Economy

Elon Musk considering taking Tesla private

Elon Musk considering taking Tesla private

About an hour and 20 minutes after Musk's initial tweet, Tesla actually did halt trading of its shares, pending the release of news from the company.

Gerber Kawasaki CEO Ross Gerber and FBN's Hillary Vaughn on how Tesla CEO Elon Musk tweeted that he may take the company private. However, they are still a long way off the $420 price teased by Musk.

Musk expounded on the idea in an email sent to Tesla employees today, which has since been published on the Tesla website. It burned through less cash ー $739.5 million in Q2 compared to $1 billion the quarter before ー and managed to increase production significantly of the mid-range Model 3 sedan. The stock rallied 11% on the day, burning short sellers, who Musk has publicly blasted, to the tune of $1.32 billion per S3 Partners and sending many investors scrambling.

Musk has followed up with an offer for current stockholders to keep their shares and "go private" - without knowing further details on the company's board and governance structure.

At that price, the buyout would cost almost $US72 billion, based on Tesla's outstanding stock as of July 27, but it is unlikely the deal would cost that much because Mr Musk owns a roughly 20 per cent stake in the Palo Alto, California, company. At the time, Tesla shares were trading at about $360 per share and went as high as $371.15 before giving back gains later in the afternoon.

"Am considering taking Tesla private at $420", Mr. Musk wrote. He says the move could be structured so that so that all shareholders will have a choice to remain investors in the private company or sell their stock for $420 (£324.58 / €362.11) per share.

While Mr Musk has previously discussed the drawbacks of being a public company, he has also used his Twitter account in ways that surprised investors.

More news: Man City and Chelsea lock horns in Community Shield

It was not clear if Musk was serious as he has a history of erratic tweets, and the company did not immediately respond to request for comment. On the other hand, many of Tesla's most passionate backers bought stock because they believe the price will eventually go to stratospheric levels.

The company's stock had been up slightly earlier in the day after the Financial Times reported that Saudi Arabia had quietly built a large stake in Tesla.

In fact, Tesla has turned a narrow profit in only two quarters since it became a public company in 2010.

At $420 per share, it would cost about $71 billion to take Tesla private.

Basically, I'm trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible, and where there is as little change for all of our investors, including all of our employees, as possible.

Finally, this has nothing to do with accumulating control for myself.


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