Connect with us

Business

Drop in shares of Tesla after SEC charges CEO Elon Musk with Fraud

Published

on

Elon Musk

On the last Thursday, Tesla shares dropped more than around 13 percent after the US Securities and Exchange Commission filed securities fraud charges against Chief Executive Elon Musk.

According to SEC, the tweets posted by Elon Musk were ‘false and misleading‘ and so files fraud charges against Musk. Musk Tweeted on August 7, that he had secured funding for taking the Company private at $420 per share.

 

Security and Exchange Commision said that the tweet let to the “Significant Market Disruption” is seeking civil penalties without noting an amount and to bar Elon from serving as an officer of a Public Company.

That Thursday afternoon Musk sent a statement calling it as an unjustified action.

The statement that Musk gave:

“This unjustified action by the SEC leaves me deeply saddened and disappointed. I have always taken action in the best interests of truth, transparency and investors. Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

Elon Musk tweeted in August for considering taking the company Tesla private, which was not embraced by the Tesla board members and many shareholders, and eventually arouse SEC to investigate.

Later on August 24, after the news of the SEC quest had become known, Musk blogged here that the Tesla will remain a Public Company.

Business

SoftBank to acquire majority stake in WeWork.

Published

on

SOFTBANK to Acquire WeWork

SoftBank a Japanese telecoms and Internet Company, which is very intimate and well known for funding and acquiring stakes in various Multi National Companies. SoftBank is about to take over around 50 percent of the company WeWork.

WeWork is an American company founded in 2010 by Adam Neumann and Miguel McKelvey that provides shared Workspaces and Offices to Technology Startups and services for entrepreneurs, freelancers, and startups, small and large Businesses.

SoftBank shares fell 5.4 % and suffered their biggest one-day drop in nearly two years on Wednesday (10 Oct 18′) partly on concerns about the prospects of eight-year-old WeWork whose outlook is tied closely to the ups and downs of the real estate market. Recent technology sector weakness also weighed on SoftBank’s shares, traders said.

WeWork_workspace

One of the sources told that the pricing and other details of WeWork investment are yet to be firmed up and the second source said Softbank is in talks to take a major investment in WeWork.

SoftBank and its giant Vision  Fund invested about $4.4 Billion August 2017 on WeWork and hold 2 board Seats in the Company. And Owns about 20 percent of the company.

Earlier the Wall Street Journal reported Softbank’s investment would be between around $15 billion to $20 billion and is most likely to come from the Softbank’s giant Vision Fund. Earlier June Journal says that the smaller Softbank investment discussion valued WeWork at up to $40 Billion.

wework_image

SoftBank’s other real estate-related investments include Compass, an online real estate marketplace, Katerra, a construction startup, and Indian hotel chain OYO Hotels.

SoftBank Group Corp, Tokyo Stocks

Image Courtesy: Reuters

SoftBank had earlier invested Billions of Dollars in U.S. ride-services firm UBER Technologies but owns a minority stack in the firm.

The Chinese unit of WeWork raised about $500 million in July from the investors including Hony Capital, SoftBank, Trustbridge Partners, to drive and expand its existence in the nation.

