Tesla Inc: Elon Musk says he's considering taking car-maker private

Roman Schwartz
August 8, 2018

Shares of Tesla were halted on Tuesday afternoon following CEO Elon Musk's Twitter message that he might take the company private - an announcement that blindsided Wall Street and led to questions about fraud. He did not identify the would-be buyer or buyers.

Trading was then halted on the stock market around 2 pm EST according to The Washington Post.

Earlier in the day, the Financial Times reported that Saudi Arabia's sovereign wealth fund had built an undisclosed stake of between 3% and 5% in Tesla. Fortune has yet to ascertain the veracity of the tweet, and will update this article once Tesla responds.

Tesla has had more than its share of ups and downs over the past few months, due to an intense focus on production rates and sales figures for Tesla's mass-market Model 3 electric vehicle. Either they can stay investors in a private Tesla or they can be bought out at $420 per share, which is a 20% premium over the stock price following our Q2 earnings call (which had already increased by 16%).

During Wednesday's earnings call, Tesla once against lost money in the quarter to the tune of $740 million. Musk owns almost 20 percent of the company. Tesla has always been one of the most-shorted stocks on Wall Street, but so far, the company has not seen the share-price meltdown that shorts expected.

Musk has occasionally griped about the frustrations of running a public company: previous year he called Tesla a "drama magnet" - and he has vowed not to do an initial public offering for his other major venture, SpaceX, until after regular trips to Mars begin, if ever. Musk has vowed that the company will start turning a regular profit in the second half of this year.

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But in a blog post by Musk on the Tesla website, he said: "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".

George Galliers of Evercore ISI said he believed the tweet was serious.

Musk has a history of outrageous behavior on Twitter. In other words, his tweet had real market implications. The tweet was apparently an April Fool's joke.

Tesla's CEO also laid out what he envisions as the ideal path for going private. Musk has followed up with an offer for current stockholders to keep their shares and "go private" - without knowing further details on the company's board and governance structure.

Gene Munster, the managing partner of Loup Ventures, said Tuesday that that he estimated "there is a 1 in 3 chance he can actually pull this off and bring Tesla private" because the higher share price "may not be high enough to incentivize existing shareholders to support the sale". It's not clear Musk has the funding to complete the deal, and he would need a majority of shareholders to agree to the plan. Chinese tech giant Tencent owns nearly 5%.

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