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No external financing might be necessary, because virtually all Tesla shareholders today (i.e., people who are net-long the stock) are true long-term believers
by cs702 8y ago
No external financing might be necessary, because virtually all Tesla shareholders today (i.e., people who are net-long the stock) are true long-term believers in Musk's vision unconcerned with the company's short-term financial issues. (People who are concerned with financial issues are either avoiding the stock or shorting it.) These true-believer shareholders will want to hang on to their shares as the company goes private and shares start trading "by appointment" on less liquid, secondary private equity markets.
If I'm right and Musk pulls this off, short sellers are in for a world of pain. They will likely have to scramble to cover their short positions in the face of a limited supply of shares before delisting.
- qaq 8y agoThat might be how this is actually gets financed :). The shorts borrowed from institutional investors who have 0 reason to make them whole and can now take them to the cleaners.
- nopriorarrests 8y agoI need to double check it, but some of the largest institutional shareholders, like Vanguard Group, could only hold positions in public companies, so they will have to sell. Retail investors can decide to go private, but tesla free float is very small, so they don't matter much in a grand scheme of things.
- cs702 8y agoYes, that's true for Vanguard. But others, like Fidelity, can and will allow shareholders to hold private shares in their brokerage acccounts, sometimes through special purpose vehicles created for the purpose.