Elon Musk’s Tweet about going private was likely an act of desperation. Tesla will not meet stated profitability goals.

It’s looking increasingly likely that Musk’s August 7 Tweet about taking the company private was a purposeful distraction as well as a violation of security laws. Here is the Tweet once again.

Am considering taking Tesla private at $420. Funding secured.

— Elon Musk (@elonmusk) August 7, 2018

I commented on that Tweet in Private Lies: Musk Tweets He Will Take Tesla Private.

I never believed Musk secured funding, and that belief has now been proven true.

So what is that Tweet really about?

CoverDrive did an exception post on one aspect and I have a follow-up idea to consider.

For Tesla, Time Has Come Today

Please consider For Tesla, Time Has Come Today by CoverDrive.

At Tesla’s (TSLA) earnings conference call on August 1st, everything seemed to be under control. The call began with a lengthy discussion of 10x faster tensor processing, followed by a brief apology for terse behavior at the Q1 conference call. Honestly, everyone just seemed to be relieved that Elon avoided another CC meltdown.

With everything going so well at the conference call, what led to this surreal state of affairs launched by Musk’s tweets last Tuesday? Let me begin by saying that if Tesla could deliver a profitable third quarter, all of these shenanigans would be unnecessary. One can only conclude that the profit narrative was evaporating.

Musk needed something even bigger to take its place. And what could be bigger than proposing to take the company private?

The Hail Mary is Launched

Let’s take a closer look at why the change in narrative was necessary. Back in 2017, the narrative was purely one of growth. In fact, Musk stated he has “Zero Doubt” About 10,000 Units Per Week in 2018.

But in the ensuing 12 months, Tesla found themselves deep in the throes of “Manufacturing Hell”. It became clear that the visionary production level would never be achieved within the walls of Fremont. As a result, capital expenditures were scaled back dramatically and the narrative was changed to “profitability at 5,000 per week”.

Continued profitability is a really big deal, especially considering that additional capacity will not be available until the Shanghai Gigafactory is built. The profitability claim is coming from a company that has posted a $2.8B loss in the last 12 months. How is the turnaround possible? Has production hell been reduced to purgatory?