The saga of the Tesla buyout is finally over after three agonizing weeks. Musk announced Friday that Tesla had put its plans to go private permanently on hold. The Wall Street Journal has run a long article chronicling the internal decision-making process, but ultimately Musk and the board decided it as not an optimal decision, not least because keeping small investors on board wouldn’t have been an option and Tesla would have had to bring on competitors as investors. The stock dropped on the news.
FINSUM: If what we read is correct, Musk did not want Volkswagen to be an investor in the company. That, combined with the Saudis backing away, seems to have been a big part of staying public.
Elon Musk shocked the world and the market yesterday. After several weeks of turbulent rhetoric and behavior, the CEO yesterday announced that he was seeking to take Tesla private. Musk said bluntly, “Am considering taking Tesla private at $420”, continuing “Funding secured”. The stock was trading at only $356 when he announced his intentions. There are three ways doing so would benefit Musk and Tesla. Firstly, they wouldn’t need to do anymore public equity funding issues. Secondly, he would not need to face anymore pesky questions from analysts. Thirdly, doing so would stick it to the short-sellers that Musk hates.
FINSUM: If we take a step back and examine it, Tesla does seem like the sort of company which might be better off private at this point. Just as Uber has stayed private while it has burned mountains of capital, Tesla might be wise to follow that lead.
Silicon Valley’s ascendance to the pinnacle of American corporatism and power has just been cemented—Google has now surpassed Goldman Sachs in terms of total political contributions. The company’s political action campaign, NetPAC, has so far spent $1.43m versus Goldman’s $1.4m. Four years ago, Google only spent a third as much as Goldman. The spending is a sign of just how aggressive Google has become in campaigning for its interests, and is this year focusing on issues ranging from tax, to immigration visas, to government spying. While tech industry workers tend to lean towards to the Democrat camp, Google has been donating more and more to Republican areas, even if they do not agree with the party’s social views—“business is business” said one Republican consultant. All told, the tech industry has donated over $22m this year to political campaigns, but that figure does not count the sometimes lofty private donations of those working in the industry, like the $500k donated by Eric Schmidt, Google’s executive chairman. Republican congressman Bob Goodlatte, Florida Senator Marco Rubio, and democratic contender for congress Rohit Kanna, have all been major beneficiaries.
FINSUM: The tech industry has undergone a major transformation over the past five years, morphing from a near “hippyish” persona—remember big tech founders speaking out against the moral bankruptcy of the financial industry—to one of big business and corporatism. The public’s pushback is already underway in San Francisco, and it will be interesting to see if it spreads in the US. Tech hatred is thriving in Europe.