Continue Reading

Business

How Elon saved SpaceX and Tesla from Bankruptcy

Published

on

SpaceX & Tesla: you would be hard pressed to find two companies that are more popular today. And yet, in the not too distant past, both companies were basically unknown and were in fact simultaneously on the verge of bankruptcy. Today we’ll learn how Elon Musk did what no other American CEO had ever done before: he created and then rescued two companies at the same time and brought them both to multi-billion dollar valuations.
In the early 2000s Elon Musk achieved what any entrepreneur would dream of achieving: he successfully sold his company for over a billion dollars. He personally received $165 million, and now this is where most people would call it quits, but for Elon this was just the beginning. He wanted to change the world for the better, and one of his ideas was to send a greenhouse to Mars in order to boost public interest in space exploration and hopefully increase NASA’s budget. The idea was outlandishly ambitious, especially because Elon wanted to spend no more than $20 million on it. Now at the time, sending just 500 pounds to orbit could easily cost upwards of $30 million, but Elon had a plan. He travelled to Russia, where he tried to buy refurbished Intercontinental Ballistic Missiles. But the lowest price the Russians gave him was $8 million a piece, about 50% above his budget for the rocket itself. On the way back from Moscow, Elon did some back-of-the-napkin calculations and he figured out that the raw materials used in the making of a rocket were only about 3% of the final sales price.
Instantly, Elon knew what he had to do if he wanted to send anything to Mars, he’d have to build himself a vertically-integrated rocket company. To that end, he read several books on rocketry from the Cold War and in June 2002 he incorporated Space Exploration Technologies, or SpaceX for short. He then set about recruiting the right people who could make his vision a reality: his ideal candidate was young, single, educated and ready to give up his social life for SpaceX Elon’s recruitment strategy was very straightforward: he’d basically call up anyone fitting that profile, from fresh aerospace graduates to the rising stars in Boeing and Lockheed Martin. At first people thought Elon was making pranks, but within a year he had assembled some of the brightest engineers in America. Together they would design almost everything for SpaceX: from the engines and rocket bodies to even smallest details, like the circuitry. In many cases, the engineers could build stronger and more lightweight components at just a fraction of the regular price. These components would be used to build the Merlin engine, which in turn would power Elon’s first rocket, the Falcon 1. Development was far from smooth, of course, but nevertheless progress was being made.
But then, Elon decided to up the ante. In early 2004 he participated in the funding round of a new electric car company called Tesla. Elon personally invested a little over $6 million and in return became the chairman of the company’s board. Right off the bat Elon began applying his experience from SpaceX at Tesla. The company’s logo, for example, was created by the same people that made the logo for SpaceX. And of course, Elon was quick to use the same aggressive hiring strategy he used to assemble the SpaceX team. This time, however, instead of poaching employees from Boeing, he was hiring from Apple. Before long, the Tesla team was working on their first electric car, the Tesla Roadster. Back at SpaceX, engineers were clocking in 60-hour workweeks, while Elon was promising very ambitious timelines. In fact, his original estimate was to launch the Falcon 1 in November 2003, just 18 months
after the company was founded.
Of course, that estimate got pushed back, and the Falcon 1 wouldn’t lift off until March 2006, when it spent a total of 41 seconds in the air before crashing down violently. Like for SpaceX, 2006 was a big year for Tesla. In July, the Tesla Roadster made its first official appearance and recorded 100 pre-orders in its first day.  But, like with the Falcon 1, the actual production wasn’t going very well. Tesla’s CEO at the time was Martin Eberhard, and like Elon he was promising unrealistic timeframes. At first, the idea was to deliver the Roadster in early 2007, but an escalating series of production issues pushed the release date farther and farther away.  In the end, Martin’s mismanagement of the Roadster project got him ousted from the very company he had founded, leaving Elon in charge of everything. With full responsibility over both companies, the stress was starting to pile up. Elon witnessed the second failure of the Falcon 1 rocket, which didn’t complete its only 2007 flight. At Tesla, Elon struggled fixing the mess left behind by Eberhard, and in fact, the Roadster’s production would not begin until March 2008.
But then, things got worse: in August, Elon launched his third Falcon 1, which never made it to orbit and then just one month later his wife publicly announced their divorce. Both of Elon’s companies were struggling to make a viable product and were running out of money fast. In fact, by late October Tesla had only $9 million left to fund the entire company. Salaries were being delayed and Elon was faced with a choice.  He had already spent $70 million on Tesla and $100 million on SpaceX. With what little he had left, Elon had to choose whether to fund and secure the future of one company or to risk everything and gamble on saving both. Fate gave Elon little time to think: the fourth and potentially final flight of the Falcon 1 was approaching. On September 28th, Elon got ready for his last chance to survive. He stood in the SpaceX control center in LA and waited in silence. Then, the rocket took off, and the center burst out in ecstatic applause. SpaceX had finally delivered a working product: the Falcon 1 became the first privately-developed rocket to go into orbit around Earth. But Elon wasn’t in the clear just yet that a working product would mean nothing if the company behind it went bankrupt. In a frantic scramble, Elon had to figure out funding solutions for both his companies before the end of 2008, and the timing couldn’t have been worse. One of the largest American banks, Lehman Brothers, had collapsed and the global economy was heading towards disaster.
In the midst of this, Elon was raising all the personal funds he could to save Tesla: he liquidated his few remaining assets and even got his cousins to pitch in. But getting investors on board doesn’t happen overnight, and December was creeping in. Elon had managed to scrape together $20 million himself, another $20 million from various investors and $50 from the German car company Daimler. Days before Christmas, it seemed as if only Tesla was going to make it, but then on December 23 Elon received a very unexpected call: NASA had awarded SpaceX with a $1.6 billion contract to resupply the International Space Station. Then, on Christmas Eve, the Tesla deal went through. Elon had successfully saved both companies from bankruptcy. In later interviews, he’d recall these final days in December in painful detail. He’d admit that this was the closest he had ever gotten to a nervous breakdown and honestly, any lesser man would’ve outright given up. So regardless of the struggles Elon might be facing today, it’s worth knowing that ten years ago he overcame the impossible. This story is just a brief chapter in the journey of Elon Musk. You can read the complete story of his life in his autobiography which is even more facinating.
Do share this article with your friends.
Continue Reading

Business

Why Is America So Rich?

