Elon Musk has surprisingly revealed he is considering taking the electric car company private once again. In a tweet, the founder and CEO says he has secured the funding to buy out publicly-owned shares.
In a series of tweets on August 7, Musk said existing Tesla shareholders could choose to sell at $420 per share, or keep their holding and be part of a private enterprise that’s no longer traded on the stock market.
All-in-all, Musk’s proposal values the e-car pioneer at around $72 billion. The offer is a significant premium on the share price that spiked on Tuesday. Following the unconventional announcement through the social media platform, Tesla shares rose 7.4% to $367.25. Now trading has halted pending further news (via Reuters).
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Musk, who currently owns around 20% of Tesla, followed up the tweet by promising to take care of Tesla shareholders and “ensure their prosperity in any scenario.” The founder has also informed Tesla employees of the development in a company wide email, also published online.
In the email, Musk said while a final decision has not been made, he has determined this would be the best path to take the company forward. However, he says the decision on whether to go private will ultimately be decided by a shareholder vote.
Musk says he wants to get away from the short-term pressures of quarterly financial returns, so shareholders can make decisions based on the long-term health of the company. In this respect, he wants Tesla to operate more like the privately-held SpaceX, but denies the two pioneering companies are merging.
He writes: “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. 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. 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.
“If the process ends the way I expect it will, a private Tesla would ultimately be an enormous opportunity for all of us. Either way, the future is very bright and we’ll keep fighting to achieve our mission.”
Absolutely. Am super appreciative of Tesla shareholders. Will ensure their prosperity in any scenario.
— Elon Musk (@elonmusk) August 7, 2018
Yes
— Elon Musk (@elonmusk) August 7, 2018
Such a move would relieve pressure on Elon Musk, who has come under fire from shareholders in recent times over the company’s inability to reach profitability, as well as the damaging Model 3 production bottlenecks. As recently as this June, Musk saw off an attempt to oust him from the company’s board of directors, with several prominent shareholders raising the possibility of limiting his power, or even deposing him.
Bringing the firm back under private control could limit the potential damage of Wall Street short-termism, while safeguarding Musk’s position at the top of the company. In the email to employees Musk said he isn’t seeking greater control than his existing 20% stake and wants all current shareholders to remain.
Do you think Musk would be wise to remove his firm from the glare of Wall Street? Drop us a line @TrustedReviews on Twitter.
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Editorial independence means being able to give an unbiased verdict about a product or company, with the avoidance of conflicts of interest. To ensure this is possible, every member of the editorial staff follows a clear code of conduct.
Professional conduct
We also expect our journalists to follow clear ethical standards in their work. Our staff members must strive for honesty and accuracy in everything they do. We follow the IPSO Editors’ code of practice to underpin these standards.
