Elon Musk considers taking Tesla private as stock jumps

Elon Musk considers taking Tesla private as stock jumps

In his typically unorthodox fashion, the eccentric Mr Musk dropped his bombshell on his Twitter account, which he has used as a platform for pranks, vitriol and now for a proposal to pull off one of the biggest buyouts in U.S. history.

Tesla shares were halted from trading at $367.25 Dollars per share shortly after 2:00 pm for more than an hour after Musk's tweets. The announcement, made initially via Twitter, stunned investors and sent Tesla's stock price soaring as much as 13 percent.

"Funding secured", the tweet added, offering no further details on where the funds would come from or when. He later tweeted that the only uncertainty about completing the deal is whether he can gain shareholder approval.

The Financial Times had earlier reported that Saudi Arabia's sovereign wealth fund had built a $2bn stake in the company.

Musk even had a price - $420 a share.

VideoJamie Albertine, Consumer Edge Research senior automotive analyst, discusses Tesla Inc.

Betting against Elon Musk has never been for the faint of heart.

In his blog post, Musk emphasized that the intention was not to merge SpaceX and Tesla, a strategy that some have speculated about in the past.

Musk did not disclose the source of the funding.

After Musk, the next largest shareholders in Tesla are the mutual fund giants T. Rowe Price and Fidelity, with stakes of more than 9% and 8%, respectively, according to Thomas Reuters Eikon.

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The SEC website explains that "Form 8-K is the "current report" companies must file with the SEC to announce major events that shareholders should know about".

Asked whether he would continue to be CEO under such a scenario, Mr Musk replied there would be "no change". But he said the idea made a certain amount of sense.

As a direct result of Musk's $420 tweet, share values started fluctuating.

Camera IconTesla's existing shareholders could be given the option of retaining a stake in the company through a special fund. About an hour and a half later trading resumed and rose by more than 11 per cent.

Musk has had a famously combative relationship with Wall Street, having mocked Tesla's short-sellers on Twitter and joked about Tesla going bankrupt. Key to that plan is ramping up production of the Model 3, a $35,000 mass-market model that has run into production and quality issues.

The proposal will have to be voted on by Tesla shareholder before it goes ahead.

It would be one of the biggest go-private deals on record with a price tag of about US$72 billion, based on US$420 per share.

"He originally brought Tesla public in 2010, given he could no longer personally finance its growth, and has continually expressed his frustration with the company being public". Will be way smoother & less disruptive as a private company.

Since Tesla went public in 2010, its stock has been on a roller coaster ride, gaining nearly 2,000 percent in eight years, but also reportedly becoming at times the most shorted stock in history. What do his latest tweets mean for the future of Tesla? "Either [shareholders] can stay investors in a private Tesla or they can be bought out at $420 per share, which is a 20% premium over the stock price following our Q2 earnings call (which had already increased by 16%)".

Shares have rallied strongly since those earnings, but Musk has continued to show a short fuse towards critics, lambasting "short" sellers of Tesla shares - those who take bets that the stock will fall in value.

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