Elon Musk 'Considering' Tesla Buyback at $420 to Take Company Private Again

Andrew Cummings
August 8, 2018

Shares in Tesla hit $367.25 after a message posted at 9.48am NY time on Mr Musk's verified Twitter account said: "Am considering taking Tesla private at $420". Why would Musk want to take his company private? "Funding secured." At 2:08 p.m., trading of Tesla shares was halted at $367.25, up 7.4 percent over Monday's close.

In recent months, Musk has been unpredictable and defiant in the face of concerns that Tesla is running out of cash and overextending itself as it races to hit production goals for the Model 3.

He added that he hoped all shareholders would remain and that all Tesla employees would "remain shareholders of the company". Taking Tesla's shares out of public markets would make it much more hard for people to engage in short selling of Tesla's stock.

Musk said he wouldn't sell his stake if the company went private. Often his erratic behaviour has drawn more attention than his struggles to shift Tesla from a niche luxury vehicle maker into a mainstream automotive company. Either they 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%).

He has been accused of spreading himself too thinly to steer Tesla to profitability in the competitive auto industry.

In the post, Musk said that he feels a forward-looking company such as Tesla is better off being private and avoiding the short-term thinking involved with public markets.

The fact that the tweet gives a specific price, and that $420 is a long-standing marijuana in-joke, makes it even more possible that this is a hoax or Musk's idea of a joke.

However, Musk expects the shareholders to agree with him and allow him to take the company private again.

But in the latest quarterly call last week, Musk struck a more amicable tone.

Did Elon Musk violate any securities regulations, particularly Reg FD [Fair Disclosure], which according to the Securities and Exchange Commission, prohibits selective disclosure of material information?

"There's a lot of noise that surrounds a public company and people are constantly commenting on the share price and value", Musk said in 2015.

As he often does, the outspoken entrepreneur took to Twitter to deliver the news. "I can't believe this is something to bluff or make fun of", George Galliers of Evercore ISI said.

Despite its challenges, Tesla has remained a favourite among many investors, partly due to their faith in Mr Musk, who made his initial fortune as a co- founder of PayPal and also is the chief executive of a trail-blazing aerospace company, SpaceX, that's already private. 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.

However, some analysts were skeptical that Mr. Musk could engineer a buyout.

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.

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