Is Going Private The Right Path For Tesla?

It will gain much-needed independence

Tesla simply can't afford this buy-out

 Getty: Joshua Lott / Stringer

Taking itself off of the stock market and becoming a private company will give Tesla the freedom to choose its own path to success, argues Jeff Spross of The Week. Elon Musk has a long-term vision, to revolutionize energy and transportation industries. This will take a lot of time, which doesn’t combine well with the stock market world that wants to see constant short-term revenue. Tesla is currently not profitable, having lost $700 million in its last quarter. This has caused Musk many headaches from unhappy investors and stock volatility. With calmer private investors, Tesla will be able to work on its long-term goals more effectively.

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Tesla going private would cost huge sums of money that the company, which has yet to make a profit, might not be able to gather, writes Robert Pozen in Market Watch. In order to buy back a third of its shares, Tesla would need to raise around $20 billion. This will be incredibly hard for a company that had a negative cash flow of around $3.5 billion in 2017; In 2018, this number stands at $1.8 billion, so far. Elon Musk has suggested that he can make his company profitable, but that is likely to happen later rather than sooner. The last buy-out of a company anywhere near this size, TXU Energy, resulted in it going bankrupt seven years later.

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