Elon Musk just tweeted he's considering taking Tesla private

  • Elon Musk just tweeted he's considering taking Tesla private

Elon Musk just tweeted he's considering taking Tesla private

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.

Asked on Twitter whether Musk would continue to be CEO under such a scenario, he replied there would be "no change". Being public also 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.

"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, all of whom are shareholders", Musk wrote in an online post. It would require a shareholder vote, Musk said.

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.

The billionaire Musk, who owns about 20 percent of the company, said a transaction would not "substantially" alter his stake and that he expected to continue to lead the company if it occurred. In the same article from Bloomberg, Munster said "our guess is there is a 1 in 3 chance that he can actually pull this off".

Musk has a history of making bold statements on Twitter and walking back from the precipice after more careful consideration, but the more detailed email to employees seems to add credence to his plan to go private. On Tuesday, Tesla CEO Elon Musk said he's considering a reversal - taking the electric vehicle company private.

Raising both the debt and equity required for such a deal would be a challenge.

At that price, the buyout would cost almost $72 billion, based on Tesla's outstanding stock as of July 27, but it's unlikely the deal would cost that much because Musk owns a roughly 20 per cent stake in the Palo Alto, California, company.

FILE PHOTO: Elon Musk listens at a press conference following the first launch of a SpaceX Falcon Heavy rocket at the Kennedy Space Center in Cape Canaveral, Florida, U.S., February 6, 2018. It also closely follows an announcement that Saudi Arabia's sovereign wealth fund has taken a 3 to 5 percent stake worth $2 billion in the company.

What seemed like a joke at first may be serious and as the company's stock price went insane, trading had been halted. Following the tweet, Tesla stock shot up to $367.25 before the stock's trading was halted at 2:08pm. "Funding secured", Musk tweeted in early afternoon.

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

Around 4AM AEST on Wednesday, trading of Tesla shares was halted for "pending news". Finally, 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".

BALLSY BUYOUT. But a buyout (acquiring a controlling interest in Tesla) would cost a spectacular $72 billion, according to the Wall Street Journal.