Years After Going Public, Elon Musk Wants To Take Tesla Private

Elon Musk

Mr Musk got the ball rolling Tuesday after the stock market had already been open more than three hours with a tweet announcing he had secured funding to buy all of Tesla's stock at $US420 ($566) per share with no further details. He said his own stake of about 20 percent would not be "substantially different" if the plan were to proceed.

"Am considering taking Tesla private at $420". He later tweeted that the only uncertainty about completing the deal is whether he can gain shareholder approval.

Musk, however, did not elaborate on when the Tesla mini-car will hit the roads.

The bombshell proposal to take the electric auto maker private prompted regulators to take the unusual step early Tuesday afternoon of suspending trading in the company's stock.

Musk was recently forced to apologise after calling a British cave diver who helped rescue the trapped Thai schoolboys a "pedo".

Musk is power tweeting about the world's biggest leveraged buyout and the financial markets are full of hot takes.

Only Toyota and Volkswagen would be worth substantially more than Tesla, which is now the world's fifth biggest automaker by market capitalization. Although it's unusual for a chief executive to make such a major announcement over social media, it does not appear to be improper.

What is the first thing that comes to mind when you think of billionaire entrepreneur Elon Musk?

One investor, the CEO of Gerber Kawasaki Wealth & Investment Management, Ross Gerber, said he had "no intention" of selling his shares at $420.

Camera IconTesla's existing shareholders could be given the option of retaining a stake in the company through a special fund.

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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.

Elon Musk's latest big idea is daring even by his standards: He wants to turn Tesla into a private company.

Making money has proven elusive for Tesla while it has been investing in electric auto technology and ramping up production of its vehicles, including a sedan with a starting price of $US35,000 to appeal to a broader audience.

Taking Tesla private "makes a ton of sense", said Gene Munster, a managing partner at venture capital firm Loup Ventures.

"The reason for doing this is all about creating the environment for Tesla to operate best", Musk, 47, wrote in an email to employees.

Tesla has been public since it filed an IPO in 2010. It's worth noting here, too, that it was just last week that Tesla reported losses, before reassuring investors that the company's "goal is to be profitable and cash-flow positive for every quarter going forward".

Elon Musk said he's considering taking Tesla Inc. private in a radical step that, if successful, would ease pressure on the money-losing automaker. Musk's tweetstorm was over, but Tesla's future was uncertain. Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts have suggested that less transparency would be welcomed by Musk. Short sellers borrow shares from other investors and then immediately sell them on the premise that they will be able to buy them back at a lower price later to replace they stock they borrowed. 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 in a letter to employees August 7th, 2018, "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 contrast, private companies have a smaller number of shareholders-generally fewer than 2,000-and are not available for purchase on public markets.

When another person tweeted that going private "saves a lot of headaches", Musk replied, "Yes".

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