By Alec Hogg
The story goes that a couple of years ago the fund raising committee at Pretoria Boys High approached old boy Elon Musk for a donation. The California-based entrepreneur, who left SA at 17 and expresses little fondness for his homeland, was not pleased. He duly sent a cheque for R1m – but on condition the school never contact him again.
At the time, the PBHOB fund raisers would have been sorry to have severed the link. Perhaps not so much nowadays. Musk’s behaviour has grown increasingly erratic as pressure builds on his 15 year old company which has yet to make any profit. More so if Musk’s latest bombshell proves to be another dud. Which is what savvy investors suggest it is.
On Tuesday, Musk sent the Tesla share price soaring when he tweeted “Am considering taking Tesla private at $420. Funding secured.” At a cost of $70bn, it would be the biggest leveraged buyout in history. By some distance. Yesterday Tesla board members issued a hasty statement saying they met several times in the past week where Musk has floated the idea. But they said nothing about his proposed price, nor the unusual manner in which he shared the news.
Professional investors are sceptical about the proposal. After surging on the tweet, Tesla’s share price has fallen to $50 below the proposed takeover point. Those traders who reckon the company is a slow motion car crash have added to their short positions, betting ever bigger on a Musk implosion. You wouldn’t judge those members of PHBOB if they felt the same way.