Turns Out Musk Might Actually Be Serious About Taking Tesla Private

Turns Out Musk Might Actually Be Serious About Taking Tesla Private

Musk's first tweet said funding was "secured" for a transaction could value the company at $420 a share.

Asked on Twitter whether Musk would continue to be CEO under such a scenario, he replied there would be "no change". He also said the quarterly financial requirements of being a public company "puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term".

Musk also previously used his Twitter account to joke that Tesla was going bankrupt in an April Fool's Day tweet and his stability was called into question last month after he called a British diver who helped rescue children from a Thailand cave a pedophile.

"As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla", Musk said Tuesday in an email to employees.

Musk owns almost 20 percent of the company. "The 16 percent premium to the current share price may not be high enough to incentivize existing shareholders to support the sale".

The only problem? Those rumors were seeded, very publicly, by Musk himself, who announced his thoughts on Twitter ― and went so far as to set a prospective buyback price of $420 and promise he had the funding "secured".

In the post, Musk said that he feels a forward-looking company such as Tesla is better off being private and avoiding the short-term thinking involved with public markets.

Tuesday's gains following the tweet added to upward movement on the stock after The Financial Times reported earlier Tuesday that a Saudi Arabian sovereign wealth fund had built a stake of between three and five percent in the company.

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Musk was clear in his email that a final decision has not been made, and, come to think of it, it's not even clear if this move would be possible.

Such foreign sources of capital would be subject to scrutiny by the Committee on Foreign Investment in the United States (CFIUS), which looks closely at deals for potential national security risks. Following the tweet, Tesla stock shot up to $367.25 before the stock's trading was halted at 2:08pm.

But another substantial segment of investors are convinced Tesla is doomed to fail and are betting on the company's eventual demise by becoming "short sellers" of its stock. The Saudi fund approached Musk about buying new shares, was rebuffed, and instead bought the shares in secondary markets.

Despite the unconventional method of disclosing such information, analysts took Musk at his word.

Tesla closed on Tuesday at $379.57 per share.

In his letter to employees, Musk wrote that, "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". 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".

Short interest in Tesla on Tuesday stood at almost $13 billion, according to S3 Partners, a financial analytics firm.

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