Published

on

Why is America So Rich

The United States is the world’s most prosperous economy. It’s been that way for so long, over a hundred years. That we take it for granted. But how did it happen? There are many answers, of course.

One is that the United States values the free market over government control of the economy. But here’s a point that is seldom made: It didn’t begin that way. Before the country placed its trust in the free market, it trusted the government to make important business decisions. Or to put it another way, only after the government failed repeatedly to promote economic growth and only after private enterprise succeeded where the government failed, did the United States start to develop a world-beating economy.

Let’s look at three telling examples: In 1808 John Jacob Astor formed the American Fur Company and marketed American furs around the world. Europeans adored beaver hats for their peerless warmth and durability. Astor gave them what they wanted.

American Fur Company

American Fur Company

Instead of leaving the fur business to capable entrepreneurs like Astor, the government decided it wanted to be in on the action. So, it subsidized its own fur company run by a self-promoting government official named Thomas McKenney. McKenney should have won the competition. After all, he had the federal government backing him. But while Astor employed hundreds of people and still made a tidy profit, McKenney’s company lost money every year.


Also Read: Reason Behind Indian Economy Growth

Thomas McKenney

Thomas McKenney

Finally, Congress in 1822, came to its senses and ended the subsidies for McKenney and his associates.

A similar situation developed in the 1840’s around the telegraph. The telegraph was the first step toward the instant communication we have today. Invented by Samuel Morse, the telegraph transmitted sound – as dots and dashes representing letters of the alphabet.

Morse, more of an idealist than a businessman, agreed to let the government own and operate the telegraph “in the national interest.” But the government steadily lost money each month it operated the telegraph.

telegraph

telegraph

During 1845, expenditures for the telegraph exceeded revenue by six-to-one and sometimes by ten-to-one. Seeing no value in the invention, Congress turned the money-loser over to private enterprise. In the hands of entrepreneurs, the business took off.


Also Read: Why is Dubai so Rich?

Telegraph promoters showed the press how it could instantly report stories occurring hundreds of miles away. Bankers, stock brokers, and insurance companies saw how they could instantly monitor investments near and far. As the quality of service improved, telegraph lines were strung across the country – from 40 miles of wire in 1846 to 23,000 miles in 1852.

By the 1860s, the U.S. had a transcontinental telegraph wire. And by the end of that decade entrepreneurs had strung a telegraph cable across the Atlantic Ocean. Why didn’t the US government profitably use what Morse had invented?

Part of the answer is that the incentives for bureaucrats differ sharply from those of entrepreneurs. When the government operated the telegraph, Washington bureaucrats received no profits from the messages they sent, and the cash they lost was the taxpayers’, not their own. So government officials had no incentive to improve service, to find new customers, or to expand to more cities.

But entrepreneurs like Ezra Cornell, the founder of Western Union, did. Cheaper, better service meant more customers and more profits. Just fifteen years after Congress privatized the telegraph, both the costs of construction and the rates for service linking the major cities were as little as one-tenth of the original rates established by Washington. In the steamship business, we see the story repeated yet again.

Western Union

WU

During the 1840s, regular steamship travel began between New York and England. The government placed its bets on shipowner Edward Collins, a man more skilled at political lobbying than at business. While Congress funded Collins, Cornelius Vanderbilt started his own steamship company. Vanderbilt cut the costs of travel, filled his ships with eager passengers, and built a fabulously successful business, soon leaving Collins in his wake.

Collins failed because he didn’t feel a need to improve, or even provide safe and regular service (for example, two of his four ships sank, killing hundreds of passengers). If he lost money, there was always another politician to appeal to.


Also Read: India, the new SUPERPOWER?

Vanderbilt, in contrast, had to serve his customers or he would have lost his company. You’d think we would have learned our lesson by now: economic prosperity comes from free enterprise, not from government subsidies. But it’s a lesson we have to learn every generation.

So, this was all about how America became Rich. Comment your thoughts on America (United States).

Source: PragerU
Continue Reading

Trending