Elon Musk Floats Taking Tesla Private; Twitter Questions What Exactly He’s Doing

Kenny Grant
August 8, 2018

His US$12b Tesla stake would presumably be rolled into the private enterprise.

This proposal to go private would ultimately be finalized through a vote of our shareholders.

In fact, Tesla has turned a narrow profit in only two quarters since it became a public company in 2010.

The tweet suggested Mr Musk was looking at a plan to buy outstanding shares in the firm for $420 each, around a fifth higher than the share's current price. "Funding secured." It isn't clear what prompted the tweet. The stock had been worth about $342 a share before Musk's tweet, and shares quickly jumped as high as $371. The stock's past-year high was $389.61, with it trading as low as $244.59 in April.

Musk is Tesla's largest shareholder, with an approximately 20 percent stake valued at about $12 billion, according to S&P Capital IQ.

In a letter to Tesla employees published on the company's blog https://www.tesla.com/blog/taking-tesla-private?redirect=no, Musk explained that such a move - over which no final decision had been made - would let Tesla "operate at its best, free from as much distraction and short-term thinking as possible".

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Loup Ventures managing partner Gene Munster said the Reed Hastings Rule eliminates legal risk, though.

"Our guess is there is a one-in-three chance he can actually pull this off and bring Tesla private", Munster said.

The tweet also comes at a time when Musk's company has continued to undergo scrutiny over its ambitious projects and cash burn. In a May earnings call, Tesla shares slipped after Musk derided "boring, bonehead" questions from analysts regarding the company's finances.

The company did not immediately respond to requests for comment. That would make the electric carmaker more valuable than fellow vehicles producer BMW ($64 billion), as well as companies such as Starbucks ($70 billion) and CVS ($66 billion). "Funding secured", the account reads.

The company's shares rose more than 7% on the news, before Tesla trading was halted.

"I fundamentally believe that we are at our best when everyone is focused on executing, when we can remain focused on our long-term mission, and when there are not perverse incentives for people to try to harm what we're all trying to achieve", he said. It has lost money on an operating basis every year since it went public and it's been burning through billions of dollars as it's ironed out production issues with its Model 3 sedan.

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