Boring Company Stock: Can You Buy IPO?

The Boring Company, one of Elon Musk’s newest social progress enterprises, has dumbfounded some of the world’s most ambitious entrepreneurs. But, can you buy stock in The Boring Company?

Elon Musk is a once-in-a-generation visionary, and I refer to him as the 21st century’s Albert Einstein. Heck, even Charlie Munger (Warren Buffett’s side man) has called Musk a genius.

The Boring Company has set their goals extremely high, and they have earned their fair share of criticism across the engineering community. Nevertheless, here is a better look inside the up-and-coming firm!

Boring Company History

The Boring Company has an excellent website, addressing almost any possible question someone might have. It’s a brilliant way to learn a little more about the company’s vision, history, and future outlook.

“To solve the problem of soul-destroying traffic, roads must go 3D, which means either flying cars or tunnels are needed.

Unlike flying cars, tunnels are weatherproof, out of sight, and won’t fall on your head. A large network of tunnels many levels deep would help alleviate congestion in any city.

No matter how large a city grows, more levels can always be added.

Created by Elon Musk, founder of Tesla and SpaceX, The Boring Company (TBC) constructs safe, fast-to-dig, and low-cost transportation, utility, and freight tunnels

Our public transportation solution, Loop, is designed to be the fastest and safest system ever.

There is no practical limit to how many layers of tunnels can be built, so any current or future capacity outcome can be achieved.

This flexibility contrasts with a surface system, where adding a lane to the road is often difficult.”

This project doesn’t surprise me in the least, especially because it’s coming from Elon Musk. If investors have learned anything from Tesla: don’t doubt the genius and his tenacious work ethic.

Traffic Congestion

CNN has been covering the absolute nightmare on Earth, AKA traffic congestion in America’s major cities.

“Drivers in LA spent, on average, over 102 hours in traffic at peak times in 2017, according to transportation analytics firm Inrix.

That’s the most time drivers spent in rush-hour jams in any city in the world. Other US cities such as New York City and San Francisco suffer from similar levels of overall congestion as LA, according to Inrix.

Their geographic areas, however, are much smaller than that of LA, meaning that drivers have a shorter commute, and hence spend less time in congestion during rush hour.

The five most-congested segments of the city are all on its highways, specifically, on Interstate 405, which connects north and south LA, and US Route 101, a major highway that crosses the West Coast.”

boring company stock can potentially solve traffic congestion costs
Source: Statista and Inrix

Los Angeles and Southern California, in general, have relatively poor (public) transit services,” says Michael G McNally, a professor at the Institute of Transport Studies at the University of California, Irvine.

“There really aren’t options (other than) cars for most travel in most areas. But even within transit-served areas, overall travel times are much greater by transit than by car.”

Speaking from personal experience, I can attest that traffic congestion is one of the worst parts about working in an office. After working a long day, who wants to spend another hour commuting? Not me!

The problem is our office buildings are three dimensional (skyscrapers), but workers can only currently travel in two dimensions. The results are traffic jams, insurance claims, lost family time, and headaches.

Consumer Demand and Profitability

The Boring Company has not publicly disclosed any financial statements, so I have no idea how profitable the venture may be. However, Musk has showed us he’s really not interested in making that much money.

Elon would rather devote his time to solving huge, societal problems using scalable, technology-driven solutions.

Through attending various work conferences over the years, the biggest complaint I have heard about living in a major city is commute times. One San Francisco co-worker said they had a 2 hour commute.

Thus, if the price was right, I imagine The Boring Company would have plenty of consumer demand. I don’t know if there would be a toll or have any further idea on how the product pricing would work.

Maybe it would be similar to subway systems, and you would purchase a pass?

Public-Private Partnership

You might be asking, “But, how will The Boring Company fund these massive projects? My guess would be through a public-private partnership. This is how most infrastructure is financed in America.

Investopedia has a more in-depth article on various aspects of public-private partnerships.

“Public-private partnerships involve collaboration between a government agency and a private-sector company that can be used to finance, build, and operate projects, such as public transportation networks, parks, and convention centers.

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Financing a project through a public-private partnership can allow a project to be completed sooner or make it a possibility in the first place.

Public-private partnerships often involve concessions of tax or other operating revenue, protection from liability, or partial ownership rights over nominally public services and property to the private sector.

Public-private partnerships typically have contract periods of 25 to 30 years or longer.

