Latest News: Technology |  Celebrity |  Movies |  Apple |  Cars |  Business |  Sports |  TV Shows |  Geek

Trending

Filed under: News

 

Would Elon Musk Sell Tesla To GM Or Ford In PayPal Redux?

1 Updates
Would Elon Musk Sell Tesla To GM Or Ford In PayPal Redux?
Photo Credit: Forbes
 
 

Comments

Full Story

Would Elon Musk Sell Tesla To GM Or Ford In PayPal Redux?

Tesla has been on a remarkable run this year, with the stock up nearly 360% as the company rolled out its award-winning Model S to thousands of new customers. But perhaps that means its a perfect time to sell out to an established player like Ford or GM.

That’s what Yra Harris of Praxis Trading speculated on CNBC this week, predicting that Tesla may be sold to General Motors in the coming year. Such a move would come as surprise to many, given billionaire Tesla CEO Elon Musk’s rock star status. But Musk has already made such a play before: when he sold PayPal to eBay in 2002.

Back in 2002, PayPal was the upstart disruptor. It had an initial public offering in February 2002 and was quickly valued over $1.2 billion. At the time, eBay was trying to introduce its own e-payments system, but PayPal was already catching on. Why re-invent the wheel? eBay grabbed PayPal for $1.5 billion and has never looked back. PayPal now accounts for roughly 40% of eBay’s revenue.

Musk made out well, too. He owned over 11% of PayPal stock at the time of the deal, making him the largest shareholder. Musk pocketed a big financial windfall which helped fund his new endeavors, including Tesla, SpaceX and SolarCity.

Why not do that again? General Motors, for example, would have plenty of reason to do a deal. Like eBay struggling to create its own electronic payments system, GM is working on its own electronic-powered cars. Jumping to Tesla’s award-winning platform would be a much easier path. Tesla also might like the financial stability and operations know-how of a global automaker. The company’s Model S car is largely limited by production capacity, rather than demand, and GM could fix that.

Musk, of course, would also gain. He’s again the largest shareholder, with over 27% of Tesla including options. The total could be worth $5 billion or more in a deal. With that kind of windfall, the itinerant entrepreneur could fund SpaceX, his pet Hyperloop project, or other new ventures — just as he did with his PayPal winnings. The question is whether he is interested in continuing his uphill battle in the car space, especially dealing with mundane details like regulators investigating Model S car fires.

The biggest obstacle to such a deal, in reality, is Tesla’s sky-high price. Tesla generates barely more than 1% of GM’s total revenues, but is trading at a market cap about one-third as large as GM. It’s 11x price to sales ratio (ttm) compares to GM’s 0.37x and Ford’s 0.41x. With that kind of valuation, Tesla may be too expensive for any of the market leaders to make a play.

Follow Brian on Facebook and Twitter.

In Pictures: Elon Musk’s Hyperloop

Source: Forbes

 

iPad Air Giveaway. Win a free iPad Air.

You Might Also Like

Updates


Sponsored Update

Update: 1

Centurion Corp acquires Penang land to develop workers dorm

Source: The Edge Singapore

Centurion Corporation said it has agreed to acquire a piece of land located at Seberang Perai Selatan in Penang, Malaysia, for RM6.3 million ($2.45 million). This marks the group’s first acquisition in another state of Malaysia outs ...
Source: The Edge Singapore   Full article at: The Edge Singapore Aug 12 2014, 9:21am CDT
 


Advertisement


More From the Web

Shopping Deals

 
 
 

<a href="/latest_stories/all/all/31" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

 

Comments

blog comments powered by Disqus

Latest stories

&#039;NFL Now&#039; Launches on Apple TV With Breaking Football News and Highlights
'NFL Now' Launches on Apple TV With Breaking Football News and Highlights
The video content can be viewed on the iPhone, iPad, Mac (via a web browser) and other connected devices such as Roku, Amazon Fire TV, and as of today, the Apple TV channel that was leaked earlier in the month.
 
 
Intel and Unity announce collaboration to bring Android support to x86 devices
Intel and Unity announce collaboration to bring Android support to x86 devices
Unity will add Android support for Intel’s current and future x86 chips, including the Core and Atom families.
 
 
iPad Air 2 will double-down on RAM
iPad Air 2 will double-down on RAM
The upgrade might be incoming due to the multi-window feature for iPad we’ve been hearing about.
 
 
Walmart discounts on iPhone 5s and 5s
Walmart discounts on iPhone 5s and 5s
Walmart discounts 16GB iPhone 5c to 97 cents, 16GB iPhone 5s to $79 for 90 days
 
 
 

About the Geek Mind

The “geek mind” is concerned with more than just the latest iPhone rumors, or which company will win the gaming console wars. I4U is concerned with more than just the latest photo shoot or other celebrity gossip.

The “geek mind” is concerned with life, in all its different forms and facets. The geek mind wants to know about societal and financial issues, both abroad and at home. If a Fortune 500 decides to raise their minimum wage, or any high priority news, the geek mind wants to know. The geek mind wants to know the top teams in the National Football League, or who’s likely to win the NBA Finals this coming year. The geek mind wants to know who the hottest new models are, or whether the newest blockbuster movie is worth seeing. The geek mind wants to know. The geek mind wants—needs—knowledge.

Read more about The Geek Mind.