This post has been updated to reflect new information from Tesla.
Tesla is having quite a day.
The Financial Times reported that Saudi Arabia’s Public Investment Fund is taking a 3% to 5% stake in Tesla through secondary markets, sending Tesla’s stock up. Then CEO Elon Musk tweeted the following:
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Initially there were questions about whether this was a material announcement by Tesla’s CEO or a bad joke about weed. Shares of Tesla went up more than 7% before coming to a stop around 2 p.m. Trades resumed less than two hours later after Tesla released an email that Musk sent to employees explaining why he was considering taking the company private. In summation, he believes that “wild swings” in Tesla’s stock price are distracting and that pressure to meet quarterly results means less focus on long-term success.
He also called out short sellers: “Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company.”
Musk offered shareholders the option to sell at the previously stated $420 per share price or remain investors in a private Tesla. He said if the company were to go private he would structure it like his other company, SpaceX, and allow all investors (both shareholders and employees) to sell stock every six months. He closed by saying the proposal to go private still had to be finalized by shareholders. Then he tweeted:
Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote. https://t.co/bIH4Td5fED
— Elon Musk (@elonmusk) August 7, 2018
Tesla’s stock hit a high of $381 per share after the announcement.
Still, there are questions about whether Musk is intentionally manipulating his company’s stock. The SEC so far has declined to comment.
Last week, when Tesla shared its second-quarter earnings, investors were hopeful that Musk had turned over a new, less-erratic leaf, after he apologized for his bizarre past behavior. He also promised profitability in Q3. This recent turn of events may have them reconsidering.
That is not to say that it wouldn’t be wise for Tesla to go private. The company has faced scrutiny for its failure to meet its own car-production deadlines and for continually losing money. And as Axios notes, having investors sell at $420 per share “makes sense as a typical take-private premium.” There are also, as Musk stated, a lot of short sellers betting against Tesla.
Whether or not Tesla does in face go private (CNBC is reporting that it reached out to a bunch of Wall Street Banks and none of them had heard anything about this deal), making these kinds of claims on Twitter only inspires eye-rolls. Not that it matters. Musk is increasingly proving to be untouchable. Tesla stock was up 11% at close.
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