Elon Musk jolts Wall Street with tweet on going private

Elon Musk

Elon Musk

Because Tesla was "the most shorted stock in the history of the stock market", and quarterly earnings putting "enormous pressure" on the exponentially growing company, Musk suggests it might make more sense to trade stock privately for the time being.

In a stunning move today the CEO of electric auto maker Tesla (NASDAQ:TSLA) tweeted out to his twenty two million followers that he was "considering taking Tesla private", similar to the move made by Michael Dell and Dell Computers circa 2013.

A buyout at US$420 per share probably won't let Musk reap any benefit from the US$2.6b stock option grant he received this year.

Soros Fund Management LLC took a $35 million stake in the 2019 Tesla convertible bonds in May of 2018.

In an internal email, sent from Musk to Tesla employees on August 7, the CEO confirmed most of this, as he explained his thinking directly.

Without an official statement to back up the tweet, Nasdaq halted trading in Tesla shares shortly thereafter.

In a Bloomberg report following the tweet, the publication quoted Musk as having said in 2015, "There's a lot of noise that surrounds a public company and people are constantly commenting on the share price and value.Being public definitely increases the management overhead for any given enterprise".

"This is especially true for a company like Tesla that has a long-term, forward-looking mission". "He originally brought Tesla public in 2010, given he could no longer personally finance its growth, and has continually expressed his frustration with the company being public".

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The company had a market value of US$58 billion as of Monday's close. In the past year alone, Tesla shares have seen a wild swing, trading as low as $244.59 last April to reaching its all-time high less than six months later amid upbeat Model 3 sentiment.

Separately, Financial Times reported on Tuesday Saudi Arabia's sovereign wealth fund, overseen by Crown Prince Mohammed bin Salman, has built an undisclosed stake of between 3 and 5 percent stake in Tesla. That said, if they do want out, they can sell their shares at $420 per share, which is a fair bit higher than Tesla's current stock price ($382.67 at the time of writing, up from today's open price of $343.84).

While Mr Musk has previously discussed the drawbacks of being a public company, he has also used his Twitter account in ways that surprised investors.

At that $US420 per share, a deal would be worth $US72 billion overall.

"This is a boon for any bondholder at Tesla, because most of the bonds are convertible notes".

"This has nothing to do with accumulating control for myself", he said.

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

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