Elon Musk tweets he may take Tesla private and shares roar
08 August, 2018, 00:38 | Author: Martin Tyler
Elon Musk is considering taking Tesla Inc private, the chief executive officer of the electric vehicle maker tweeted on Tuesday.
At the price mentioned in Musk's tweet, however, Tesla would be valued at roughly $71.7 billion, 18% higher than its current market capitalization. A Tesla spokesman declined to comment.
The rally after Musk's tweet unleashed fresh pain for short-sellers in Tesla, the most shorted US stock.
At first glance, it was not clear how seriously to take Mr Musk's messages.
Musk has lashed out at critics and investors who have shorted the stock, going so far as to call one prominent critic's employer to silence him, and refusing to take a hard question from a financial analyst in the company's June shareholder meeting.
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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.
The furor over Musk's tweets has led to a halt on $TSLA trading.
Shares were pummeled in May after Musk abruptly cut off questions from Wall Street analysts over Tesla's spending plans.
His US$12b Tesla stake would presumably be rolled into the private enterprise. And finally, he maintains that going private isn't about accumulating control for himself: "I own about 20% of the company now, and I don't envision that being substantially different after any deal is completed", Musk wrote.
He implied that the funding values the company at $420 a share.
Musk's surprise announcement comes as the Financial Times revealed that a fund controlled by the Saudi Arabian government holds a stake of between three and five percent in the company. Prices seesawed in the range of $360 to $370, a roughly 7 to 8 percent rise for the day, while investors tried to decide whether Musk was joking.
Tesla has not confirmed whether the tweet was real - or if the CEO's account was hacked.
Last month, Musk attacked British diver Vern Unsworth, who had dismissed the Tesla chief's efforts to help the rescue mission for the 12 boys as a "PR stunt" in a widely seen interview on CNN.
But asked if he would take legal action against Musk over the allegation, Unsworth said: 'If it's what I think it is yes'.
George Galliers of Evercore ISI said he believed the tweet was serious.
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"My hope is all current investors remain with Tesla even if we're private", Musk tweeted.
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As the co-founder of one of the world's most successful companies, his is one of the most recognised names in the world of tech. Market capitalization, or market cap, is the total combined value of all of a publicly traded company's outstanding shares.