Financing comes partly from the private sector but requires payments from the public sector and/or users over the project’s lifetime.

The private partner participates in designing, completing, implementing, and funding the project, while the public partner focuses on defining and monitoring compliance with the objectives.

Risks are distributed between the public and private partners through a process of negotiation, ideally though not always according to the ability of each to assess, control, and cope with them.”

Musk: Best CEO?

Who would run the day-to-day operations for The Boring Company? Well, the plan is for Elon to run the show, but is it feasible to be the CEO of both Tesla and The Boring Company?

Inc tends to believe this would be the best arrangement for the future prospects, and I tend to agree.

“In particular, journalists and analysts seem alarmed by the seemingly haphazard, hasty way that Musk is changing Tesla in order to make the Model 3 profitable.

Consider: in the space of two short weeks, Musk has announced he’s making changes, immediately fired hundreds, perhaps thousands, of subcontractors, announced he’s flattening management, and has pushed out two highly-visible executives.

As the mainstream sees it, an experienced, mature CEO would never make such drastic and dramatic changes so quickly.

A great CEO would roll out a long-term plan, brief investors, and execute that plan slowly, while measuring all the way.

Because Musk isn’t following the traditional playbook, says the mainstream, Musk is an impractical visionary who should probably be replaced by a more seasoned executive. Musk is, in short, a lousy CEO.”

The article further goes on to state that because Musk is so unconventional, he’s the perfect CEO for this role. You need an unconventional leader to accomplish unconventional tasks.

Boring Company Stock IPO

The Boring Company IPO date is currently unknown. The firm is still developing their core operations and consistently working on technological feasibility. And, that’s just the first set of problems.

There are going to be numerous additional safety, zoning, permitting and legal issues. I mean c’mon, you’re building a tunnel. That’s a liability waiting to happen.

Musk has been able to secure funding for employee payroll and research development costs so far. As long as financing is available, a Boring Company IPO is not essential.

Personally, I highly doubt Boring Company stock will ever go public. As previously mentioned in the article, Musk is more focused on solving problems than enriching shareholders.

He has had infamous fights with shareholders and analysts during Tesla earnings calls. He once even told an investor “his questions were boring”.

Boring Company Stock Price

Nevertheless, let’s assume for the sake of argument that Boring Company stock does go public. What would the price be?

Well, The Boring Company recently raised its first outside investment to fund development of their tunnel transportation systems. Bloomberg has been following their stages of funding so far.

“The company authorized the sale of $120 million in stock, according to a securities filing that was obtained by the Prime Unicorn Index.

The investment is in addition to the $113 million the company raised last year.”

The Boring Company would have the same CEO of Tesla, so we can make some rational assumptions about financing structure. This (of course) is an executive decision.

Tesla prefers to give-up less equity, and this is because their firm’s cost of equity greatly surpasses their cost of debt. Especially with historically low interest rates!

Based on an approximate $5 billion valuation, IPO publicity boost, Musk as CEO, and similar capital structure to Tesla, I would guess the stock price to hover around $25.

Boring Company Stock Alternatives

Boring Company stock isn’t publicly available at the moment, but you can still profit off the back of Elon Musk’s genius and technology-driven firms.

Here are a few other names to keep an eye out for in the near future or peer competitors.

Work From Home: Update

An interesting development since the initial release of this article was the massive reversal in traditional workplace dynamics. I have been working from home for almost a year at this point.

Elon’s thesis behind The Boring Company was the massive traffic jams on morning and evening commutes for work. However, almost everyone who can is working from home.

It doesn’t seem like this trend is going to end any time soon either. Working from home means no commute, wearing comfortable clothes, and saving money on gas/food.

I personally love working from home, and most of my friends and co-workers do too. Will there even be a need for The Boring Company if traffic congestion is a thing of the past?

Can You Buy Stock in The Boring Company?

No, you cannot buy stock in The Boring Company, but you will be able to purchase shares in any future IPO. Based on my rough analysis, the stock price could launch around $25 per share.

The popularity of Musk would certainly give the stock price a runway upwards. We have seen recent IPOs double (even triple) on the first day retail investors can buy general shares.

Who knows, The Boring Company, may even jump more than that. I wouldn’t be surprised to say the least. Tesla has had quite the run, and investors don’t seem too concerned about the underlying earnings.

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