Economy

Elon Musk just tweeted he's considering taking Tesla private

Elon Musk just tweeted he's considering taking Tesla private”

Tesla CEO Elon Musk is laying out his rationale for possibly taking the company private, saying the move would free the electric auto maker to focus on long-term goals, rather than the quarterly concerns of Wall Street.

- Tesla's stock was halted on the NASDAQ on Tuesday as CEO Elon Musk tweeted he's considering taking the electric vehicle company private.

Earlier in the day, the Financial Times reported that Saudi Arabia's sovereign wealth fund, overseen by Crown Prince Mohammed bin Salman, has built an undisclosed stake of between three and five per cent stake in Tesla. A price of US$420 a share would value the company at US$72b, nearly double Ford.

It didn't help that some interpreted $420 as a veiled reference to 4-20, which is a magic number for marijuana users. About an hour and a half later trading resumed and rose by more than 11 per cent. "Funding secured", Musk tweeted in early afternoon.

Tesla's shares were at $362.74 prior to the share halt being lifted. Musk also said he had no intention of selling his stake, and he said he would remain on as CEO.

Making money has proven elusive for Tesla while it has been investing in electric auto technology and ramping up production of its vehicles, including a sedan with a starting price of $35,000 to appeal to a broader audience. They'll have an option to sell at $420 per share or to hold onto their shares and become shareholders of the new private company.

He added: "As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders".

In an internal email, sent from Musk to Tesla employees on August 7, the CEO confirmed most of this, as he explained his thinking directly. However, the structure envisioned for Tesla is similar in many ways to the SpaceX structure: external shareholders and employee shareholders have an opportunity to sell or buy approximately every six months. They are also shielded from the ups and downs of the stock market.

Some people on Twitter immediately began speculating that Musk may have wandered into a potential regulatory violation with his tweet.

"There's a lot of noise that surrounds a public company and people are constantly commenting on the share price and value", Musk said in 2015.

Elon now owns about 20 percent of Tesla and so he would need something like $50 billion in additional capital to fully privatize the company, along with a shareholder vote of "yes" to the move. Either way, the future is very bright and we'll keep fighting to achieve our mission.

To announce a privatization plan in a series of tweets is unusual, to say the least.

After Musk, the next largest shareholders in Tesla are the mutual fund giants T. Rowe Price and Fidelity, with stakes of more than 9% and 8%, respectively, according to Thomas Reuters Eikon.



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