Elon Musk says taking Tesla private is 'best path forward'

Aug 08, 2018, 00:57
Elon Musk says taking Tesla private is 'best path forward'

Unlike publicly listed companies, private firms do not have to share details of their finances and operations.

Musk detailed his proposal in a blog post on the company's website Tuesday, hours after stunning the company's followers by casually tweeting that he might take it private. The stock, then trading at about $342 per share, shot up to $367.25, before trading was halted at 2:08 p.m.

Musk pledged earlier this month to post net profits in future quarters, and he said he expects to company to avoid returning to the markets for capital and to be self-funding going forward.

Musk said he has no intention of combining the electric vehicle maker and the private space company under one umbrella.

Going private would take the electric auto maker out of the quarterly reporting cycle making it "free from as much distraction and short-term thinking as possible", Musk said in a blog post.

He tweeted minutes after it was reported that Saudi Arabia's sovereign wealth fund had taken a stake of up to 5pc in Tesla, a holding worth as much as $2.9bn (£2.2bn).

"We're working on a new Tesla mini-car that can squeeze in an adult", Musk tweeted on Sunday, replying to a user who asked him about a "Model X Radio Flyer" toy vehicle.

The confusion caused by Musk's Tuesday announcement via Twitter also prompted regulators of the Nasdaq stock market to temporarily suspend trading in Tesla's stock.

Musk's tweet was an exceedingly rare way to break potentially monumental news.

Tesla did not immediate respond to requests for comment.

His US$12b Tesla stake would presumably be rolled into the private enterprise. Musk noted that the price represented a 20% premium over the company's share price after last week's second-quarter earnings report.

For current shareholders, Musk said he would institute a provision ensuring that their stock be converted into private shares, adding he would 'ensure their prosperity in any scenario'.

Musk has previously discussed possibly going private as a means to realize long-term growth and accomplish a goal that some Tesla acolytes embrace with near-messianic passion.

BUYING TIME. Elon Musk has had a bumpy relationship with investors as of late, and has taken Twitter to lash out at short sellers repeatedly.

It is far from the first time Musk has dropped a financial bomb to his 22 million Twitter followers.

Taking Tesla private would certainly qualify.

Tesla CEO and founder of the Boring Company Elon Musk spoke at a news conference, June 14, in Chicago.

"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 wrote.