Elon Musk considers a private Tesla in tweet, shares jump

Fredrick Soto
August 8, 2018

"Funding secured", Musk tweeted in early afternoon.

Several financial industry insiders were unclear why trading was halted, whether it's because Musk is trying to initiate a buyout or because he could be violating FCC regulations.

Tesla has burned through cash while struggling to produce the Model 3, its lowest-priced electric vehicle.

Musk has frequently expressed dismay at Tesla's treatment as a public company and has clashed with regulators, critics and reporters. Musk has vowed that the company will start turning a regular profit in the second half of this year.

In another tweet later in the day, Musk assured his vast network of followers that Tesla would remain loyal to those that had supported the company on the journey to where it was today.

The most obvious equity partners for Musk would be a sovereign wealth fund such as Saudi Arabia's Public Investment Fund (PIF) or major technology investment funds such as SoftBank Group Corp's Vision Fund, bankers said. Short sellers are speculators who effectively bet against the price of Tesla's shares, potentially adding to the volatility of Tesla's stock price and giving them a vested interest in seeing Tesla fail.

In his blog post, Musk emphasized that the intention was not to merge SpaceX and Tesla, a strategy that some have speculated about in the past.

While the decision isn't set in stone, Musk layout out a provisional plan to take the company private.

Tesla did not return repeated calls for comment from CNBC, nor did the Securities and Exchange Commission, as of this publishing. Whether he meant to do that or not, his tweet certainly had that effect: By the time trading halted, Tesla's market value had soared to $61.74 billion, a significant raise from its pre-tweet $58 billion.

Musk took to Twitter, announcing he was thinking about taking Tesla private for $420 a share.

"Musk does not want to run a public company", said Gene Munster of Loup Ventures, as Tesla's ambitious mission makes it "difficult to accommodate investors' quarterly expectations". He also stated that this is not an attempt to assume more control over his company - Musk owns approximately 20 percent of Tesla right now, and he doesn't see that changing after the company goes private.

The memo included some of the details Musk had tweeted earlier in the day; investors could stay in or be bought out at $420 a share, and shareholders would have an opportunity to sell or buy every six months.

Musk said he hoped current shareholders would keep their stock.

Tesla CEO Elon Musk shocked investors when he tweeted to his 22.3 million followers on Tuesday suggesting the electric vehicle maker could go private at $420 per share, while noting, "funding secured". Eventually, the SEC decided that companies and executives could use social media to pass along information, as long as shareholders know ahead of time to look on those platforms.

The mysterious tweet sent out this morning read: "Am considering taking Tesla private at $420". He added that in the future, when Tesla reached a "phase of slower, more predictable growth", the firm could go public again.

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