Elon Musk tweets he is taking Tesla private at $US420

Lloyd Doyle
August 8, 2018

The executive posted on Twitter, "Am considering taking Tesla private at $420 a share".

The stock closed at $379.57 after trading was halted for an hour and a half on Tuesday afternoon due to volatile activity caused by Musk's tweets and a report that a Saudi Arabian sovereign wealth fund had accumulated $2 billion in shares. Musk, 47, has already pledged some of his shares of Tesla's common stock to secure bank borrowings, according to a June 2018 filing.

"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".

Earlier today, I announced that I'm considering taking Tesla private at a price of $420/share.

At 3:28 p.m., Tesla tweeted a link to a blog posting on its website titled "Taking Tesla Private", in which Musk said: "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".

Munster predicted a one-in-three chance that Musk will actually take Tesla private. He claims Tesla is the most shorted stock "in the history of the stock market" and that going private would remove them from the narrative.

He also said he would not sell his stake.

For comparison's sake, General Motors Co. has a market cap of $54 billion; Ford Motor Co.'s is about $40 billion.

At that price, the buyout would cost almost $72 billion, based on Tesla's outstanding stock as of July 27, but it's unlikely the deal would cost that much because Musk owns a roughly 20 percent stake in the Palo Alto, California, company. 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.

"Being forced to sell at $420 in a go-private deal would be a little bit of a bummer because, although myself and all the other Tesla investors would make money at an all-time high, we'd be missing out on a long-term ride", Russell said.

Last week Tesla said it had achieved its goal of producing 5,000 Model 3 vehicles per week by the end of its second quarter in June, but burned through $739.5m (£565.2m) in cash during the period in order to do it.

"Once Tesla enters a phase of slower, more-predictable growth, it will likely make sense to return to the public markets", he wrote.

Third, the intention is not to merge SpaceX and Tesla.

Musk was clear in his email that a final decision has not been made, and, come to think of it, it's not even clear if this move would be possible.

Tesla shareholders would need to vote in favor of going private before the decision is finalized, Musk concluded.

Despite the unfolding media "shitshow", Musk still seems to view privatization as an "enormous opportunity for us all".

Other reports by Iphone Fresh

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