Tesla & SolarCity: This Deal’s Getting Worse All The Time

Elon Musk failed to disclose his purchase of SolarCity stock.

Musk bought 570,000 shares of SolarCity stock on February 11, evidently near the time he discussed the possibility of a merger with cousin Lyndon Rive.

The per-share purchase price ($17.56) was significantly below the implied valuation of SolarCity stock in the merger; hence, Musk will realize a profit of several million dollars if the merger is approved.

Again, EnerTuition’s article has an excellent and nuanced discussion of the stock purchase, and the questions it raises, so I skip over it here except to note Musk’s stock purchase further taints a deal that already has a bad odor.

If you are a Tesla shareholder (or, indeed, a SolarCity shareholder), and deciding how to vote on the merger, would any of these topics be important?

A budget for CapEx needed to achieve volume production of the Model 3;

Any change in 2016 delivery guidance;

Any change in the number of Model 3 deposits since April;

The yield on Tesla’s 32,000 Model X deposits;

Details about Model S order backlog and demand;

Details about Tesla Energy sales;

Details about Tesla Energy margins;

Details about Gigafactory sub-suppliers;

Details about the “safety stock” Panasonic is requiring Tesla to pay for;

Update on whether Tesla still plans to begin Model 3 production in July 2017;

Update on whether Tesla still forecasts production of at least 100,000 Model 3 car in 2017.

If you believe any of this information might be useful in considering the merger proposal, too bad for you. The S-4 is silent about all this.

Tesla Out, Chevy Bolt In

Summary

Silicon Valley’s dean of tech fashion, Apple co-founder Steve Wozniak, gets some seat time in the upcoming Chevrolet Bolt.
Previously, he was singing the praises of the Tesla Model S, which he has been driving for at least a couple of years.
After driving the Bolt, he changes his tune: “I was surprised and blown away.”.
“You like this one the best?”, Woz is asked. “Extremely” he responded.
The writing is on the wall. Woz may be the first to dump his Tesla for a Chevy Bolt, but Tesla just hit the competitive ice berg. RIP.

Tesla’s Extravaganza Of Fraud-Risk Indicators

Audit firms are required by their professional standards to consider the possibility that the financial statements contain fraudulent misstatements and/or omissions. The auditing standards contain a number of indicators, or “flags,” that should alert auditors to the risk of fraud. PwC is likely beginning its client retention and planning for year-end audits right about now.

PwC client Tesla (NASDAQ:TSLA) is throwing off an extraordinary plume of fraud-risk indicators that is visible from deep space; red flags, orange flags, floating pink flags at high tide. As an artistic achievement, this colorful extravaganza might make Christo and Jeanne-Claude green with envy. Somehow we don’t think PwC will have the same reaction.

SpaceX explosion puts goals of Facebook, Musk into question

On Thursday, Zuckerberg struck an upbeat tone in his post about the rocket failure, noting that the company has other strategies in the works to expand internet connectivity across the world. Aquila, the Facebook-built drone, he noted, recently undertook its first successful flight in the desert.

Still, the setback will delay Facebook’s ambitious plans and even more ambitious timetable.

Shortly after his SpaceX comments, Zuckerberg struck a cheerier note by posting some “good news” from the region: A family of baby giraffes was seen on his safari.

Yesterday, Elon Musk lost a rocket and $780 million

Thursday started badly for Elon Musk when one of his SpaceX Falcon 9 rockets exploded on the launchpad, days before it was set to take a payload into orbit. Things got worse when Mark Zuckerberg discovered his $95 million satellite was sitting on top of the rocket, and took to Facebook to express his “deep disappointment.”

But as it turns out, blowing up a multi-million-dollar rocket was not Elon’s most expensive mistake yesterday.

As Bloomberg reports, share movements and regulatory filings related to Tesla and SolarCity, two of Musk’s other companies, cost him $779 million yesterday. The stock in both those companies (which are set to merge) took a sharp drop yesterday, with Tesla down 4% and SolarCity dropping by 9%. According to Fortune, the drop was due to cash concerns in Tesla, and ongoing worries from investors over Tesla’s merger with SolarCity.

Tesla Motors discloses $1.1 billion in third-quarter cash needs

“During the third quarter, we will be using substantial amounts of cash in connection with conversions of our 2018 Notes and we could pursue other actions to reduce our outstanding balance of convertible notes, which could require further outlays of cash,” Tesla wrote in the filing with the U.S. Securities and Exchange Commission.

If the two third-quarter payments are subtracted from the mid-year cash balance, Tesla would have $2.1 billion left over. The company on Wednesday told analysts it planned $1.75 million in the second half of the year on capital expenditures.

Tesla declined to comment beyond the filing.

Judge Says Tesla Can’t Sell Directly to Missouri Customers

“All we have ever requested is that any new manufacturer be treated the same as other vehicle manufacturers in Missouri, which are all required to employ a system of sales that uses an automobile dealer to deliver the vehicle to Missouri consumers,” Smith said.

Stop Elon From Failing Again

THE ONE STOP DATABASE ON STOPPING ELON MUSK