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

Adjust Comment Print

After Musk tweeted that he had secured funding for the deal, which would value the company at more than $70 billion, Tesla's share price jumped 7 percent before trading was halted at $367 a share. He goes on to mention the quarterly earnings cycle and how that puts pressure on the company to focus on moves that would boost quarterly numbers while disregarding longer-term motives and outcomes.

"Elon Musk does not want to run public companies", Munster said.

Still, the tech-heavy NASDAQ exchange where Tesla is listed halted trading over the uncertainty of whether Musk's tweet may have violated any Securities and Exchange Commission rules that prevent company executives from making market-moving statements. Public companies often have thousands of shareholders-ranging from huge pension plans and mutual funds to ordinary retail investors.

This is really no surprise, given his other major endeavour - SpaceX - is privately owned and is likely never going to be listed publicly.

In July, Model 3 - that comes with a base price tag of $35,000 - not only had the top market share position in its segment in the U.S., but it also outsold all other mid-sized premium sedans combined - accounting for 52 per cent of the segment overall.

More news: Ollie Pope plans to replicate Curran´s class in Test arena

Taking Tesla private would certainly qualify.

"Given his historic frustration with short sellers, analysts and certain parts of the press, it is perhaps also not surprising that he has given consideration to taking the company private".

The tweets have added to speculation about Tesla, which is spending heavily as it ramps up production of its latest vehicle, the Model 3.

"The reason for doing this is all about creating the environment for Tesla to operate best", Musk, 47, wrote in an email to employees. As a result, its stock is not subject to big swings in value, and the company is not required to provide quarterly financial results to the public.

But time and again Musk and Tesla have been given more time to achieve success.

More news: Iran sanctions: Trump warns trading partners

Going private is one way to avoid the intense scrutiny of public markets.

Musk also made mention of the "shorts", investors who bet against Tesla succeeding in order to profit themselves.

First, I would like to structure this so that all shareholders have a choice. And if the information in the tweet isn't true, Musk could be looking at some stock price manipulation allegations.

Trading for Tesla stock was re-activated fifteen minutes before the closing bell was rung, and the automaker closed the day up 12 percent, realizing a massive $6 billion+ appreciation in market capitalization.

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

More news: Elon Musk considers taking Tesla private as stock jumps

And yet it also left many questions unanswered, namely how Musk - who owns nearly 20 percent of the company - would be able to come up with the $66 billion necessary to complete the transaction.

Comments