Musk Says He May Take Tesla Private, Shares Roar
- Author: Eleanor Harrison Aug 08, 2018,
Aug 08, 2018, 0:54
By taking Tesla private, Musk believes that the company will be able to sharpen its long-term focus of revolutionizing an automobile industry dominated by fuel-combustion vehicles without having to cater to investors' fixation on how the business is faring from one quarter to the next.
In his typically unorthodox fashion, the eccentric Musk dropped his bombshell on his Twitter account, which he has used as a platform for pranks, vitriol and now for a proposal to pull off one of the biggest buyouts in USA history. "Funding secured." At 2:08 p.m., trading of Tesla shares was halted at $367.25, up 7.4 percent over Monday's close. This would enable you to still share in the growing value of the company that you have all worked so hard to build over time.
Musk said he has no intention of combining the electric auto maker and the private space company under one umbrella.
"T$3 he reason for doing this is all about creating the environment for Tesla to operate best", the email reads.
Tesla did not immediately confirm if Musk himself sent the tweet or if it was the result of a hack. Public companies often halt trading in their stock and file official releases before making similar statements so as to minimize market jolts and abide by guidance from the Securities and Exchange Commission.
It's unclear what prompted the tweet.
Starting in November, Tesla faces repayment of $1.7 billion in debt over the next 18 months that is tied to the company's stock price. If the process ends the way I expect it will, a private Tesla would ultimately be an enormous opportunity for all of us. If shareholders approved the deal, it would remove Tesla from Wall Street scrutiny, eliminating the need to publicly disclose its earnings and - for Musk - the requirement to explain himself to shareholders. Musk has vowed that the company will start turning a regular profit in the second half of this year.
Analysts took Musk at his word.
Musk is leaving it to shareholders to decide if they want Tesla to privatize. The Financial Times earlier reported the investment. A price of $US420 per share price would represent a 22.8 per cent premium to Tesla's closing price on Monday, which gave the company a market value of about $US58 billion.
Musk's other companies specializing in private spaceflight and underground supertrains - SpaceX and The Boring Company - remain private, and Musk has shown reluctance about opening them to the public markets. "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".