35.1 C
Delhi

Here are some ways in which Elon Musk can create a Super Conglomerate

Tesla CEO Elon Musk thinks it’s a “good idea” to create a holding company above Tesla, SpaceX, Neuralink, and The Boring Company according to a recent tweet he has replied to. Dave Lee, longtime Tesla shareholder, suggested that such a holding company could be simply known as “X”.

Musk once wound up in court when he entertained a change to his company via a suggestion on Twitter (largely baseless) to take Tesla private through “funding secured” from Saudi Arabia.

However, the idea here isn’t so baseless as it was only five years ago that Google surprise-announced a similar shakeup. The holding company Alphabet was created, and some of its bigger and bolder projects were split out into their own ventures alongside the search giant but still under that new umbrella.

Let’s have a think on what that would even look like if Elon Musk is entertaining something similar after thumbing through Twitter.

- Advertisement -TechnoSports-Ad

REPEATING THE ALPHABET STRUCTURE

Here’s what Google did, it created a new wholly-owned subsidiary called Alphabet and another underneath it called “Maple Technologies.” Maple and Google were then merged to create a new version of Google wholly owned by Alphabet. Following the Alphanet model roughly would be the most straightforward way for Musk to create X. The big difference here would be, Tesla, the only publicly-traded business of the bunch, does not contain SpaceX, Neuralink, and The Boring Company, these are all separate entities that exist outside of Tesla.

What about the stockholders? Google basically told them to sit tight while things are shaking up, and when it’s all done they’ll now own a slice of Alphabet worth the same amount.

- Advertisement -TechnoSports-Ad

The same could be done with Tesla by creating a subsidiary called “X,” then another merger entity underneath that, and then combine the merger entity with Tesla with Tesla stockholders transforming into equivalent shareholders of X, deal done.

PHILOSOPHICAL BARRIER

Well, not so fast, instead of just shuffling around other businesses like Google, X would probably have to acquire the other three private companies, SpaceX, Neuralink, and The Boring Company. As Musk is a majority owner of those companies, it wouldn’t be too difficult.The trouble here will be more philosophical

People believe in Tesla and its sock value is high but after it’s merged, how will people perceive X with all the companies combined? However, combining the four companies under X could help Musk further sell his futurist vision of making humanity run on sustainable energy and settling other worlds, etc. 

Okay now let’s get weird.

MUSK BUYS TESLA

Musk kind of despises the fact that Tesla is a public company so going the Alphabet way doesn’t track well. Here’s what the Tesla CEO wrote when he tried to take the company private back in 2018:

As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders. Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term. Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company.

Would Musk really want to put SpaceX, Neuralink, and The Boring Company through the same kinds of pressures of prying eyes by folding them into a public holding company?

Probably not, so what’s the solution?

Make Tesla, the only public company of the three currently, private. Yep, run the whole “funding secured” experiment all over again, but not by the way of selling it off to Saudi Arabia, or Apple. Let’s get weirder.

HOW CAN BILLIONAIRE ELLISON HELP MUSK

See the source image
Larry Ellison. Image: Trendrr

Here’s Musk’s situation if we consider what he needs to buy Tesla. He probably can’t come up with all the $600+ billion it would take to buy out Tesla at its current valuation. As the second richest man in the world, Musk values at $140 billion. Half his shares in Tesla are already pledged as collateral, and he has been limited to borrowing just 25 percent of the value of any additional shares by Tesla’s board members. We also cannot predict how much of his SpaceX shares are pledged as collateral. He would still somehow manage a fair-sized bite out of that $600 billion price tag by using his ownership in all four companies based on loans.

Musk would need a rich partner’s help. Seems like the least Larry Ellison, billionaire and Tesla board member, could do for Musk after he turned what was a modest investment into what is now many billions of dollars.

Musk would also maybe find a way for other loyal Tesla shareholders to be involved. Whatever alliance Musk brings about could just stand-in for X, buyout Tesla, and then bring the other companies into the fold.

SPAC X

Musk creates a SPAC (Special Purpose Acquisition Company), that has been on the rise this year and calls it X. He kick-starts it with a lot of his own money (could be from leveraged Tesla and SpaceX shares). The stock price soars immediately once it starts trading because i) SPACs are just what excites people now, apparently, ii) it’s Elon Musk. SPAC X buys Tesla.

MARS STREET

Unsatisfied with merely theorizing what the laws should be on Mars, Musk establishes MSE, a stock market on Mars called the Mars Stock Exchange. Modeled on terrestrial stock exchanges, he can make some tweaks to reduce some of his least-favorite aspects (like the Securities and Exchange Commission (SEC) and the quarterly reporting rules.)

BITCOIN

Musk pulls off the unthinkable and reveals he’s bitcoin creator Satoshi Nakamoto. He sells all his coins for a fortune and buys Tesla.

There we have it, Musk’s few options on how to create the kind of world-beating conglomerate that only shows once in a while, even in the movies. It may be a long shot, but that’s the whole Elon Musk thing. No wonder he thinks it’s a “good idea.”

SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

TechnoSports-Ad

Popular

TechnoSports-Ad

Related Stories

More from author

Top 10 Richest Football Club Owners in the World in 2024

Football, one of the most popular sports with an estimated 4 billion fans worldwide, is not just a sport anymore but has also turned...

Top 5 players with the most goals for Indian national football team

Football is still a sport that is on the rise in India, with it still finding its feet among the public, though in recent...

Top 10 Most Popular Sports in the World in 2024

Here we bring to you the Top 10 Most popular sports in the world From our early childhood years when we take sports very seriously...

Top 10 Semiconductor Foundries of The World in 2023

Know the Top 10 Semiconductor Foundries in the world here as of 2023 A semiconductor foundry, also known as a fab or se­miconductor fabrication plant,...