding company stock options and the conversion of convertible debt, but it’s a reasonably close figure.) Given Tesla’s relatively poor credit ratings, a traditional leveraged buyout is unlikely, but there are other ways to make the deal happen.
Musk has explained that existing shareholders would be given the choice to tender their shares for $420 in cash, or retain ownership of the same equity stake in a private structure.
Tesla would need a majority shareholder vote to approve any deal. If 100% of existing shareholders chose to retain their stakes in a private entity, the deal could theoretically be done for zero dollars in cash. Musk himself owns approximately 20% of shares and he has stated his intention to retain that position even if the company is taken private. As of the most recent 13-F filings, institutions own another 63% of shares, with the top five holders combining for ownership of approximately 33%. That doesn’t include the Saudi Sovereign Wealth Fund, which it was announced this week has acquired almost 5% of Tesla on the open market.
In short, Musk would only need the agreement of a handful of existing shareholders, along with their commitment to purchase any tendered shares to gain a majority and truthfully say the financing was “secured.”
This is speculation of course, as Tesla and Musk have been tight-lipped so far about the details of their plan. To continue the poker analogy, Musk just shoved a big pile of chips into the middle and dared everyone at the table to make the call. Betting against him certainly hasn’t worked in the past but we’ll have to wait and see for a bit longer to find out how this hand turns out.
The only thing we know for sure is that it will be interesting.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions. New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Tesla
For Immediate Release
Chicago, IL –August 13, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Tesla (TSLA - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Is Elon Musk Crazy, or Crazy Like a Fox?
It’s been an interesting week to say the least for electric car manufacturer Tesla, and behind it all are the words and actions of its eccentric-genius CEO Elon Musk. To say that Musk’s behavior has been non-conventional would be a dramatic understatement. His announcement via Twitter on Tuesday that he was considering taking Tesla private at $420/share and had “funding secured” sent the shares skyward from $350 to $380 - although since then speculation about whether and how a deal of that sort might happen and scant details from Musk or Tesla itself about his plan to finance the deal have caused the stock to pull back to $355/share.
What’s Normal?
Typically, in a situation like this in which a public company was publicizing that they were considering a major corporate action, management would contact the listing exchange and ask for a trading halt so that they could make the appropriate announcement and let the markets digest the information in an orderly fashion before trading resumes. At roughly the same time, the company typically files form 8-K with the SEC, which is intended to notify investors of a significant event.
Musk’s tweet came during market hours with no halt requested until the NASDAQ exchange requested it from the company.
Did Musk Violate Securities Laws?
In a word, no. At least it doesn’t seem that way, though he is dancing pretty close to that fire.
The SEC decided all the way back in 2013 that social media was a legitimate way for public companies to disseminate information, provided the company formally notifies investors where information will be available. Tesla has complied with these guidelines.
There has been much speculation about the phrase “funding secured” all the way down to parsing the semantics of the word “secured” instead of “confirmed” or “committed”, but at the time being, there’s no indication that Musk said anything that is materially false - which would be a violation of securities laws.
Merry Prankster
The notoriously confident Musk even continued to taunt those with short positions in Tesla with a prank aimed at famous short seller David Einhorn in which he mailed the hedge-fund manager a box of actual short pants.
Einhorn, himself a clever individual and semi-pro poker player who often donates his winnings to charity, got in a dig of his own when he replied via Twitter that the shorts “did come with some manufacturing defects,” an obvious reference to reports that Tesla’s Model 3s were being assembled hastily in the push to ramp up production and were consequently of lower quality than the company’s previous Model S and Model X.
Is the Financing “Secured”?
That’s the million-dollar question. (Actually, it’s the 72-billion-dollar question.)
Funding for the proposed deal does not have to involve a single buyer or lender committing the full $72 billion dollars. ($72 billion is an estimate, as the actual number of shares involved depends on the exercise of outstanding company stock options and the conversion of convertible debt, but it’s a reasonably close figure.) Given Tesla’s relatively poor credit ratings, a traditional leveraged buyout is unlikely, but there are other ways to make the deal happen.
Musk has explained that existing shareholders would be given the choice to tender their shares for $420 in cash, or retain ownership of the same equity stake in a private structure.
Tesla would need a majority shareholder vote to approve any deal. If 100% of existing shareholders chose to retain their stakes in a private entity, the deal could theoretically be done for zero dollars in cash. Musk himself owns approximately 20% of shares and he has stated his intention to retain that position even if the company is taken private. As of the most recent 13-F filings, institutions own another 63% of shares, with the top five holders combining for ownership of approximately 33%. That doesn’t include the Saudi Sovereign Wealth Fund, which it was announced this week has acquired almost 5% of Tesla on the open market.
In short, Musk would only need the agreement of a handful of existing shareholders, along with their commitment to purchase any tendered shares to gain a majority and truthfully say the financing was “secured.”
This is speculation of course, as Tesla and Musk have been tight-lipped so far about the details of their plan. To continue the poker analogy, Musk just shoved a big pile of chips into the middle and dared everyone at the table to make the call. Betting against him certainly hasn’t worked in the past but we’ll have to wait and see for a bit longer to find out how this hand turns out.
The only thing we know for sure is that it will be interesting.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions. New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.