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

Daniel Fowler
August 8, 2018

Tesla reported an adjusted loss per share of $3.06 for the second quarter, which was larger than what analysts had predicted, and revenue of $4 billion, which beat analyst projections.

James Anderson, a Baillie Gifford fund manager who recently called out Musk's tweeting in an interview with Bloomberg, had no comment about Musk's tweets on Tuesday.

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.

Tesla closed up 11 percent at almost $380 after trading resumed.

Musk has been under intense pressure this year to prove he can deliver on his promise to turn his money-losing company into a profitable higher-volume manufacturer, a goal that has propped up Tesla shares and resulted in a market value higher than that of General Motors Co.

It's no joke that particularly in the U.S. and here in Australia, public companies are using share markets more for capital subversion, tax minimisation and corporate capture rather than truly creative, risky capitalistic endeavours. It is also the only auto maker building cars (some of them) under a tent, as Tesla strains to crank out cars for Model 3 buyers in the waiting line to buy and collect tax credits. However, given Musk's lack of concern for industry norms and his ongoing feud with short-sellers, it's not out of the realm of possibility.

Palo Alto-based Tesla, named after the physicist Nikola Tesla, went public in 2010. Employees would remain shareholders, and Tesla would be independent of Musk's other company, Space X, though the structures would be similar. He said in his letter to employees that he did not seek to expand his ownership.

It would cost about $71 billion to take Tesla private at $420 per share.

Earlier today, I announced that I'm considering taking Tesla private at a price of $420/share.

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Shares in Tesla opened at $343.84 before hitting a high of $371.15 around mid-day on the news.

He shared more details in a series of Twitter replies, noting that should Tesla go private, he'd remain in his role as founder and CEO of Tesla.

A leveraged buyout of this size - one using debt - would eclipse by a wide margin the prior record, the purchase for utility TXU Corp.in 2007 by a consortium that included KKR and TPG for US$44 billion.

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

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.

Shares were pummeled in May after Musk abruptly cut off questions from Wall Street analysts over Tesla's spending plans.

The Financial Times, citing unnamed people with direct knowledge of the matter said Saudi Arabia's Public Investment Fund had built a stake of between 3 and 5 percent of Telsa's shares.

"Once Tesla enters a phase of slower, more-predictable growth, it will likely make sense to return to the public markets", he wrote.

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