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Musk looking to privatise Tesla

08 August, 2018, 08:28 | Author: Melinda Barton
  • Elon Musk tweet 'Am considering taking Tesla private at $420. Funding secured'

"Funding secured", Musk said on Twitter, without disclosing the source of the funding.

Mr Musk has had feuds with regulators, critics and reporters, and questions remain about Tesla's production and manufacturing difficulties, long-term demand for its cars and uncertainty over funding. Factoring in $US8.8 billion ($11.9 billion) in debt, Musk's ganja-friendly target price to go private would value the company at around $US80 billion ($107.8 billion).

Mr Musk's statement came at a time when the electric auto maker faces financial constraints, and barely a week after the company announced it had made its biggest net loss to date of $717.5m (£547.6m) during the second quarter ending in June.

In a subsequent blog posted on Tesla's website, Musk said that while no final decision had been made, "the reason for doing this is all about creating the environment for Tesla to operate best".

DON'T MISS: Analysis: Did Tesla's earnings call and stock surge save Musk and skip skeptics? Short sellers borrow shares from other investors and then immediately sell them on the premise that they will be able to buy them back at a lower price later to replace they stock they borrowed.

When asked on Twitter whether he was serious, Musk replied: "Yes".

$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.


Green Car Reports reached out to Tesla for comment and is awaiting comment. Funding secured."Musk's tweet followed a report from the Financial Times that the Public Investment Fund of Saudi Arabia had acquired a $2 billion stake in the company".

Tesla's shares jumped as high as US$371.15 in afternoon trading before trading was halted.

Tesla CEO Elon Musk, in true Elon Musk fashion, took to Twitter to think out loud about his electric vehicle business.

Palo Alto-based Tesla, named after the physicist Nikola Tesla, went public in 2010.

Musk's rationale for $420 a share? 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 company had a market value of $58bn as of Monday's close. With approximately 170 million outstanding shares, Musk's proposed privatization of the company at $420 per share would require $71.4 billion, about a 17 percent increase. "His mission for Tesla (to accelerate the globe's adoption of sustainable energy) is both grand and long-term, making it hard to accommodate investors quarterly expectations". He went on to say he hopes all shareholders stick with the company but, if not, this is their time to exit while still making a "nice premium".

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.

Taking Tesla private would be an extreme albeit effective way of muting Tesla's bears, according to Michael O'Rourke, chief market strategist at JonesTrading.

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