Mr. Musk Made the Right Call to Abandon Going Private

By August 25, 2018 Blog

        On Friday night at 8 pm, well after the market had closed, Mr. Musk disclosed that he was abandoning his effort to take Tesla private.  For those who read the detailed article linked to the previous post on reverse engineering the price of Tesla, this should not have come as a surprise.  Recall that a conclusion of the article was that “All of this suggests that a buyout of Tesla at $420 is not economically rational and is unlikely to occur.”  In our view at the Cornell Capital Group, this underscores the importance of the reverse engineering exercise.  It not only provides insight into the relation between stock prices and expectations of financial performance, it also has potential predictive power.