Loup Ventures

About the Author Loup Ventures

At Loup Ventures, research is in our blood. The spirit of our team has always lived on the curiosity to discover new insights that yield investment opportunities. For years we did this on Wall Street, focused on public tech companies. Now we invest in private frontier tech companies, but public companies like Tesla, Nvidia, and others are also meaningful innovators in frontier tech. These public companies are shaping the emergence of AI, robotics, autonomous vehicles, and AR/VR just as much as early stage startups. As a result, we’ve always kept a watchful eye on public market participants to inform our private investment strategy. Gene Munster is a managing partner and co-founder at Loup Ventures. Prior to Loup Ventures, Gene was a managing director and senior research analyst at Piper Jaffray where he covered technology companies including Apple, Amazon, Google and Facebook. During his 21-year tenure, Gene received many acknowledgements including: Top Stock Picker from Forbes, Best on the Street from The Wall Street Journal, and was widely recognized for his work on Apple. Gene holds a bachelor’s degree in finance and entrepreneurship from University of St. Thomas.

Tesla (TSLA) Would Create More Value as a Private Company; The Stock Is Still Attractively Valued


By Gene Munster

  • Tesla (NASDAQ:TSLA) announced it’s staying public. We were wrong in thinking there was a 2/3 chance that Tesla goes private.
  • We continue to believe Tesla would create more value as a private company. That said we believe shares of TSLA are undervalued given the company’s position in EVs, autonomy, and renewable energy.
  • The company cited three primary reasons for staying public: current TSLA investors’ limits on private investment, no path for retail investors to invest, and the process would be a distraction from ramping Model 3 production.
  • A fourth unstated reason may have been collateral damage from the recent media interactions of Musk and a perception from potential go private investors that he may be difficult to work with. We still think there is work for Musk to do to rebuild that trust in the market.
  • There is a silver lining, as Musk pointed out in the blog post, that this will allow him to fully focus on Model 3 production as he should be able to hand off most of the work related to the class action issues to his legal team.
  • These reasons will put further scrutiny on Musk’s August 7th “funding secured” comment.
  • We expect class action lawsuits against Musk around “funding secured” could linger for a year.
  • We expect Musk to continue to lead Tesla regardless of any outcome from the class action lawsuits.
  • We don’t know what level of personal liability Musk will be exposed to related to “funding secured” but note while the comment may seem clear (i.e. I have all of the money to take Tesla private), it is open to legal interpretation.
  • We believe Tesla will be insulated from any claims given the company has made it clear that “go private” is an Elon Musk initiative.
  • We expect a small fine from NASDAQ related to the failure to notify the exchange of pending material news from the August 7th go private tweets.

Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making any investment decisions and provided solely for informational purposes. We hold no obligation to update any of our projections and the content on this site should not be relied upon. We express no warranties about any estimates or opinions we make.

 

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