Elon Musk Considering Taking Tesla Private, Has Already Secured Funding

Tesla CEO Elon Musk has shocked the financial world with a tweet saying he is considering taking the company private in a move that would pay $420 (£324.58 / €362.11) per share.

Tesla stock closed at $341.99 (£264.29 / €294.85) yesterday and rose rapidly following the announcement today. Trading was temporarily suspended, but Tesla stock closed at $379.57 (£293.33 / €327.25) which is an increase of nearly 11 percent.

Following the tweet, where Musk revealed he has already secured funding for the move, he sent an e-mail to employees explaining his reasons for wanting to go private. According to Musk, the decision isn’t final but he believes taking Tesla private would be the “best path forward.”

Part of the reason Musk believes this is the right thing to do is because Tesla faces increased scrutiny as a public company. As he explained “Being public … subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term.” He went on to say wild swings in the company’s stock price can be a “major distraction for everyone working at Tesla, all of whom are shareholders.”

Musk went on to claim Tesla is the “most shorted stock in the history of the stock market” and this means there are “large numbers of people who have the incentive to attack the company.”

Musk added that he believes taking the company private would allow Tesla to better focus on its long-term mission. He cited SpaceX as an example and said it is “far more operationally efficient” because it is a private company.

While the decision isn’t set in stone, Musk layout out a provisional plan to take the company private. He says the move could be structured so that so that all shareholders will have a choice to remain investors in the private company or sell their stock for $420 (£324.58 / €362.11) per share. He went on to say he hopes all shareholders stick with the company but, if not, this is their time to exit while still making a “nice premium.”

Musk went on to say the move isn’t be about amassing control for himself, rather eliminating the focus on “short-term thinking.”

The decision to go private would have to be approved by shareholders, but Musk believes taking Tesla private would be an “enormous opportunity for all of us.” He also suggested the move could only be temporary as he stated “once Tesla enters a phase of slower, more predictable growth, it will likely make sense to return to the public markets.”

  • Six_Tymes

    Very interesting

  • Earl Scheib

    He runs the company like it’s private anyway…. why not make it official.

  • Shtekeris

    I hope he does. The hate towards Tesla lately on the internet has been out of control. And this is his baby and it shouldnt be anyones business what he does with it.

    • Mr. EP9

      You’re right, it isn’t anyone else’s business but being a public figure will get you criticized all the same.

    • Pavo

      Uhm… it’s a publicly traded company at the moment. So yes it is other peoples business what he does with it.

  • pcurve

    Gutsy move. I’m sure he’ll eventually take it public again.

  • Mr. EP9

    From what I’ve been reading so far this opens the door to lawsuits if Elon doesn’t actually go through with it or prove he has the financing and support arranged to make Tesla a private entity. However, if he did it for the purpose of sticking it to those short sellers he hates so much, Elon will be in some trouble.

    I don’t think Elon would go that far but he is unpredictable so you never know.

  • SO HOW MANY SHARES ARE THERE?

    • Mr. EP9

      A lot.

    • Dude

      At least 12

      • 166,666,666.67 IF MY ADMITTEDLY NOT VERY GOOD MATH IS CORRECT…GIVE OR TAKE SOME 6’S.

    • TheBelltower

      At 420/share, yes, $70B

      A $2B Saudi investment is a drop in the bucket. Wonder where he’s getting the other $68B? Or was this just a tactic to eviscerate the Shorts?

  • Funding secured, that is crazy, then where does the company get funding for development of their future range? You need double the money that you will paid off to the shareholders.

    • Callanish

      The Saudi’s already own 5% of Tesla. They’ve also got an investment fund of $250 billion that could make this happen without breaking a sweat. The Saudi leader paid $450 million for one painting, so you know they’ve got some walking around money. Doubt if Musk would be talking big if this wasn’t realistically doable without having guaranteed backing. Either that or Musk’s recent inroads into the Chinese market has introduced him to some very wealthy people there. Either way, after his dumb previous tweets on Twitter, I don’t think he’d just throw this out there without being 100% sure he’s got access to deep pockets in order to make this happen.

      • You need to read the quoted news again, the $250 Billion is for overall Saudi investment. Tesla will get *mere* $2 billions. That means Elon need to find $68 billions, and with all that money you think that they don’t ask for a share or control over the board.

        This is actually the opposite of being independent. He is in constant danger of removal from the board of shareholders, especially if most of the $70 Billion comes from different sources of funding.

  • Bob

    Sounds logical to me but then I’m not an expert. I just notice, sometimes, that decisions that are great for shareholders can be the opposite for customers.

    Tesla needs to vastly increase its productivity, pandering to short-term stock market expectations means having to show, on a quarterly basis, financial records that look healthy when no real productivity gains can be had in that period.

  • ▶️ ProtectOurHeritage ◀️

    That’s one way to keep himself as CEO. The guy is a dictator.

  • salamOOn

    it looks like a cheap stock trick…

  • Bash

    I read that somewhere, it called (the elastic state), you put your company between being public or private in a try to minimize the hit of a possible or foreseen recession.
    .
    It only means that the company is on trouble or about to.

  • EyalN

    when the company is public everyone knows that no one is getting his model 3 that he oldered 2 years ago and how much Musk is getting. when the company is private he can do whatever he wants

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