Elon Musk considering taking Tesla private

08 August, 2018, 08:25 | Author: Salvatore Jensen
  • Elon Musk tweet 'Am considering taking Tesla private at $420. Funding secured'

During the conference call accompanying the results, Mr Musk said he expected the company to avoid going back to the markets for capital and to be "essentially self-funding on a go-forward basis".

What seemed like a joke at first may be serious and as the company's stock price went insane, trading had been halted.

Musk and his luxury automaker have been under enormous pressure to overcome repeated delays and deliver on promises of producing 5,000 of Tesla's more affordable Model 3 cars per week.

Mr Musk has been under intense pressure this year to prove he can deliver on his promise to turn his money-losing company into a profitable higher-volume manufacturer.

"My hope is all current investors remain with Tesla even if we're private", Musk tweeted.

"The short position is the best thing the stock has going for it. "Musk vs The Shorts" is a far better narrative than 'Tesla vs Mercedes/Audi/Porsche, '" Chanos said.

But time and again Musk and Tesla have been given more time to achieve success. On the other hand, many of Tesla's most passionate backers bought stock because they believe the price will eventually go to stratospheric levels.

When asked on Twitter whether he was serious, Musk replied: "Yes.It saves a lot of headaches". He also said he does not now have a controlling vote in the company and wouldn't expect a single shareholder to have one if the company were private.

$420 per share would be a significant premium on where Tesla is now trading, and also its performance over the first half of the year.

Initial evidence indications that Tesla did not immediately respond when the PIF's initially expressed interest to CEO Elon Musk.

The Financial Times is reporting that Saudi's Public Investment Fund (PIF) has built a significant stake in Tesla - to the tune of between 3% and 5% of the all-electric vehicle maker's shares this year.




Tesla's shares were up 6.5pc at $363.46.

Beyond skyrocketing Tesla's valuation to over $70 billion at $420 a share, taking the company off of the public markets would relieve some of the pressures of having to report earnings and face volatility from traders, thus giving the company better financial footing.

"He originally brought Tesla public in 2010, given he could no longer personally finance its growth, and has continually expressed his frustration with the company being public".

He also said trading its stock publicly "means that there are large numbers of people who have the incentive to attack the company".

Shares of Tesla closed up 11% after being briefly halted in trading by the Nasdaq to release the letter.

Gene Munster, managing partner at Loup Ventures and a top tech analyst, said the odds that Musk will take Tesla private were about one in three.

His US$12b Tesla stake would presumably be rolled into the private enterprise.

This is especially true for a company like Tesla that has a long-term, forward-looking mission.

His asking price of $420 would be 22 percent of Monday's closing share price, and almost 9 percent above the stock's all-time closing high of $385.

While it is unlikely the SEC will take action on Tuesday's tweet, there are a group of investors who are likely to sue.

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